Taking a huge initiative to streamline the railway development policy in the city, the Mumbai Vikas Railway Corporation (MRVC) has written to the Railway Land Development Authority (RLDA) to change the stipulation which states that the maximum lease period of land being given out for development must be for only 45 years. The RLDA is the statutory body set up by the railway ministry to commercially develop railway land.
Why the need for a longer lease?
Speaking to dna, MRVC chairman and managing director Rakesh Saksena confirmed the move. "We have written a letter in connection to the 45,000 sq mt land at Bandra East which has been unable to get a buyer despite being put on the block two times. This demand for enhancing the lease period was arrived at during talks between MRVC and different stake-holders in the land development policy," said Saksena.
While the Bandra east land is being readied for development by RLDA, three major land parcels in Bhandup, Mahalaxmi and Wadala have been handed over to MRVC.
Is the residential sector a better bet?
Saksena said that residential development of railway plots must also be considered since the commercial sector is facing a glut, especially in Mumbai. "The ultimate aim of land development is optimum monetisation of the land, so why should residential development be excluded," asked Saksena.
Senior MRVC officials agree to the above point. The three plots that they have been provided for development - at Bhandup, Wadala and Mahalxmi - are such that expecting commercial development from them might be a tough ask. The Bandra land, these officials say, is however best suited for a commercial complex than a residential colony.
"These three plots might fetch huge amounts if they are allowed to be developed as residential enclaves. Infact, areas like Mahalaxmi and Wadala are seeing a tremendous boom in the construction of upscale residential colonies. These plots, close to the railway stations, could fetch handsome a price," said officials. "However residential development would mean long lease periods like 80 years or 99 years. No one will line up for a 45 year lease to build a residential colony," said a senior MRVC official
Why land development is so important?
MRVC officials agreed that land development might be the single-biggest money-spinner for the railways in the city as other forms of revenue - tickets or advertisements- are not enough to power the projects that the railways has been planning in order to increase the capacity of the suburban system.
The failure of the Bandra land development plan has already got the MREVC shooting off a letter to the railway ministry saying that its projects as well loan repayment schedules would get affected if the money from the Bandra plot does not materialize soon. MRVC is expecting around Rs 2,400 crores as its share form the land sale.
dna in its August 6 edition had highlighted how real estate developers are of the view that the railway's 45-year lease policy is a major dampener since the high land costs in Mumbai combined with the short lease would make any project unviable.
Which places could hold the key for Mumbai?
Currently, the RLDA is thinking of residential or mixed-use development for four of its plots but the length of lease period is still to be decided by the railway board. These plots are at Ashok Vihar in Delhi, Nirala Nagar in Kanpur, Aisha Bagh in Lucknow and Kanchrapara in West Bengal.