In India, Master-Planned City Moves Forward

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Work on a 500 billion rupee city in India is going full steam ahead, with the project expected to be completed by 2023, according to the developer behind the project.

The planned hill city of Lavasa, being developed by the Indian company Hindustan Construction Company, is located in the Sahyadari mountains near the city of Pune and about 200km from Mumbai.
 
Lavasa, spread over 10,000 hectares and set around a lake, is designed to include a Nick Faldo golf academy, a Manchester City football academy, and a space theme park. It aims to eventually host 300,000 residents and attract 2 million tourists a year, as India's existing cities become increasingly overcrowded.

The first area, called Dasve, offers hotels including a property managed by Accor, the French hospitality company, as well as homes, restaurants, an upmarket convention centre and a hospitality school. Dasve already has residents and is almost 95 per cent complete. Work on a second town is underway.
 
Lavasa was originally intended to be completed by 2021, but work was halted for a year in November 2010 when India's Ministry of Environment and Forests demanded additional clearances for the development, which resulted in a court battle. Those issues have been resolved but there has been a great deal of negative press surrounding allegations about the impact of the development on the environment.

"With the push back that we've had it could go to about 2023," said Anuradha Paraskar, the senior vice president of marketing and sales at Lavasa.
 
Nearly all the homes in Dasve have been sold and values of apartments have surged from about 2,400 rupees per square foot six years ago to about 4,500 rupees per square foot today, according to Ms. Paraskar. Sales are underway for the second area that is being built. The slowdown in economic growth in India has, however, impacted demand.

"Everyone knows that there is a slowdown," said Ms. Paraskar. "We're doing the numbers that we set out for ourselves, but the kind of buoyancy that the market has displayed three or four years back is not the buoyancy any real estate player is seeing today."

Demand from overseas was to some extent helping to compensate for this after the rupee in recent weeks crashed to a series of record lows, she added.

"We've seen a lot of NRI (non-resident Indian) interest in recent times because of the rupee situation," she said. "A lot of NRIs, particularly the US, UK, and even the [Arabian] Gulf, look back at investments in India."

Plans for an IPO for Lavasa have been put on hold until market conditions improve, the company said.

A report by McKinsey highlighted that India needed to build at least 25 new cities which could accommodate populations of up to one million people, to cater to the growing strains on the country's urban areas.

"India's urban population grew from the 290 million reported in the 2001 census to an estimated 340 million in 2008, and McKinsey projects that it could soar further to 590 million by 2030," according to the report. "This urban expansion will happen at a speed quite unlike anything India has seen before. It took nearly 40 years (between 1971 and 2008) for India's urban population to rise by 230 million. It could take only half that time to add the next 250 million."