Economic planning a must for cities
Development of new infrastructure is not enough to impact realty markets. For cities to be truly smart, new jobs have to be created
Af ew weeks ago t he government released t he t hird l i st of 27 c i t i e s i n cl u d e d i n i t s Smar t Cities Mission. The 60 cities out of a total of 100 cities to be developed in the next three years include five from Maharashtra, four each from Tamil Nadu and Karnataka, three from Uttar Pradesh, two each from Punjab, Rajasthan and Madhya Pradesh, and one each from Andhra Pradesh, Odisha, Gujarat, Nagaland and Sikkim.
All of these cities will get ₹ 200 crore each for improving their infrastructure. The selection process for the remaining 40 cities will start in January next year. The mission’s focus is governance and experts say that the increase in infrastructure spending and redevelopment will lead to an increase in property prices. Some small and medium size cities in the list will also be able to attract investments and thereby create jobs. However, if the government has to really leverage its spending, it has to focus on creating jobs and empower the city administration to take decisions on not just area planning but also economic planning, say experts.
Sunil Agarwal, managing director, Black OliveVentures, a consultancy on real estate asset management, says as of now public spending on infrastructure and public governance has no co- relation with job creation. Citing Mumbai’s example, he adds, “Job creation and investment in the city so far have been incidental and driven by availability of manpower in a city, rather than quality of life and real estate factors. The conditions in which people live in Mumbai are not great (expensive housing and long commute times). Even in Bengaluru, while there are enough jobs and a stable property market, the infrastructure is crumbling.”
Apart from pushing property prices up because of infrastructure spends and redevelopment, the mission will also ensure that infrastructure development in Tier 2 and Tier 3 cities will attract investments from commpanies and impact real estate te prices.
Amit Bhatt, strategy headdurban transport, EMBARQ, Q, agrees with the premise that at only sufficient job opportunities es will ensure that the city is trulyly smart. Cities that have madee it to the smart cities list noww need to think about not only y utilising the funds to create better infrastructure but also plan what economic activity will be required to sustain them over the years. For example, authorities in Faridabad, which is town focused on heavy industries, need to understand that this will not carry it forward for the next 20 years and therefore it needs to develop ancillary allied industries to attract talent and create jobs. It needs to realise that a diverse economic base is essential for it to grow and develop.
It is important for job creation to be part of city planning. For that, city agencies need to be empowered, say experts. In most cities around the globe, powerful mayors have been effective changemakers. In India, cities are governed by states, which have other priorities. Ideally, mayors should be empowered to decide on the economic planning of a city.
As urbanisation increases, we need to empower institutions at the local level. “If cities have to transform, they need leadership and governance at the city level. Once you empower the right quality of leadership comes in right at the city level and only that leadership can bring about change,” says Amit Bhatt, strategy head - urban transport, EMBARQ.
Hudson Yard in the US is a great example of smart city planning combined with economic vision. The area is a brand new neighbourhood located on the western side of New York City. The idea for developing this 28-acre area was conceived by Related Company’s billionaire developer Stephen Ross. As per estimates, the development is expected to add about $19 billion annually to New York City’s gross domestic product. The area has also been given tax breaks.
Developments coming up in the area include 8 million square feet of office space, a 1 million square-foot mall, shops, restaurants and 4,000 residences and 14 acres of open space. Estimates suggest that in 2025, about 125,000 people, including residents and workers will visit the area every day. Currently, a 1BHK in the area is priced at $1.95 million and the average price per sq ft is around $3,300.