What is a Smart City?
Smart Cities are planned cities of varied sizes where infrastructural developments are sustainable in nature, so are the real estate and economic developments. Predominantly, a Smart City is all about its residents and technologically advanced systems to create a superior standard of living for the people. Digital innovations are the main drivers for a Smart City’s urban planning. Though this may sound futuristic to the uninitiated, this is an emerging face of India which is real and comprehensible.
What are the challenges?
In India, a lot depends on how the end-users react to sustainable measures that are taken for energy conservation or in case of implementation of modern technologies. Timely approvals and execution still remain a challenge in India. The level of competency and awareness that are required to ensure growth of a Smart City is still rare in India. By global standards, in any Smart City, all utility services like electricity, water, internet or telecom services should be available to the residents, 24X7. The existing supply and distribution systems of our country are still not adequate to fulfill this.
So, is it an incoherent, half-cooked vision?
No, because the noble intention backed by massive planning and solid steps towards realization of the project has succeeded to push aside initial hiccups and has registered positive developments. The project will cover 100 cities over five financial years (FY2015-16 to FY2019-20). The total numbers of 100 Smart Cities have been distributed among the States and UTs on the basis of equitable criteria. The formula gives equal weightage (50:50) to urban population of the State/UT and the number of statutory towns in the State/UT.
The Smart City Mission will be operated as a Centrally Sponsored Scheme (CSS) and the Central Government proposes to give financial support to the extent of Rs. 48,000 crores over five years i.e. on an average Rs. 100 crore per city per year. An equal amount, on a matching basis, will have to be contributed by the State/ULB; therefore, nearly Rupees one lakh crore of Government/ULB funds will be available for Smart Cities development.
First Smart Cities to be developed Here are the first 20 cities to receive funds under the scheme. The next two years will see the inclusion of 40 and 38 cities, respectively.
Impact on Real Estate
Government’s vision to develop 100 smart cities and pushing a robust fund forward will surely have positive impacts on the real estate sector, as developers will now be offering new projects in these locations, boosting the social and economical infrastructure, considerably. Currently, the real estate sector contributes around 6 percent to India’s GDP. With the rise of 100 smart cities, it is expected that this share might increase to 10-12 percent by 2022.
As the Smart Cities grow there will be significant movements in the commercial real estate segments as many businesses would consider shifting their bases to these developed regions with better infrastructure and sustainable growth plans. For the residential segment too, as the job opportunities will be created in large numbers, the working population would be inclined to invest in those areas which in turn will boost real estate developments.
However one important thing that the developers would need to keep in mind is that the developments in Smart Cities follow certain rules and strict regulations and they would need to abide by this set of sustainability & affordability norms which form the very basic of the concept.