Railways plans mother of all land deals

NEW DELHI: The Railways are all set to unlock around 50 acres of real estate in and around New Delhi railway station for commercial development. The property, with a floor area ratio (FAR) of 2.5, could fetch over Rs 10,000 crore to the Railways, making it potentially one of the largest real estate deals in the country.

At present, the real estate cost is Rs 30,000 per square feet in Central Business District (CBD). According to analysts, this could be largest A-grade real estate space up for grabs after completion in 2009. The Railways have already appointed a consultant for the project. Commercial development is part of the 80-hectare railway station development plan.

“We have appointed a consultant who would guide us on how to go about with the commercial development in New Delhi Railway Station Area. At present, we have decided to exploit at least 10% of the real estate for commercial development, i.e. 16 hectares or 50 acres (20% of total area of 80 hectares),” a senior Railway official said.

At present, the permissible floor area ratio is only 1.5 on the railway land. But, the Railways are in talks with the urban development ministry for grant of an extra FAR of 1. “We are in talks with both the Delhi government and the union urban development ministry. We are hopeful we would have it,” the official said.

As commercial exploitation of railway land would be limited to just 16 hectares (4.7 million square feet), the remaining 64 hectares would be dedicated for railway platform and station modernisation and passenger amenities. “Our prime aim is passenger comfort. Through commercial exploitation of a small part of real estate, we would be able to set off our expenditure on redevelopment,” a source said. The commercial space would comprise a five star hotel, a few budget hotels, shopping arcades and a significant office space.

According to real estate experts, with an FAR of 2.5, the area around central business district would provide an ample supply of A-grade office space. At present, there is a shortage of around 10 million sq ft office space in Delhi. But, there are also fears that such enormous construction would lead to oversupply of commercial and office space in the Capital. “ A sudden spurt in real estate and office space would take at least three years to get absorbed in the market. Real estate valuations may also dip if supply for office space outstrips demand,” DTZ India MD Ankur Srivastava said.

Apart for unlocking of land in Delhi, the Railways have also decided to exploit about 500 acres of land in Mumbai, which could also add significant moolah in its kitty. In Mumbai also, the Maharashtra government has agreed to grant Railways an floor space index of four instead of existing 2.5.