URBAN VILLAGES - Mixed-use projects, the future of real estate
More and more developers are launching mixed-use projects these days, in a bid to diversify their business and reduce risk in the current slowdown.
Mixed-use development, as the name suggests, is a combination of two or more asset classes developed in a building or set of buildings that are physically and functionally integrated and mutually supporting.
“The idea behind this development is the complementary nature and interdependence of these asset classes with each other, that is, office workforce would like to stay closer to their homes while retailers would like to be in close proximity to the office and residential areas, so that they register higher footfalls from different sections of the society,“ Amit Chawla, associate director (valuation and advisory services) of Colliers International India, says.
There are already several mixed-use projects up and running across the country, while several others have been planned by prominent developers. Some of the developers include Lodha Group, which has plans to develop a 15-acre mixed-use project in Wadala and the Hiranandani Group, which is planning a 250-acre mixed-use project in Powai. Uppal Group (along with QVC Realty) is building a 106-acre integrated township, Gurgaon 99, on Dwarka Expressway in Sector 99, Gurgaon.
Other major developers in the fray include DLF, M3M Group, and TDI Developers, among others.
“To make this concept a success, developers must ensure that the layout is designed in a well-thought manner so that there is a free flow of multiple activities across asset classes at any given time. For instance, there should be adequate parking facility, well-laid security check points and monitoring facilities, smooth traffic movement and noise levels modulation,“ Amit Chawla says.
This proposition is a win-win case for developers and buyers. Buyers primarily benefit from the concept of “live, work and play at one place“ and can walk to work within the same township, while their children do so to their schools. Retail outlets, malls, and clinics, too, would be within the township.
For developers, it's a product with higher returns as well as steady cash flow.“Mixed-use projects offer developers an opportunity of earning good returns as it gives greater flexibility in land use. Moreover, the demand for residential and commercial spaces benefit from each other.While residents of the area form the main customer pool for shopping malls, F&B spaces, entertainment hubs, schools, and hospitals, commercial spaces, in turn, create demand for residential properties. Mixed-use development helps differentiate the tenant mix, de-risking developers' investment. Another main advantage of integrated developments is that they allow developers to use FSI and location efficiently,“ Vivek Singhal, president (corporate strategy) of M3M Group, said.
“Not only do these properties guarantee higher rental yield compared to a regular residential property, the long-term capital appreciation is also a major factor boosting investment.However, the housing and retail units should complement each other. Before buying a flat in a mixed-use development, one should ensure that the project has been properly planned and gives its residents all the benefits that come with such projects,“ Ravish Kapoor, director of Elan Group, says.
Ssumit Berry, managing director of BDI Group, is also positive about mixed-use projects. However, he cautions that a developer should take every aspect of such projects into consideration at the design stage itself, as a mixed-use project has to fully satisfy the aspirations of customers. “Though mixed-use development comes with its own set of benefits like having all amenities for a modern life at one place, it can degrade the quality of life if even one aspect of it does not take off,“ Berry says.
Whatever be the case, mixed-use developments have been a popular phenomenon around the globe and certainly are bound to become the future of real estate in the country, as people come to terms with their varied benefits.
These projects take care of all the major requirements of consumers, adding tremendous value--economically and socially. Not only do they represent the highest level of urbanization, they are blurring industry lines with commercial and residential developers discovering novel opportunities that mixed-use properties offer.
“Besides convenience and functionality, these projects have enhanced security features as there is vibrancy and dynamism around the complex with maximum visibility and openness. The model is proving successful in both metro and Tier I cities. In fact, in the context of changing retail subtleties, the response for such projects in Tier II cities has also been visibly encouraging,“ Singhal of the M3M Group says.