NEW DELHI - It is a US$1 billion project
that will put India on the top of the world,
literally. Plans are afoot for the world's tallest
building, with 135 stories, at Noida, a satellite
township on the outskirts of the capital, New
Delhi. The skyscraper is a seen as a fitting
epitome of a rapidly growing and resurgent India -
hub of outsourcing for multinational firms, a
service-led economy that's pulling up
manufacturing as well and an information
technology (IT) powerhouse, all of which have
translated into a hyperactive real estate sector,
with the mega skyscraper to show for it.
The Indian skyscraper, to be built as part
of the ambitious Noida City Center in the northern
state of Uttar Pradesh, will be built on a
140-hectare plot and will be higher than the 508
meter-high Taipei 101 in the Taiwanese capital,
currently the tallest building in the world. The
Noida building is slated to be 710 meters (2,330
feet) tall - 202 meters
higher than Taipei 101. It will be designed to
resemble the peaks of the Himalayas and is
scheduled to be open for business by 2013. The
building will contain a 50-floor five-star hotel,
a 40-story glass atrium and 370,000 sq meters of
shopping space.
"New York in the '30s,
Malaysia in the '90s and China today - all have
used tall buildings to showcase their countries'
achievements to the world," said Hafeez
Contractor, a famous Indian architect who has
designed buildings around the world. "We want this
building to show to the world what India can do."
Chairman and chief executive officer of the Noida
Authority, Deo Dutt Sharma, said: "Aspects like
cost and related activities are yet to be worked
out." The authority has set up a six-member
committee to work on the project and visit Kuala
Lumpur, which boasts the world's
now-second-tallest building, Petronas Twin Towers.
The skyscraper, its planners hope, will be
the tallest new indicator of India's economic
prowess as the country jumps into the race with
the likes of Taiwan, Malaysia and China, where
seven of the world's 10 tallest buildings rest.
These countries have a penchant for tall buildings
and are known to compete with each other in
outdoing heights. India, too, is looking to join
this race to the top.
Noida, Gurgaon,
Bangalore, Hyderabad, Chennai and Kolkata lead the
business and process outsourcing (BPO) boom in the
country with several highrises in their midst.
Gurgaon, for instance, is sprinkled with numerous
office buildings, shopping malls and residential
highrises in various stages of completion to cater
to the ever-rising demand of the upwardly mobile
middle class. Multiple tracts of land in Noida and
Gurgaon, which were lying idle just a year ago,
have suddenly sprung to life, being converted into
residential or commercial property.
Realty boom Noida skyscrapers
and Gurgaon malls, of course, are just the tip of
the real estate boom in the country that has also
resulted in a more than 40% rise in realty prices
in the past year. The construction boom is at an
unprecedented scale in India to meet the soaring
needs of India's high-tech sector. It's a building
boom where 70-80% of the demand is being driven by
software services and business and process
outsourcing companies. According to a report by
international property consultancy firm Cushman
and Wakefield, in some of the micro-markets within
Bangalore, Kolkata, Chennai and Pune, cities where
IT jobs abound, property prices have gone up by
almost 50%, leading to a huge pressure to meet
pent-up demand.
A similar growth trend is
visible now in Tier II cities like Ludhiana,
Chandigarh, Jaipur, Hyderabad, and Kochi, where
several BPO companies have moved operations due to
lower costs. Bangalore has moved from an IT
back-office location to a full-fledged IT hub,
with cutting-edge research combined with low
value-added services. Business-led demand for
commercial office space has fueled demand for
residential and retail properties.
Properties with the potential of being
leased out to multinationals, large corporates,
banks or embassies are the most in demand. In
Mumbai and Delhi, lease rentals are as high as
10-13% of the value of a residential property and
13-14% for furnished apartments and offices.
Residential property prices have gone up by
30-100% in Delhi. Most predict that 2005 will also
witness growth in property markets but prices will
not rise as steeply as in 2004.
China
attracts about 3.2% of its gross domestic product
as foreign direct investment (FDI) in its real
estate sector, while India draws a measly 1.1%. In
order to catch up with China, the government has
recently begun giving automatic permission,
without requiring the usual FDI clearances, to
100% foreign-invested construction projects.
Earlier, overseas firms were allowed in only after
clearance from the highly bureaucratic Foreign
Investment Promotion Board (FIPB). Foreign
investors can now enter any construction
development area, be it to build resorts,
townships or commercial premises, but they will
have to construct at least 50,000 square meters
within a specific time-frame. Norms relating to
the stipulated land area to be developed by
foreign entities have also been eased, to 25 acres
from 100. Several companies have announced setting
up real estate funds with estimates indicating
that realty funds are expected to raise in excess
of $1 billion in the coming months, with expected
returns of over 15% annually.
According to
Chesterton Meghraj Property Consultants, much of
the investments will come in IT parks and
residential projects. "We see companies from West
Asia and Southeast Asia eyeing India's real estate
sector. Interest to the tune of $2 billion has
already been expressed after the recent
announcement. The country's leadership position in
back-office operations could trigger a requirement
of 70 million square feet capacity in the next 2-3
years,'' Chesterton Meghraj director Santhosh
Kumar said.
Priyanka Bhardwaj is
a New Delhi-based writer.
(Copyright
2005 Asia Times Online Ltd. All rights reserved.
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