Smart cities and real estate opportunity

Anupam Saxena MRICS, Associate Professor, School of Real Estate, explores the components of smart cities and what smart cities mean for India.

28 June 2016

Expert Talk


During my first visit to London in 1989, I was waiting to cross a road at the designated zebra crossing. Having waited for over five minutes I realized that the traffic was not stopping and even the pedestrian light was not changing from red to green. I thought traffic lights were not working. Still in this thought, I saw a man approaching the crossing and pressed a button on a pole near the zebra crossing, to change lights to stop traffic. This experience made me realize two things, first right of pedestrian on the roads over the cars and a smart way of saving fuel! 

Over a decade later, while riding a taxi in Singapore I asked the driver to drive a little faster as I was getting late for a meeting. The driver told me that he can take me through a shorter route, only if I was willing to pay $3.50 extra over the metered fare. He explained that there are charges for using certain roads that help in saving time and fuel between two destinations. These charges are collected automatically through the overhead scanners deployed throughout the city. 

These were my early glimpses of the ‘Smart’ and how it helps in making life simpler and better. At that time I didn’t realize that very soon the whole world will be talking about a ‘Smart City’. 

Over the years, cities have overgrown and are consuming resources tremendously, be it water, sewage, power or building materials, etc. This rapid urbanization has led to fast consumption of so many natural resources that are scarce, resulting in fresh water depletion and global warming. 

So, when a city like Mumbai comes to a complete halt after just a few hours of rain, or when people in Delhi have to fight it out to ride the public transport or those in Lucknow have to sweat it out in summers due to long power cuts, one can no longer remain indifferent to the situation and will have to ask “How long before we can finally stop worrying about the basic amenities?” 

The talk about ‘Smart’ has become all the more relevant globally over the past few years. Consciousness about sustainability and green buildings has been increasing due to global warming and the increasing general awareness about the ever-depleting natural resources on our mother Earth.

So what really is a ‘Smart City’?

As defined by Wikipedia: A smart city is an urban vision to integrate multiple information and communication technology (ICT) solutions in a secure fashion to manage city’s assets. The city’s assets include, but not limited to, local departments information systems, schools, libraries, transportation systems, hospitals, power plants, water supply networks, waste management, law enforcement, and other community services. The goal of building a smart city is to improve quality of life by using technology to improve the efficiency of services and meet its residents’ needs. The focus here is on integration of technologies and sensors based solutions that can smartly optimize usage, do a need assessment and data analysis for providing automated ‘smart’ solutions that are able to substantially improve the quality and sustainability for the various stakeholders of a city. 

As defined by the Smart Cities Mission, Govt. of India: Smart City is a city that provides core infrastructure and gives a decent quality of life to its citizens, a clean and sustainable environment and application of ‘Smart’ Solutions. (The focus here is on sustainable and inclusive development and the idea is to look at compact areas, create a replicable model which will act like a light house to other aspiring cities). 

Although, both the above definitions maybe be different in their essence and meaning, the ultimate outcome is possibly the same – a much improved quality of life due to a better managed infrastructure and efficiencies in provisioning of the basic necessities. 

Accordingly, the definition of a ‘Smart City’ would also vary from country to country and even city to city, since the ‘Smart’ tag to a city can be given on the basis of the extent it is able to meet the basic infrastructure requirements of its residents and the extent of control city planners and authorities have over the assessment and planning in order to ensure that the city remains manageable and configurable in line with its growth. 

Possibly, if we go back to the beginning where I mentioned about my experience from London and Singapore, we can see that they had already achieved some level of smartness at a time when we had not initiated a thought process in this direction, which means that there would be always scope of levels of smartness. ‘Smart’ will always keep evolving to ‘Smarter’ and there cannot be a finishing line which would certify one city as a “Smart City’ and the other one as an aspirant to become a ‘Smart City’.

Now coming back to Indian scenario, I was scouting for a suitable location to start a project and in search for a suitable and a profitable location, I landed up in Jhansi – a city famous for ‘Rani Laxmibai’. This has a population of more than a million people, yet the city does not have a sewage treatment plant and is dependent on an open sewage system. Now, for someone living in Jhansi, smartness would possibly mean setting up a closed sewage line and sewage treatment plant and ensuring that with relevant STP treatments water is being recycled and composts are being prepared driving sustainability into the system; whereas for some Facility Manager managing a commercial building in nice (one of the Top 5 Smart Cities in the World, located in France), where sewage treatment is already a way of life, smartness would mean achieving complete optimization of power consumption by ensuring that the saving happening due to sensor-based lighting and air-conditioning can be utilized for running the STP and further the sensors in the STP can analyze the gas emissions and neutralize them before they can affect the sensitive technology devices within the premises.

So, going by the basic definition of a Smart City, as given by the Government of India, if we look at the city of Chandigarh, it would be one of the first Smart Cities in India, because it was planned and designed to provide all basic infrastructure including water, power and sewage – all with sustainability. Further, it was designed for a smooth traffic movement, provisioning of good air quality and Chandigarh was supposed to meet the basic Smart City requirements:
a.    Buildings
b.    Utilities
c.    Transportation and road infrastructure

However, over the years the city of Chandigarh has instead of becoming ‘Smart’ and more sustainable, it has degraded and is now far from meeting those basic requirements that it was planned for. 

In Indian scenario, the first step towards becoming ‘Smart’ would be to ensure basic infrastructure requirements in sustainable model. Once this has been achieved, then the city infrastructure would have the scope for integration of information technology in infrastructure provisioning and management so that the infrastructure becomes more manageable, optimized and sustainable in terms of its usage, provisioning and scaling. 

In Indian context, the core infrastructure elements in a smart city would include:

  1. adequate water supply, assured electricity supply
  2. sanitation, including solid waste management
  3. efficient urban mobility and public transport
  4. affordable housing, especially for the poor
  5. robust IT connectivity and digitalization
  6. good governance, especially eGovernance and citizen participation
  7. sustainable environment
  8. safety and security of citizens, particularly women, children and the elderly
  9. health and education

Whereas, though in India the journey towards ‘Smart’ is just beginning, many cities in the world have done quite a lot and quite successfully. The top five Smart Cities in the world are Barcelona in Spain, London in UK, New York in USA, Singapore and Nice in France.

So what makes them the smart? According to Juniper research, a leading consulting firm, each one of them has variations in smartness on various fronts. So, while Barcelona boasts of smart grids, Singapore boasts of smart traffic. A smart grid is an electrical grid which includes a variety of operational and control measures including smart meters, smart appliances, renewable energy resources, etc. Electronic power conditioning, control of the production and software controlled distribution are important aspects of the smart grid. 

In India, the term ‘Smart City’ is in vogue after NDA government took over. This special focus is because urban population is expected to jump to 50 % by 2030. This calls for a robust core infrastructure, that is why the Government has allocated an outlay of Rs 98,000 crore and launched three Mega Urban Schemes in India, namely 100 Smart Cities India, “Atal Mission for Urban Rejuvenation and Transformation” (AMRUT) and “Housing For All 2022”. 

The smart cities envisioned to come up over the next few years would be looking at meeting the requirements of its citizens in a manner that would facilitate overall improvement in quality of life by provisioning of affordable housing, efficient transportation, safety and security, health and education and robust IT connectivity and management of the basic core infrastructure, which includes assured power and water, sanitation and sewage and solid waste management systems to ensure sustainable environment and good governance along with citizen participation.

What cities will become ‘Smart’?
  • Each state has shortlist a certain number of smart city aspirants as per the norms, and has prepared smart city proposals for further evaluation for Central support. States will have the flexibility of designing schemes based on the needs of identified smart cities, and in their execution and monitoring.
  • Smart city aspirants will be selected through a 'City Challenge Competition' intended to link financing with the ability of the cities to achieve the Mission objectives.

Why this urgency to Build Smart Cities in India?
With all this hullaballoo over Smart City movement in India, thousands of crores rupees is expected to be spent into making of these Smart Cities. So why really are we asking for them? 

Studies show that: 
  • •    About 25-30 persons from rural areas will migrate every minute to major Indian cities in search of a better livelihood and lifestyle; 

  • •    It is estimated that by 2050, the number of people living in Indian cities will touch 843 million. 

  • A massive program like this is bound to have challenges of its own. Increasing population, escalated costs, long travel distances, shortage of urban land, multiple implementing agencies, untrained manpower, stressed lifestyle would naturally as a result of all the above, the increase in crime rates would lead to many physical and psychological problems.


The list of first 33 Smart Cities in India is:

Bhubaneshwar

Pune

Jaipur

Solapur

Surat

Kochi

Ahmedabad

Jabalpur

Udaipur

Vishakhapatnam

Belgaum

Agartala

New Delhi

New Town

Bhopal

Davanagere

Indore

Ranchi

Guwahati

Imphal

Port Blair

Kakinada

Lucknow

Raipur

Coimbatore

Faridabad

Panaji

Chandigarh

Chennai

Warangal

Dharamshala

Bhagalpur

Ludhiana

 

What does this mean for real estate sector?
It is quite obvious that all this movement towards cities, and the making of smart cities would definitely mean a major opportunity for the real estate industry– be it residential, retail or commercial development; or recreational, healthcare, logistics and educational infrastructure. The times ahead is definitely promising and would bring excitement in real estate industry. 

At current migration level approx. 700 to 900 million sq.mt. of real estate is expected to be added by 2030 which means we need to build a new Chicago every year.

The Smart City timeline




While, this may sound as a great opportunity for our developers, the smart cities area are actually going to throw a major challenge to these developers in terms of how Smart they themselves can get while delivering these millions of square feet of space. Actually, with cities becoming smart, the expectations of the people will also increase and the developers will also have to deliver real estate solutions that are more environment friendly, user friendly, cost-effective and time bound. 

So, while the brick and mortar structure may remain same, the expectation of the buyer will increase in terms of how economical will the Total Cost Ownership (TCO) be and what all intelligence has been integrated buildings by the developer in order to minimize TCO. With TCO in place, the ‘smart’ buyer would look at all the smartness that has gone into the real estate solution being offered, which could be in terms of sensor based lighting and air-conditioning, sensor based water consumption, recycling of wastes, emerging management, use of data analytics, etc. Smart buyers would expect smartness not only the building operations related services, but also in terms of ease of living, integration of devices in residences, automation of payments etc. 

Get ready for a smart future!

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