Download the latest issue of Business Today Magazine just for Rs.49
Integrated townships a win-win for both developers and buyers

Integrated townships a win-win for both developers and buyers

Integrated self-sustaining townships include independent houses, apartments, offices, shopping malls, cinemas, schools, hospitals and all other facilities that are there in developed urban centres.

Photo: Rachit Goswami/ <em>Photo: Rachit Goswami/</em>
Everyone dreams of buying a reasonably-priced home in a good area. But it's easier said than done. There are not many affordable properties in major urban centres.

Though one can get houses at lower price points just outside the big cities, such areas lack quality infrastructure such as roads, schools and health-care centres. These locations are developed by private real estate companies in expectation that the local ecosystem will evolve with time. Homebuyers, too, hope so. But what happens if the area fails to develop as expected?

Buying a house in an integrated self-sustaining township can minimise these risks. Spanning hundreds of acres, these include independent houses, apartments, offices, shopping malls, cinemas, schools, hospitals and all other facilities that are there in developed urban centres. Some also have police and fire stations.


Integrated projects are built in the periphery of cities due to availability of large tracts of land. Many states are promoting the concept to ease the pressure on big cities. For example, West Bengal and Rajasthan are easing the minimum land requirement (generally 100 acres). Some states have relaxed development norms as well. Easing of external commercial borrowing norms for integrated townships is also expected to give such projects a boost.

Analysts expect more such townships to come up in metros and suburbs over the next few years. Major urban centres and state capitals are also likely to get many such projects.

"It's a concept whose time has come. In large cities, people are now open to residential solutions that allow them to circumvent infrastructure deficit and improve their lives," says Anuj Puri, chairman and country head, Jones Lang LaSalle (JLL) India, a property advisory firm.

"We are seeing higher demand for properties in integrated townships in peripheral locations where access to shopping, education, entertainment and health-care facilities is not necessarily centralised. In such locations, townships offer a clear advantage," says Puri of JLL.

Also, the presence of residential and commercial spaces leads to faster development as the two create demand for each other. As a result, valuations grow faster than in case of stand-alone properties.


Township developers are attracting buyers with concepts such as 'walkto-work', eco-friendly environment and large open spaces.

"Many townships have office, retail and residential spaces. They also feature generous landscaping and serene environment, all of which are effective enticements for buyers," says Puri.

Developers find townships attractive as their risks are reduced by inclusion of commercial and residential properties in the same project

Affordability is another factor that is drawing buyers to these townships. Being located in peripheries of metros, these properties are way cheaper than those in prime locations.

"A township project offers latest amenities at a relatively low price," says Kruti Jain, director, Kumar Urban Development, a Pune-based real estate developer.

Some townships have only affordable properties to cater to the huge shortage in this segment. For example, Mumbai-based Poddar Developers recently launched an affordable housing township in Atgaon, Maharashtra. The project, where apartments are priced at Rs 7.5-15 lakh, will be developed in phases over the next 8-10 years.


Townships offer lifestyle advantages, but have certain limitations as well, particularly if you have opted for a residential plot. Though builders market plots by saying that you will have full freedom to build your house the way you want to, this is not the case. Most townships require that the houses follow certain requirements and layouts.

"Townships are planned communities and so there are norms about size, configuration and architectural style that need to be followed. Plot owners are not allowed to deviate far from the norms since the purpose of an integrated township is providing a uniform, wellbalanced neighbourhood," says Puri of JLL.

But there are costs attached with these benefits. Properties in townships are 10-15% costlier than standalone properties at the same location. Residents might also have to pay a higher maintenance charge. The annual maintenance outgo can be steep if civic amenities such as sewerage and street lighting are taken care of by the township management.

The construction period is also long. Township projects, being capital-intensive, are developed in phases and completion can take years. Buyers are handed over properties in phases. Some projects might get delayed due to funding or regulatory issues.

Lack of a clear definition of township can also create confusion. It is not hard to find developers selling their project as townships even if they cover, say, just 25 acres. Such small projects cannot offer the range of facilities that a full township can.

Not all projects being marketed as townships offer a sustainable ecosystem. "If built correctly, townships provide a holistic living environment. I am not sure if this is the case, though," says Rohit Poddar, group managing director, Poddar Developers.


These developments are more profitable for builders as well. The demand for residential, commercial and retail components feed each other.

"The risks involved in developing township projects are much less and distributed. Developers can even restructure the project in the future depending upon demand. These are a win-win for both developers and buyers," says Jain of Kumar Urban Development.

Though townships have an edge due to government incentives, problems related to land acquisition and the long list of approvals that are required slow the pace of development. As the real estate sector is not recognised as an industry, securing funds is also often cited as a problem by developers.

"Generating funds (for townships) can prove to be a long and cumbersome process. This is especially true in India, where the real estate sector does not enjoy industry status," says Jain.