How can real estate associated with railway station(s) be better utilized?

Indian Railways is among the world's largest rail network serving approx. 23 million travellers each day. A major part of the existing rail network has been in existence since the pre-independence era and deserves to be reimagined to keep up with the demands of New India. In this context, Indian Railways has embarked on a much-needed and exciting endeavour to redevelop significant railway stations in India's major cities to provide enhanced travel experiences to its passengers to modernize and future-proof these important travel nodes. 

Interestingly, the focus is not only to develop the rail side facilities and amenities, which are of course extremely essential but also to develop the cityside amenities to commercially utilize excessive land holdings available in some of these stations. The costs of redeveloping terminals and rail-side amenities can be cross-subsidized to a large extent by exploiting the real estate potential in these locations. Additionally, there has been a clear intent to motivate increased participation of the private sector in the redevelopment of these railway stations.

Keeping the above in perspective, the Indian Railways has introduced some new initiatives to form a meaningful collaboration with private sector players. Earnest steps in this direction can potentially change the image and outlook of railway stations for the citizens of the country. 

Some of the initiatives include: 

• Single window clearance mechanism for building plans
• Significant relaxation in environment clearance
• Extension of concession period of up to 60 years from 45 years previously 

While these initiatives are bound to excite and increase participation from the private sector, factors such as realistic valuation of real estate, fair contractual terms and conditions, optimal financing options and greater autonomy during the development phase of the projects, etc., are likely to ensure the success of this partnership model. 

On one hand, Urban local bodies now have the opportunity not only to modernize the area around the station but also plan for better public and civic amenities. They could transform the station into a multi-modal transit hub by providing local bus and metro rail networks interlinking them to the station & also possibly the airports in their cities. On the other, private entities, will need to identify the optimal product mix that can be developed keeping into consideration the size, scale, and location of the land parcels. Out of the daily 23 million train travel users, 14 million who ride in trains are middle or lower-class members. Hence, it is imperative that the components that are planned must have strong inter-component synergies and are complementary to the needs of the passengers and the railway station. 

The way ahead

With India shifting focus to smarter connectivity post-pandemic, the development of railway stations and the larger surrounding areas will be a significant step. The areas near railway stations will soon become prime locations as connectivity and accessibility become increasingly significant for investors and occupiers in suburban areas. This is expected to revitalize the nodes that once used to be the most significant landmarks in most cities. 

CBRE Govt Practice has successfully executed projects related to the modernization and re-development of railway stations across the country. In addition, CBRE’s Government Practice vertical provides services in economic planning for greenfield cities, privatization of airports, disinvestment of hotels and large landholdings, advisory on dedicated freight corridors, data centers, multi-modal transit hubs SEZs, industrial and IT offices.