Bangalore: After scrapping the few bids it received for building hotel and shopping spaces along its railway line in the city, Bangalore Metro Rail Corp Ltd (BMRCL) has decided to develop some of the land itself.
The company will build an office complex, including space for itself, on 2 acres it owns along Bangalore’s SV Road, where it has a station.
Designs for the proposed office complex are under way, said an official with BMRCL, who did not want to be identified. A spokesperson for BMRCL confirmed the development.
Revenues from such developments are crucial for metro companies because of their inability to charge fares high enough to cover costs. But BMRCL’s attempt to bid out 10.52 acres along Byappanahalli station for development drew only two bidders and the land along the SV Road station just one.
The spokesperson was unable to say what BMRCL now plans for the land along the Byappanahalli station, where the metro line currently terminates.
BMRCL hoped for the land development to bring in significant revenue to add to the money it collects from ticket sales and shopping spaces within the metro stations and from advertising. Its original tender documents had asked for companies to share project revenues.
No revenue estimates were available
A BMRCL official had said in October that the tepid response to the tenders was not necessarily a function of the prevailing economic situation and more because of the conditions BMRCL had imposed on bidders.
“If it’s (the space) marketed properly, it would do well,” said Farook Mahmood, CMD of Silverline Realty Pvt Ltd, a property consultancy, but added BMRCL should leave the development to a consultant or a real estate firm. “I think they should stick to what they do best. Their job is to commute people from point A to point B.”
Maximising non-traffic revenue is crucial to profits of metro rail systems anywhere, especially in India where it is not possible to align fares with the cost of services, said Akhileshwar Sahay, a management consultant and strategic adviser to Delhi Metro Rail Corp Ltd.
All metro rail systems should have at least a third of their revenues coming from property development and advertising, he said.
Sahay, though not aware of BMRCL’s plan, said its decision to develop the land by itself was “not a bad idea at all”. “Delhi also, when metro project was first started, initially bidders were not coming. So the first project for an information technology park Delhi, (DMRCL) did with their own money,” he said.
The lukewarm response to BMRCL’s tenders came even as the Karnataka government, in a bid to profit from the development the metro was bringing along its route, last year allowed for higher permissible building limits for properties within 500m of the railway line.
Nearly two-thirds of the money that accrues from this additional provision will go to BMRCL and the rest will be apportioned among various stakeholders such as the city corporation and power and water utilities.
The Bangalore metro, called Namma Metro (Our Metro), currently operates the train on six stations along a 6.7km stretch. The first phase of the project, scheduled for completion in 2014, has two lines that together traverse some 42.3km and 41 stations, including one where the two lines intersect.