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Compact cities - A solution to bulging cities
Compact cities - A solution to bulging cities
Compact cities - A solution to bulging cities
Compact cities - A solution to bulging cities
Compact cities - A solution to bulging cities
Compact cities - A solution to bulging cities
Compact cities - A solution to bulging cities
Compact cities - A solution to bulging cities
Compact cities - A solution to bulging cities
Compact cities - A solution to bulging cities
Compact cities - A solution to bulging cities
Compact cities - A solution to bulging cities
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Compact cities - A solution to bulging cities

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The report highlights the concept of Compact Cities and its applicability in Indian cities. It exemplifies recommendations that big Indian cities should strengthen the transportation infrastructure …

The report highlights the concept of Compact Cities and its applicability in Indian cities. It exemplifies recommendations that big Indian cities should strengthen the transportation infrastructure and small cities should focus on compact planning before they become unmanageable. This is required for sustainable growth of Indian urban cities.

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  1. REAL ESTATE AND CONSTRUCTION Compact cities A solution to bulging cities
  2. 1 Shortage of urban infrastructure has reached a critical point Water Only 70.6 percent of urban population is covered by individual connections, with duration of water supply ranging from 1 to 6 hours. Sanitation About 13 percent of urban households do not have access to adequate sanitation facility. About 37 percent of urban households are connected to open draining while 18 percent are not connected at all. Public transport It accounts for only 27 percent of urban transport. In 2009, only 20 out of 85 Indian cities with a population of 0.5 million had bus service. Housing There is a shortage of 18.78 million households in urban areas, most of which is from Economically Weaker Section (EWS) and Lower Income Group (LIG) sections of the society. Source: Report on Indian Urban Infrastructure and Services, HPEC, MoUD, March 2011 The future lies in sustainable urbanization The world is urbanizing rapidly, especially in developing nations such as India. Indian cities are among the fastest growing cities globally. In the past decade, urban population has increased by 32 percent or 91 million people (9.1 million each year)1 supported by threefold growth from industrialization, urbanization and motorization, which has historically been the cause of economic prosperity across the globe. Like other countries, Indian cities were also not prepared to deal with such growth. They prospered yet faced the problem of congestion. In past, policy makers have stressed more on rural development and urban development has always taken a backseat. This is evident from the fact that India’s annual per capita expenditure on urban infrastructure is meager USD 17, much less than China’s USD 116 and United Kingdom’s USD 391.2 In addition to low spending, the execution of the infrastructure projects is also a challenge. As per KPMG in India – PMI survey on cost and schedule overrun 2012, about 46 percent of large central sector infrastructure projects (more than INR150 crore) were delayed resulting in cost overrun of about 18 percent. India has been meeting the urbanization challenge by increasing urban spaces and converting and classifying rural areas as urban. Small districts, villages and municipalities merged with cities, increasing their size. Large cities such as Delhi, Bengaluru, Hyderabad and Mumbai have expanded about three to four times over the past few decades. Increasing the urban spaces created new issues in large cities, such as lack of physical and social infrastructure, high transportation demand, high pollution levels, development of slums and squatters, reduction in agricultural land, destruction of bio-diversity and ecosystem and loss of community life. The urban infrastructure such as housing, roads, sewerage, water, transportation and power has not been able to keep up with the growth in the population. The shortage of urban infrastructure has now reached a critical level and it requires urgent attention from policy makers. 1 “Provisional population total Paper 1 of 2011 India Series 1,” Census 2011 2 “Sustainable cities for India – Can the goal be achieved?,” futurecities website, http://www.futurecities.org/images/media/pdf/Sustainable%20Cities%20-%20Karuna%20Gopal.pdf, accessed 19 August 2013 © 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  3. 2 It is expected that pace of urbanization will accelerate further from now on and Indian cities will have to accommodate at least 10 million more people annually for the next 30 years which would require about 700 million square feet of built up space every year.3 This roughly means that India will have to add a new city bigger than New York every year to accommodate the ‘new’ urban population. With strong urbanization wave waiting to flood Indian cities, an efficient planning of cities is essential. Urban development should be the top most priority for policy makers and higher resources should be allocated to maximize the benefit. Development of cities is important from an economic point of view as well. About 31 percent of India’s population contributes about 60 percent to the country’s GDP and 85 percent to its tax revenues.4 With limited availability of time and finances, policy makers should look at Compact City model being increasingly followed globally to achieve sustainable urbanization in the future. 3 KPMG in India, Compact cities, A Solution to bulging cities, 2013 4 Twelfth Five Year Plan (2012-2017), Planning Commission © 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  4. 3 Compact cities — a potential answer to meet the urbanization challenge The concept of compact cities falls under urban planning and design and promotes high residential density with mixed land uses. The public transport system and urban layout of compact cities is efficiently planned to encourage walking and cycling and reduce energy consumption and pollution. A large resident population increases social interaction and provides safety in numbers. This model of urban settlement is also more sustainable than the urban sprawl model because its low dependence on personal vehicles leads to requiring less per capita infrastructure provision. The concept of high-density land planning faces strong opposition from some quarters of society. However, years of research indicates that urban density and transport energy usage are inversely proportional. Experiences from several cities also prove that high-density land use planning impacts travel time, transit share and quality of life in urban areas. Global experiences have demonstrated that doubling the density can reduce the need for driving in a city by up to 30 percent. Singapore is a prime example of high-density urban development that has a robust transit system. The city of Curitiba in Brazil is another example of effective integration of land use and public transportation systems. Some other examples include Hong Kong, Freibourg (Germany) and Portland (US) 5 . In India, the impact of high density planning on transportation can be witnessed in New Delhi and Mumbai. The populations of both these cities are comparable (about 20 million), but New Delhi has about three times more vehicles than Mumbai despite the latter boasting of better per capita income. This is due to a strong public transport system and high residential density in Mumbai6 . Characteristics of compact cities and urban sprawl Compact city Urban sprawl Benefits of compact city High residential and employment densities Low residential density Efficient usage of scarce land Mixture of land use Spatial segregation of different type of land uses through zoning Reduces travel time between office and home Contained urban development Unlimited outward extension of new development Low wastage of precious sub-urban agricultural land Strong urban infrastructure Insufficient infrastructure Saving in per-capita infrastructure spending Multimodal transportation Transportation dominated by privately owned motor vehicle Lower per capita pollution Unitary control of planning of land development Fragmentation of governance authority of land uses among many local governments Enables faster execution of planned development Sufficient government fiscal capacity to finance urban facilities and infrastructure Great variance in the fiscal capacity of local governments Reduced collusion among local authorities Source: KPMG in India, Compact cities, A Solution to bulging cities, 2013 5 KPMG in India, Compact cities, A Solution to bulging cities, 2013 6 Report on Indian Urban Infrastructure and Services, HPEC, MoUD, March 2011 © 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  5. 44 Global experiences Many countries such as the United Kingdom, South Africa and China have been able to develop cities in less than a decade. National policies and corporate strategies that encourage urbanization have made a difference in these countries. The compact cities model has been most successful in Europe. This is primarily due to high value accorded to agricultural land near cities and restricting its usage. By making agricultural landowners the stakeholders, the compact city policy guards their resources. This facilitates policymakers to design high density areas with mixed-land use in cities. London and Amsterdam are among the major compact cities in Europe. Of late, the United States has been advocating smart growth policies, as it has observed that urbanization deters sustainable urban development. The concept of compact urban form — integral to smart growth — is gaining traction in the US. China, Brazil and South Africa are some countries that have used the compact city model to overhaul/restructure their cities. Among the most successful Asian compact cities are Singapore and Hong Kong. These cities have very high population density, which is supported by strong infrastructure and public transport system. © 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  6. 5 Compact cities in the Indian context The Delhi Development Authority (DDA) worked toward making Delhi a compact city some years ago. However, inadequate implementation of policies and proposals resulted in the creation of an inverted compact city (lower density in central areas and high density in suburbs). The trend of urbanization in India has some unique characteristics, which have not allowed Indian cities to develop like some of the best global compact cities. India, in comparison to many of its peers, has comparatively lower level of urbanization and higher rates of urban growth but the scale of urbanization is huge, which could result in unpredictable urban dynamics. Moreover, Indian cities, especially metropolitans, have high density, lower income levels, high income inequalities, low investment in urban infrastructure and services due to budget constraints. Informal development in Indian cities is high, which hampers the success of compact city policies. The compact urban form stresses on high urban densities and mix-use land, which are already integral features of developing cities in the country. The emergence of large urban areas and metropolitans, resulting in a mismatch of infrastructure, best exemplify the trend of urbanization in India. This has led to slums in cities, traffic chaos, dearth of land, a rise in pollution levels and the degradation of natural environment in cities. Despite such constrains, the compact city model can be tweaked for India to suit local requirements. As metropolitan and tier-1 cities have already expanded and become decentralized using the urban sprawl method, the compact cities model should be applied in these regions at the roots. Recently, New Delhi has trifurcated municipality, almost creating three mini- cities within the capital. It must now adopt the decentralized concentrated model i.e. developing mini-compact cities in each sub-region. This can be achieved by allowing higher FSI/FAR in these regions along with mixed-land use. Local authorities should partner with the government to strengthen public transportation and social infrastructure in these sub-cities. The decentralized concentrated model can be a potential alternative to large tier-1 and metropolitan cities. A fresh implementation of the compact city policies would likely be the most effective in tier-2 and other cities. Though these cities have high density concentrated in core areas, the rate of urbanization is below satisfactory. To begin with, policymakers should increase FSI/FAR in cities to increase population density and spread it evenly. The government should allocate more funds toward public transportation than toward the creation of physical infrastructure and it should ensure that the public transportation system is operating smoothly. © 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  7. 6 Conclusion It is safe to say that the future of India lies in its cities. The government seems to have realized it and it is now allocating more funds and services than before toward urban development7 . However, Indian cities require more funds and resources to bring them at par with global standards. Analyzing experiences from across the globe and the country, Indian cities should strive to become more sustainable by promoting the compact city culture. The first step toward achieving this is by encouraging higher FSI/FAR in the city along with mixed-land use. The public private partnership (PPP) model should be promoted in the urban transportation section, as it is an important characteristic of compact cities. Large metropolitan and tier-1 cities, which have expanded in the past few decades, should follow the decentralized concentrated urban model and allocate higher budgets for public transportation systems. Smaller cities should implement compact cities from scratch and restrict urban sprawl to curb environment and ecological degradation. Strong political will and support from citizens is also integral to the success of compact cities. Since no two cities are alike, it is important to carefully consider policies regarding transport and other urban infrastructure. Finally, the government should plan realistically and it should also have a vision. It should aim to raise enough investment and create a regulatory environment that is beneficial for travel, housing and industry markets. 7 Twelfth Five Year Plan (2012-2017), Planning Commission © 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  8. 7 About NAREDCO Formed in 1998 under the aegis of Ministry of Housing and Urban Poverty Alleviation, Govt. of India, National Real Estate Development Council (NAREDCO) is the apex national organization representing all stakeholders of real estate. The Union Minister of Housing and Urban Poverty Alleviation is its Chief Patron and 6 members on the Governing Council are nominated by the Ministry. NAREDCO works towards creating an environment conducive to growth of real estate industry and urban habitats in partnership with Industry and Govt. through advisory and consultative processes. NAREDCO was formed with the mandate to induce transparency and ethics in real estate business and transform the real estate industry into a mature, professional, modern and globally competitive industry. In this connection it strives to be the leading advocate to develop standards for effective and ethical business practices, viewed crucial for healthy growth of organized real estate industry in the country. About KPMG in India KPMG in India, a professional services firm, is the Indian member firm of KPMG International and was established in September 1993. Our professionals leverage the global network of firms, providing detailed knowledge of local laws, regulations, markets and competition. KPMG in India provide services to over 4,500 international and national clients, in India. KPMG has offices across India in Delhi, Chandigarh, Ahmedabad, Mumbai, Pune, Chennai, Bangalore, Kochi, Hyderabad and Kolkata. The Indian firm has access to more than 7,000 Indian and expatriate professionals, many of whom are internationally trained. We strive to provide rapid, performance-based, industry- focused and technology-enabled services, which reflect a shared knowledge of global and local industries and our experience of the Indian business environment. KPMG is a global network of professional firms providing Audit, Tax and Advisory services. We operate in 156 countries and have 152,000 people working in member firms around the world. Our Audit practice endeavors to provide robust and risk based audit services that address our firms’ clients’ strategic priorities and business processes. KPMG’s Tax services are designed to reflect the unique needs and objectives of each client, whether we are dealing with the tax aspects of a cross-border acquisition or developing and helping to implement a global transfer pricing strategy. In practical terms that means, KPMG firms’ work with their clients to assist them in achieving effective tax compliance and managing tax risks, while helping to control costs. KPMG Advisory professionals provide advice and assistance to enable companies, intermediaries and public sector bodies to mitigate risk, improve performance, and create value. KPMG firms provide a wide range of Risk Consulting, Management Consulting and Transactions & Restructuring services that can help clients respond to immediate needs as well as put in place the strategies for the longer term. © 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  9. 8 © 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  10. 9 Other Real Estate and Construction publications www.kpmg.com/in Study on project schedule and cost overruns Concerned with huge delays and cost overruns in several infrastructure projects, Ministry of Statistics and Programme Implementation (MoSPI) requested KPMG in India and Project Management Institute (PMI) to conduct a study to analyze the reasons for schedule and cost overruns across various infrastructure projects running across the country. To facilitate this study, a portfolio of 25 projects, monitored by MoSPI, of varying sizes and across all major infrastructure sectors was carefully created. KPMG in India undertook the study, collected the data through site visits, conducted few case studies and presented its findings in the report. The analyses and findings presented in the report have been gathered and validated through discussions with various stakeholders engaged in the execution of these projects. Bridging the Urban Housing Shortage in India The report discusses at length on the rising trend of urbanization in India and the looming urban housing shortage. It further deliberates on the constraints faced by real estate developers in their bid to bridge the gap through affordable housing. The study also discusses, practical solutions which could help the country in mending the gap. Importance of urban and social infrastructure in economic growth of Bengal The report highlights the roadmap for the sector in Bengal and the vision and challenges of the Urban Infrastructure Development. It exemplifies recommendations such as the development of EWS/ LIG housing, the introduction of slum-rehabilitation schemes, the formulation of favorable land policies, the strengthening of IT infrastructure and the formulation of township policies, which can play a pivotal role in inclusive growth. © 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
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  12. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. © 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International. Printed in India. Latest insights and updates are now available through our KPMG India App. Download the app on your smart device from Google Play | App Store Contacts Pradeep Udhas Partner and Head Markets T: +91 22 3090 2040 E: pudhas@kpmg.com Arvind Mahajan Partner and Head Infrastructure and Government Services T: +91 22 3090 1740 E: arvindmahajan@kpmg.com Neeraj Bansal Partner and Head Real Estate and Construction T: +91 124 307 4000 E: nbansal@kpmg.com kpmg.com/in

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