Is Lack Of Accessible Land Slowing India's Growth?

This article quotes Jan Brueckner's study on Bangalore to say that low FAR in Indian cities (1.6 compared to 5 to 15 in major Asian cities) are pushing the growth out. The commentary calls for corrections in the distorted land market, citing a 5-year old McKinsey Report. Although much has changed in India over the last five years, most urban land market problems are still acute, as evident from the recent haggling on Mumbai abandoned mills properties.

"A growing shortage of good-quality urban real estate in India is beginning to act as a dampener on many businesses that might otherwise have strong prospects.

Take organized retailing, which is set to triple in size to $23 billion by 2010, according to KPMG International.

Wal-Mart Stores, which is eagerly waiting for India to allow global retailers to set up shop, will need anywhere from 100,000 square feet, or 9,290 square meters, to 200,000 square feet for each of its bigger stores. So would Carrefour.

Where will they find that kind of space in Mumbai, New Delhi or Bangalore? Not in the main shopping areas.

'Supply of vacant space of the desired size in prime locations is extremely limited,' economist Amitendu Palit said in a recent study on the challenges that global retailers can expect in India. 'While New Delhi and Mumbai are expected to acquire additional retail space of around 30 to 40 million square feet over the next few years through new retail formats, the bulk of this is to be located in satellite or suburban areas.'

The Indian property market is extremely fragmented, thanks to zoning laws that specify land use based on pre- World War II British notions of what cities should look like."