New Delhi Indian Railways may be on its way to becoming the country’s largest operator in real estate, with plans to develop around 43,000 hectares of surplus land, some of it in the best parts of cities. As the lead body responsible for this, the Rail Land Development Authority (RLDA) is betting big on the interest coming back to the real estate sector to commercially develop railway land parcels, and in the process, renew its lease contracts. more than three times 10,000 crore in FY24.
The agency will monetise the assets created for the first time and kick off mega railway station development projects in Delhi, Mumbai and Ahmedabad. In an interview, RLDA Vice Chairman Ved Prakash Dudeja talks about the major infrastructure projects being undertaken by RLDA and how the agency is becoming a major monetization vehicle for the Railways. edited excerpts,
Covid has severely affected railway operations, affecting both its services and revenue. How has RLDA done in these difficult times?
As in all other sectors, Covid had a profound impact on our operations. In fact, pre-Covid year 2019-20 was the best year ever for RLDA as it could award land lease contracts 1,553 crores. But then Covid disrupted operations as prize giving went down to rock-bottom levels 133 crore in FY21. Things have started picking up from FY22 onwards when we could deliver lease contracts of value 655 crores, with 533 crore upfront lease premium and 122 crore as development of railway assets during 2021-22. This year, things have progressed really well as we have already awarded lease contracts worth 2,200 crore and may end the financial year with total lease awards 3,000 crores. Next year, we aim to award lease contracts 10,000 crores.
How has the reform of leasing contracts affected the revenue of RLDA?
Total revenue we earned 425 crores so far this year. In the last year (2021-22) we generated revenue 380 crore whereas during the covid period of 2020-21, our revenue fell 352 crores. In pre-covid 1999-2000, we had revenue 933 crores but included 800 crores from the Dharavi Development Project. Next year, revenue should easily exceed 1,500 crore mark.
What type of development will be leased to investors? Will it develop surplus railway land real estate development for commercial use by private developers?
We are into commercial development of surplus railway land. So, we have different categories of development like there are some greenfield projects where we don’t need to do redevelopment. Then, there are railway colonies where we need to redevelop our property. We are currently given 121 commercial sites for development by the Railways, and so far we have awarded 35 of them for various types of commercial development including construction of residential, office space, commercial projects etc. Also, we are taking out additional FAR. (Floor Area Ratio) on redevelopment projects of colonies for commercial development, thereby also monetizing existing railway assets. This helps the Railways to complete the redevelopment of colonies without incurring actual expenditure on the project.
Railways has gone slow on the government’s monetization agenda, where it is proposed to sell, lease or operate assets built on a public-private partnership basis. RLDA to take forward the monetization agenda of Railways?
Our mandate is to develop the land commercially so that it earns value for the Railways, and at the same time, it contributes to the economic development of the region and the country. It is a monetization exercise that has been mandated to generate revenue by leasing out railway land. Next year, we intend to earn 10,000 crores from the demonetisation exercise which basically involves leasing out surplus railway land and leasing out built up assets.
What type of properties are proposed to be leased out as part of the demonetisation exercise?
We are building some properties on our own which will be leased out for the first time. We are developing a plot of land for commercial use in Gomti Nagar, Lucknow. This will be the first exercise where we will be leasing out the built up properties. Currently, we are not building residential projects for leasing, but only focusing on commercial development.
Is station redevelopment also on the RLDA’s radar as the Railways seeks to majorly revamp major and minor stations across the country?
RLDA is contributing to some of the most prestigious and mega station development projects in Delhi, Mumbai and Ahmedabad. We are doing techno-economic studies for redevelopment projects of 403 stations. We have also won the tender for about 40 stations. The government has also announced 1,275 stations for development under the AMRUT Bharat scheme in this year’s budget.
Our aim is to develop land around these stations once they are upgraded. This can be through the leasing of developed properties or the development of leased land. Out of these, we have already done master planning for land development of about 50 stations.
We are also working out the mechanism for development of 15 of these stations under PPP model, as the earlier exercise of redevelopment of stations under this model did not elicit interest from the private sector.
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