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How do India's historic buildings fit into modern cities?

India’s old cities are evolving on almost a daily basis as the modern needs of a rapidly growing population change the face of the urban landscape. Gone are the wide verandas and courtyards of the old buildings as increasing land prices due to large-scale urbanisation and the failure to unlock new land for cities gives...

June 11, 2015
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India’s old cities are evolving on almost a daily basis as the modern needs of a rapidly growing population change the face of the urban landscape.

Gone are the wide verandas and courtyards of the old buildings as increasing land prices due to large-scale urbanisation and the failure to unlock new land for cities gives rise to high rise, compact blocks of flats.

“Balconies are a luxury few can now afford,” says Ashutosh Limaye, National Head of Research and Real Estate Intelligence Sservice (REIS) at JLL India. “Since their inclusion in the floor space index (FSI), verandas have turned into guest rooms or sitting areas for growing families. Rooms with two sides open are no more, creating a dependence on air-conditioning. Changing by-laws have forced lower floor heights and have made the ground level into parking under stilts.

“Today’s norm is to build bigger, taller buildings instead of a cluster of smaller, shorter ones. This has led to numerous semi-private open spaces vanishing,” he adds.

Challenges posed by historical buildings 

For the landlords of residential heritage buildings it can be a struggle to meet the constant flow of bills for the upkeep of their ancestral homes.

“Once a residential building receives a heritage tag, repairs can be carried out only in a certain way,” says Limaye. “In many Indian cities, there used to be very big houses or ‘Wadas’. Economically weaker landlords are now unable to maintain such properties. Such families need financial assistance as they become victims to the decisions of the Archaeological Survey of India (ASI) and state-level bodies, which are often taken unilaterally, without involving the opinion of these stakeholders. However, no guidelines exist to help these landlords.”

And there are big differences between the cities. Mumbai and Kolkata both have areas with Victorian-era buildings. However, in Mumbai , restoration and maintenance have been possible due to availability of space, broader connecting roads and other social infrastructure in the vicinity of historic buildings.

“The same has not been the case in Kolkata as it has congested roads and limited scope for restoration,” says Anshuman Barve, Senior Manager of Regional Markets at JLL India. “A major factor in restoration is the opportunity cost, which again helps Mumbai as the high costs of real estate here encourage investment in older buildings. The same is not true for Kolkata or even Chennai. ”

Working in a piece of history

India’s distinctive colonial style buildings, located in the older parts of cities which now often fall into the Central Business Districts, are now more likely to be used as office space by companies or local authorities – Connaught Place in Delhi or The Writers’ Building in Kolkata being prime examples.

But old city planning does not fit well with modern needs. Barve says these buildings were not designed to support vehicular traffic and their premises lack space for car parking, which is a major deterrent to corporate occupiers.

“It is also difficult to upgrade infrastructure in most of these buildings, set up air conditioning, tackle parking, carry out building repairs or maintenance, etc. There are, however, many buildings that have been successfully refit and now offer the luxury of modern amenities in the lap of tradition. If maintained well, these structures are preferred by businesses and travellers: for example, the royal palaces in Rajasthan and southern India that got converted into hotels,” he adds.

Sudarshan Malpani, regional director, integrated portfolio services and transaction management at JLL India, points out how some financial institutions that wanted to move out of such structures could not do so, due to legalities.

“There is inaction on the part of the government. Leases that were to be renewed in the early-2000s have still been pending in Mumbai. Then there is high maintenance involved in operating out of heritage buildings and it is very challenging to make any changes from the environment-health-safety (EHS) perspective. However, the high costs are offset by the lower rentals in such buildings,” he says.

From a valuation expert’s perspective too, it is tough to assess the value of such buildings. According to Limaye, more often than not, it is difficult to find comparable buildings and the value of their transactions for benchmarking purposes.

“The valuation has to be done by comparing these buildings to non-heritage buildings, which brings the evaluator to the next decision – whether to discount the price as the building requires refurbishment or rather put a premium for its heritage tag as there are some proprietary firms, which prefer heritage buildings and are ready to pay a premium for them. In such cases, special valuations have to be carried out,” he says.

With so much complexity hanging over India’s historic buildings, their future looks far from bright. According to Barve, unless new regulations for historical buildings come up, most of the buildings will see major vacancies in the coming decade despite their good locations due to increased infrastructure and safety concerns.

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