DMRC already raises about 20% of its revenues from property development and is now looking to enter the housing development sector to raise capital funds.
Trains with ad-wraps and stations with co-branding semi-naming rights have become the latest hallmark of the Delhi Metro Rail Corporation, which in the wake of a slowdown in the property market, has resorted to other means of raising resources for cross-subsidising the ticket fares. While the DMRC is already raising about 20% of its revenues through property development, it now intends to expand this footprint by entering the development of residential housing in order to further increase its resources.
According to DMRC, the government’s mandate allows it to raise revenue from property development. This is deemed essential to keep the fare rates down by enabling the transport company to earn more through alternate sources. With Hong Kong metro raising around 35% of its resources through property development, there is still scope for more development in Delhi.
However, with the market conditions being “very sluggish” and there being “very poor demand of commercial areas”, the Delhi Metro has also shifted its focus to the development of residential properties.
Another reason for this shift is that commercial properties do not yield revenues in the form of capital funds as private agencies take commercial properties only on rent. So, DMRC has realised that the only way to raise capital funds is by going for residential development.
“DMRC has these options in mind and is planning to bring the residential projects in two ways, namely by leasing the pieces of land for residential development and by developing the plots residentially and selling the flats in the market,” executive director, corporate communication, Anuj Dayal revealed.
As part of the plans to maximise revenues, DMRC intends to develop a plot of 11,280 sq.m. in Janakpuri (West) under the Transit Oriented Development norms. The concept plan for this plot is ready and it will have nearly 300 flats of different sizes in addition to mandatory housing for the economically weaker sections. DMRC is planning to bring a scheme to sell these flats directly to the public, government organisations and government PSUs by inviting applications. In addition, DMRC will also construct about 5,000 sq.m. of commercial area on this plot.
Apart from this DMRC will undertake commercial development in a number of places such as Bhikaji Cama Station, Netaji Subhash Place and Malviya Nagar.
It has floated tenders for a concession for a 12290 sq.m. plot near Malviya Nagar metro station for its commercial development through use for offices, budget guest houses, food plaza, health clubs and shopping centres.
Similarly, the corporation would be developing floor area of 18,464 sq.m. over the footprint of Netaji Subhash Place under-ground metro station of line No.7 on Ring Road.
DMRC is also going to develop premium floors each of approximately 2,500 sq.m. area totalling 13,112 sq.m at the footprint of Bhakiji Cama Place underground metro station. This five-storeyed property would come up in two years and would provide space for premium offices as also a food plaza.
Branding stations and wrapping trains
But what has really caught the fancy of the citizens has been the advertising at stations and the wrap-arounds on the trains. Both these forms of advertising have caught the attention of the market and are increasingly becoming popular due to their reach and visibility.
For some commuters and DMRC alike, the issue of aesthetics is also closely linked to such advertising. Many believe it spoils the looks of the stations.
Dayal has also acknowledged the fact and stated that DMRC is well aware of the issue of aesthetics and has therefore restricted both the percentage of the number of trains on which it would be used, as well the spaces in which it would be allowed by advertisers at the stations.
As of now, he said, a maximum of 10% of coaches under operational holding on lines 2 and 3 have been allowed to have these ads. Similar permissions have also been given out for lines 4, 5 and 6. “Around 120 coaches at present across the network are having ad-wrap.”
“For us aesthetics are as important as commercial gains and though there is no mandate on us to restrict such advertising, we have set our own yardsticks,” he said.
At the stations too, corporate sponsorship has been initiated in a large way to attract revenues. It was in Gurgaon that this form of advertising was first seen in the DLF Metro. And gradually, it has spread to 14 Delhi metro stations where “co-branding semi naming rights” have been given out.
The stations where such advertising can be seen are Noida Sector 18, Noida City Centre, Vaishali, MG Road, Sikandarpur, Guru Dronacharya, Huda City Centre, IFFCO Chowk, Vishwavidyalaya, Badkal Mor, NHPC, Neelam Chowk Ajronda, Dwarka Sector 10 and ITO.
At all these stations, usually 500 sq.m. of inside advertisement space, along with branding rights are given to the sponsors. However, due to space constraints at some stations, the amount of space given out may vary on tender to tender basis, the DMRC said.
On how DMRC balances the issue of aesthetics with revenue maximisation, Dayal said “all layout plans have prior approval from DMRC. The contracts have inbuilt clauses, where licensee has to maintain aesthetics and look and feel at the station.”
The scheme is gaining traction. The tenders for co-branding rights of Phase-III stations have also been floated. “Future stations with good market potential and existing stations kept for co-branding purposes would be covered under this scheme.”
With some commuters questioning the use of sponsor’s name as a suffix or prefix of the station name on the ground that it causes confusion, Dayal clarified that “the prefix/suffix is being allowed only at the station level. It is nowhere reflected in other stations, DMRC network maps, or announcements.”
Delhi Metro is also seeking to maximise its returns from the built-up shops, licensed bare spaces, kiosks, ATMs, vending machines, water ATMs and advertisements inventory to shore up its non-operational revenue.
In 2015-16, the percentage share of earning of DMRC from advertisements from all sectors was 48%, from telecom business it was 16%, from ATM business 14%, from shops 6%, from kiosks 3.65% and from miscellaneous sources 12%.
Though DMRC was initially allowed advertising rights and commercial development over its properties, the municipal corporations had claimed a right over raising of property tax, sharing of advertising revenues and had also demanded that the commercial establishments on Metro property take a proper trade licence.
Though the initial years had witnessed some tussle over the issue, the matter has been amicably resolved. As Dayal said, now the DMRC shares between 25-30% of outside advertisement revenue with different municipal corporations.
While the non-ticketed revenue is currently around 20%, the DMRC believes that any “increase would be welcome as it would help boost revenue and help in repayment of loan”.
Clearly, the corporation has also charted out its course for remaining the most comfortable, reliable, fast and economical mode of public transport in the region.
Categories: Cities & Architecture