Monday, March 14, 2016

Why Uttar Pradesh Government’s focus on roads development and improvement is the step in right direction for realty sector?

Roads are the lifeline of a major growing economy. Not only roads bring people closer by improved connectivity, they also boost trade and commerce. India has second largest road network in the world. National highways in India cover a distance of 79243 kilometers. State highways cover a distance of about 131899 kilometers. And district roads cover a large distance of 467763 kilometers.

Among all the states in India, Uttar Pradesh has the largest road network. There are 42 national highways that pass through the state of Uttar Pradesh. Additionally, 83 state highways complement 42 national highways in connecting the densely populated state of Uttar Pradesh. Following are the list of national highways that pass through the state:
  • National Highway 2 (NH-2): 752 out of 1465 KM passing through Uttar Pradesh
  • NH-3: 26 out of 1161 KM pass through Uttar Pradesh
  • NH-7: 128 out of 2369 KM
  • NH-11: 51 out of 582 KM
  • NH-19: 120 out of 240 KM
  • NH-24: 431 out of 438 KM
  • NH-24B: 185 out of 185 KM
  • NH-25: 270 out of 352 KM
  • NH-26: 128 out of 396 KM
  • NH-27: 43 out of 93 KM
  • NH-28: 311 out of 570 KM
  • NH-28C: 140 out of 140 KM
  • NH-29: 306 out of 306 KM
  • NH-56: 285 out of 285 KM
  • NH-58: 165 out of 538 KM
  • NH-73: 60 out of 188 KM
  • NH-74: 147 out of 300 KM
  • NH-75: 110 out of 1175 KM
  • NH-76: 587 out of 1127 KM
  • NH-86: 180 out of 559 KM
  • NH-91: 405 out of 405 KM
  • NH-91A: 126 out of 126 KM
  • NH-92: 75 out of 171 KM
  • NH-93: 220 out of 220 KM
  • NH-96: 160 out of 160 KM
  • NH-97: 45 out of 45 KM
  • NH-119: 125 out of 260 KM
  • NH-231: 169 out of 169 KM
  • NH-232: 305 out of 305 KM
  • NH-232A: 68 out of 68 KM
  • NH-233: 292 out of 292 KM
  • NH-235: 66 out of 66 KM
  • NH-330A: 227 out of 227 KM
  • NH-730: 519 out of 519 KM
  • NH-730A: 110 out of 110 KM
  • NH-931: 114 out of 114 KM
  • NH-931A: 60 out of 60 KM
  • NH-NE2: 90 out of 134 KM

Uttar Pradesh Core Road Network Development Program (UPCRNDP)

Additionally, state government under Chief Minister Akhilesh Yadav has focused on developing and improving state highways. Uttar Pradesh Core Road Network Development Program (UPCRNDP) has been established under which new state highways will be built and old ones will be improved. In early 2015, World Bank assured a grant of Rupees 3500 Crores for the project. For the project, a total of 24095 KM of road network has been identified including state highways and national highways passing through the state. The money raised will be used for widening of 1000 KM of state highways, building 419 KM of new roads, raising the formation level, pavement rehabilitation/strengthening. The work is expected to be completed within the timeline of year 2017.

Agra-Lucknow 6 lane expressway received allocation of Rupees 3280 crore in UP Government’s 2014 budget. This expressway is expected to be completed by end of 2016. Meanwhile, work on Lucknow-Ballia Purvanchal expressway is expected to begin in near future. The Uttar Pradesh’s Government budget 2016-17 has provision of Rupees 28600 crore for roads and highways projects.


What does it mean for real estate sector?

  • Impact on affordable housing
Road network is an essential part in the development of any city, state, or country. Therefore, focus of Uttar Pradesh Government to improve road network in the state is commendable. This will not only lead to improved connectivity but also enhanced economic activity. New jobs will be created and people will be able to commute from faraway places to cities for their employment.

Building and improving the road network will go a long way in eliminating the housing shortage in the state. Affordable housing can come up in areas where land is cheap and because of greater connectivity people will actually inhabit those places. Therefore, Uttar Pradesh Government’s UPCRNDP initiative will boost demand for affordable housing.

Steps taken in Budget 2016 and UPCRNDP Project will complement each other and housing shortage can be overcome in coming years.
  • Impact on commercial real estate development
Improved connectivity will boost development of commercial real estate across the state. Office spaces, malls, as well as institutional real estate such as hospitals, schools, and universities can be developed on back of enhanced road network. Private investment in this space will pick up and this will further strengthen the eco-system of the state of Uttar Pradesh.

Data Source: World Bank

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