Smart! The word played on every Malayalee lip as the evening of May 15, 2007 reluctantly faded out. It was as if Kerala's tech history was undersigned by an ideology-bound, hardcore Marxist-led government.
The state got even smarter as the people, the residents as well as the many Keralites among the Indian diaspora shot off short messages and lengthy e-mails to the man who managed to do what onlookers thought he never would. The Smart City deal has everything in it to log Kerala into a broader tech horizon.
In V S Achuthanandan, Kerala, suddenly saw a techie leftist they could bank on. So did the business community. Playing the state's boss and IT minister to perfection, the left veteran who once, as opposition warhorse, yelled out in his inimitable style that the Smart City proposal was just another real estate deal, just did a U-turn.
And the state rejoiced. Kerala -- and Kochi in particular -- saw itself being elevated to the rank of being talked about among infotech circles.
Just over a month after the Smart City agreement was formally inked between the Kerala government and Tecom Investments, a Dubai Internet City company, talk rages on the number of IT companies that are to flow in to set up shop here and the number of jobs they would churn out. That isn't all. Another segment had already begun working overtime to ensure all is well and profitable -- the realtors.
For the proposed Smart City can never be just another IT zone. Rather, it will be Tecom's dream project that should translate into a pioneer component of a network of similar projects planned across the globe. Going by what the Tecom brass had hinted after the deal was signed, the Kochi Smart City would be the DIC company's first such Indian facility and only the second in the world.
The Smart City project, which will involve an investment of $350 million, will boast of 88 lakh sq ft of built-up space and supporting infrastructure for IT and ITeS companies. The whole project will be spread across 246 acres of land.
The project promises to generate as many as 90,000 high-paying jobs over a 10-year period. A master-plan for the development of the project will be drawn up and it is expected to take a year to start work. An elated CM points out, "The Smart City project will play a key role in tapping Kerala's enormous potential for the development of key industries like ICT and media."
Not surprisingly, the real estate sector in and around Kakkanad, the Kochi suburb where the Smart City will come up, had been waiting in the wings to explode to higher price levels.
It was as if the realtors were waiting for the Smart City deal to be signed. Kakkanad, which till recently used to be a quiet, sleepy part of Kochi, woke up when the Infopark came into being. Individuals who had owned most part of the area in the form of paddy fields realised that they too were becoming part of the booming realty scenario. With the Smart City agreement in place, the real estate business is experiencing a new buzz.
Mathew Chakola, chairman of the Kerala Builders' Forum (KBF), illustrates a clearer picture. "A closer look will clarify that more than the land prices, the apartments scene is seeing a boom. For instance, completely-built apartments near the proposed Smart City site currently quote prices up to Rs 2,000 a sq ft. A year ago the prices had stood around Rs 1,450 a sq ft. Land prices, however, have not shown growth of this magnitude," he said.
The reason for the boom in apartment prices is being attributed to the number of jobs to come and the accommodation possibilities for the new professionals who will move to Kochi for good.
Elaborating on the scene, Chakola adds that if Kochi's land prices saw a boom, it was due to speculative moves by brokers who played smart in the middle. They had bought land for cheaper rates when the first rumours about Smart City had arisen, and then through speculation driven up the prices.
"See what the real scene is now," he points out. "In real terms, land prices may be said to have shown a drop of 30 per cent. The prices, which were Rs 2 lakh a cent a year back, saw speculation driving them up to triple the amount. However, as the deal got inked, the price level can be explained as only double or even less. The prices are currently hovering around the sub Rs 4 lakh a cent level."
Interestingly, a large number of north Indians who are currently settled in the UK and the US are increasingly looking at investing in apartments in and around Kochi. This is apart from the Gulf Malayalee investments in apartments here.
Statistics reveal that the number of north Indians from the US and the UK who formed just 5 per cent of the individuals who booked apartments in Kochi around a year ago has grown to around 25 per cent now. Apartments and villas are the clear winners here, compared with just open spaces.
The proposed Smart City project, in which the Kerala government is to have 16 per cent stake in the initial stage and 26 per cent after five years, is seen by one and all as a revolution that would spawn better growth prospects across the spectrum, from ICT to realty.
As V K Mathews, chairman and managing director of IBS Group, an IT company, commented: "With around 1 lakh new jobs coming up in the Smart City and around Kochi, it is only correct to estimate that we would need about 50,000 new apartments or other housing facilities. Also, this project will bring an additional 1 lakh new vehicles to our already congested roads. Technology jobs are well paid jobs and IT professionals need relatively better social facilities. In other words, there will be a lot of demand for both general basic as well as social infrastructure, such as roads, water, power, waste management and housing, hotels and markets."
Mathews concludes: "When demand increases, the price and inflation goes up, especially for land and real estate. The government must ensure that there is no real scarcity for land. This can be done by making the lands in the interiors useful for urban consumption, by making such areas accessible by creating roads. Unnecessary restrictions should be removed, thereby stopping middlemen from exploiting the situation and causing cost escalation to decelerate growth."
Doesn't that ring a bell?