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GIM Pre-Feasibility Report - Indiranagar_Revised
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7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
httpslidepdfcomreaderfullgim-pre-feasibility-report-indiranagarrevised 133
Bangalore
RedevelComple
Pr
CRISIL Risk and Infrast
evelopment
Authority
pment of BDAat Indiranagar
-Feasibility Report
June 2012
ructure Solutions Limited
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
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[b]
Abbreviations
Acronym Definition
ATM Automated Teller Machine
BDA Bangalore Development Authority
BEL Bharat Electronics Limited
BHEL Bharat Heavy Electricals Limited
BMA Bangalore Metropolitan Area
BSUP Basic Services for Urban Poor
BUP Built-Up (Area)
CAGR Compounded Annual Growth Rate
CITB City Improvement Trust Board
CRIS CRISIL Risk amp Infrastructure Solutions Limited
CRRI Central Road Research Institute
DCR Development Control Regulations
FAR Floor Area Ratio
IRR Internal Rate of Return
ITeS Information Technology Enabled Services
JNNURM Jawaharlal Nehru National Urban Renewal Mission
LPG Liquefied Petroleum Gas
NPV Net Present Value
ORR Outer Ring Road
PCNTDA Pimpri Chinchwad New Township Development Authority
PPP Public Private Partnership
RMP Revised Master Plan
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
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[c]
Acronym Definition
SPC Special Purpose Company
ULB Urban Local Body
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[iv]
Contents
1
Executive summary 1
2
Introduction 3
21
Project idea 3
22
Approach amp methodology 3
23
Review of previous studies 4
3
Sector profile 5
31
Industry overview 5
32
Regional profile 5
Geography 6
Connectivity 6
Major commercial areas 6
33
Key issues 7
4
Project 8
41
Description of the project 8
42
Components of the project 8
43
Description of the site 8
44 Interaction with stakeholders 9
45 Case studies 9
451 Public private partnership in affordable housing under Jawaharlal Nehru National
Urban Renewal Mission (JNNURM) 10
5
Market assessment 13
51
Bangalore growth overview 13
52
Demand projections 14
6
Project financials 15
61
Cost estimation 15
62
Revenue stream 15
63
Viability assessment 16
64
Ranking of options based on commercial viability 16
7
Statutory amp legal framework 17
71
Legal amp regulatory framework 17
8
Indicative environmental amp social impacts 18
81
Environmental impacts 18
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[v]
82
Social impacts 18
83
Mitigation measures 18
9
Operating framework 19
91
Risks amp mitigation 19
92
Indicative project structure 19
10
Way ahead 21
101 Project development framework 21
102 Procurement plan 21
11 Annexure 1 ndash Cash-flow statement 23
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[vi]
List of Tables
Table 7-1 Project Cost of the proposed development 15
Table 7-2 Viability assessment for BDA complex at Indiranagar 16
Table 8-1 Plot details of Indiranagar site 17
Table 10-1 Risk mitigation measures 19
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[vii]
List of Figures
Figure 2-1 Approach and Methodology 4
Figure 4-1 Development structure of the Commercial Complex 8
Figure 4-2 BDA Complex at Indiranagar 9
Figure 6-1 Population growth in Bangalore between 1901 and 2011 13
Figure 11-1 Project development framework 21
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Bangalore Development Authority
[1]
1 Executive summary
Infrastructure Development Department proposes to strengthen the project development process inthe Departments responsible for implementing Infrastructure Projects through Public Private
Partnership (PPP) The PPP concept is relatively new and the implementing officers require
necessary insight orientation and assistance into the project development for effective marketing and
implementation of the projects
CRISIL Infrastructure Advisory a division of CRISIL Risk and Infrastructure Solutions Limited (CRIS)
has been appointed by the Infrastructure Development Department Government of Karnataka to
work closely with the Bangalore Development Authority for the assignment ldquoInstitutional Strengthening
and Sector Specific Inventory for PPP Mainstreaming in Sectorsrdquo Under this BDA has identified a set
of nine projects for which pre-feasibility assessments are to be carried out Redevelopment of BDA
Complex at Indiranagar is one of the nine projects proposed by BDA
In line with the objectives of BDA the BDA Complexes were built at strategic locations and near
residential localities in order to provide a one stop solution for shopping Hence facilities like motor
training schools travel agents RTO etc started operating within the complexes The complexes are
now in dilapidated condition and in order to provide better facilities to the citizens BDA proposes to
redevelop the old BDA Complex at Indiranagar
This report examines the possibility of redeveloping the commercial complex on a PPP Basis In order
to bring in private sector participation in the redevelopment of the complex it is proposed that the land
is handed over to the developer on long term lease basis The selected developer would be
responsible for Finance Design Construction and Operation amp Maintenance of the project
throughout the lease period Ownership of the land will always be with BDA After the lease period
the land along with the BUP area will be transferred back to BDA free of cost One portion of the
proposed commercial development shall be reserved for BDA for rehabilitation of the existing
vendors
For the purpose of cost estimation we have studied the feasibility report developed by SREI
Infrastructure Finance Limited and have also consulted with the BDA The estimated cost of
development of the project is Rs 20810 lakhs
The revenues to the developer would accrue from the revenue earned from the lease rentals as well
as maintenance charges The total revenue from both the heads has been arrived at Rs 6720 Lakhs
for the base year Occupancy of 80 has been assumed for the base year which will stabilize at a
maximum of 95 towards the end of the concession period The average lease rentals have been
assumed at Rs 70 per square feet and maintenance charges have been assumed at Rs 225 per
square feet Appropriate escalation factors have been assumed for both revenue heads
The viability assessment has been carried out over three concession periods of 25 33 and 66 years
The debt to equity ratio has been assumed to be 121
The viability assessment has been worked out with determinants like the project level internal rate of
return (IRR) IRR of equity and the net present value of the equity The project is found to be viable for
all the 3 concession periods In case of the 25 year concession period it is estimated that the
developer would pay BDA an upfront premium of Rs 9650 Lakhs For the concession period of 33
and 66 years the upfront premium to be paid by the developer would be Rs 12300 Lakhs and Rs
6000 lakhs respectively
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Bangalore Development Authority
[2]
A key issue that the BDA will need to address is the relocation of the existing tenants of the
complexes The BDA needs to prepare a rehabilitation plan for the existing tenants and should also
clearly lay out the rehabilitation mechanism for these tenants As part of the project configuration we
have assumed that a certain proportion of the developed spaces would be handed over to the BDA
which can be utilized for the rehabilitation of the existing tenants However if the BDA chooses to
accommodate these tenants in the redeveloped facility the commercial terms may have to be in line
with the rentals being charged to the new tenants We are of the opinion that the BDA should make
an informed decision on this only after a detailed feasibility has been conducted for the site
We have examined the way forward for the project We propose that the BDA should appoint a
transaction advisor for the project who will conduct a detailed feasibility for the project and would also
facilitate the appointment of the developer through bid process management
The procurement plan for the project has been developed to be spread over 11 months which can be
shortened depending on the swiftness of decision making at BDA
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
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Bangalore Development Authority
[3]
2 Introduction
CRISIL Infrastructure Advisory a division of CRISIL Risk and Infrastructure Solutions Limited (CRIS)
has been appointed by the Infrastructure Development Department Government of Karnataka to
work closely with the Bangalore Development Authority for the assignment ldquoInstitutional Strengthening
and Sector Specific Inventory for PPP Mainstreaming in Sectorsrdquo Under this BDA has identified a set
of nine projects for which pre-feasibility assessments are to be carried out
In order to provide advanced recreational facilities and services to the citizens BDA has proposed the
redevelopment of its Complexes through Public Private Partnership model Redevelopment of BDA
Complex at Indiranagar is one of the nine projects proposed by BDA
21 Project idea
Bangalore Development Authority (BDA) is one of the premier urban planning and development
agencies that oversee the growth of the city The BDA came into being with effect from 6th January
1976 under a separate Act of the State Legislature viz the BDA Act 1976 This Authority combined in
itself the Planning functions of the City Planning Authority and the developmental functions of the
erstwhile City Improvement Trust Board (CITB)
The key objectives of the authority as per the BDA Act shall be to promote and secure the
development of the Bangalore Metropolitan Area (BMA) and for that purpose the Authority shall have
the power to acquire hold manage and dispose of moveable and immoveable property whether
within or outside the area under its jurisdiction to carry out building engineering and other operations
and generally to do all things necessary or expedient for the purposes of such development and for
purposes incidental thereto
In line with the objectives of BDA the BDA Complexes were built at strategic locations in near
residential localities in order to provide a one stop solution for shopping Hence convenient stores like
motor training schools travel agents RTO etc started operating within the complexes The complexes
are now in dilapidated condition and in order to provide better facilities to the citizens BDA proposed
to develop the old BDA Complex at Indiranagar The project is also an outcome of reducing
commercial spaces in key residential areas
22 Approach amp methodologyThe broad approach and methodology followed for study of these projects has been depicted
graphically below
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
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Bangalore Development Authorit
Figure 2-1 Approach and Met
23 Review of pre
Bangalore Development Authori
development works identified by
29102010 BDA retained Tand
identified projects namely ldquoDevel
TUSPL had submitted their Fe
estimations The report submitte
been presented as below
The project cost indicate
to reflect the market
contingencies prelimina
The financials indicated
Developer and BDA an
given the market conditi
The report does not cle
1062701 sq ft And an
2440023 square metre
officials
1 The cost incurred towards upfront pre
figure
Study of existingreports
y
odology
ious studies
ty had invited proposals for appointment of Co
BDA vide Tender Notification No BDAEMTA-
on Urban Solutions Pvt Ltd (TUSPL) as Cons
opment of Commercial Complex at Indiranagar
sibility Report for the Indiranagar site along
d by TUSPL was studied in detail and the CRISI
d in the report is Rs 39165 Lakhs The project c
rates The Revised project cost is Rs 239
ry and pre-operative expenses
in the Feasibility Report is assuming a revenu
an upfront premium which the developer woul
ns and rates this has been revised
arly mention the area of the plot It indicates a
open land development area of 131322 sq f
has been assumed for the pre-feasibility in c
ium and the interest during construction period is not includ
Discussions withBDA personnel
Be
a
Finalrecommendation
[4]
nsultants for various
3802010-11 dated
ultant for one of the
angalorerdquo
ith the designs and
Lrsquos observations has
ost has been revised
11 Lakhs including
share between the
ld provide However
construction area of
t Hence an area of
nsultation with BDA
d in the above mentioned
lock coststimation
inancialsessment
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
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Bangalore Development Authority
[5]
3 Sector profile
The city of Bangalore has witnessed very rapid growth The city today is home to over 84 million
people (2011 Census) The salubrious weather and the rapid concentration of economic activities in
Bangalore have fuelled the growth of Bangalore As one of the worldrsquos fastest growing cities
Bangalore is experiencing a steady growth in population
Bangalore has been substantially affected by globalization and rapid urbanization over the last
decade The demand for services and quality of life is not confined to the central core or the erstwhile
Bangalore Mahanagra Palike jurisdiction but spreads beyond into the peri-urban areas the
Metropolitan Area and outwards into Bangalore Metropolitan Region With the emergence of the
Bangalore-Mysore Infrastructure Corridor the Bangalore International Airport and the planned ring
roads urbanization has sprawled out
Banaglore has incontestable advantages to develop into an international metropolis but at the same
time faces significant constraints The city is embedded in its history and depicts the greatness of a
truly Indian city established before the invasions and colonization It has a diverse set of activities
from silk to aeronautics from clothing to information technology and is a gauge of dynamism and
solidity of the city Natural drainage climatic advantage and the availability of water in the Cauvery
baisn are factors assisting in improving the quality of life
31 Industry overview
Bengaluru is countryrsquos third leading realty market With the IT boom and corresponding growth of the
economy saw large-scale increase in the cityrsquos population mostly due to migration from across India
Bengalurursquos population grew about 35 percent in the last six years
This increase in population along with steady demand and restricted supply led to saturation in central
Bengaluru region and pushed development to peripheral areas like Whitefield Sarjapur road Outer
Ring Road (ORR) Bannerghatta Road Hosur Road
With the opening of International Airport Real estate in North Bangalore (Bellary Road to Yelahanka)
has also witnessed the launch of numerous projects with apartments and villas Given the improved
infrastructure accessibility and the future potential for this area the area has been attracting both the
segments of investors and end-users alike
The city leads the country in office space with 738 million square feet of commercial capacityavailable However Bengaluru also has 22 per cent of the available space vacant with a large number
of projects under development and reduced demand
32 Regional profile
Bengaluru (formerly Bangalore) also known as Garden City for its beautiful gardens is the
administrative industrial commercial educational and cultural capital of Karnataka and located on
the Deccan Plateau in the South-Western part of India Bengaluru is Indias third most populous city
fastest growing and fifth largest metropolitan area with population of about 57 million (as per 2001
census) The population is expected to reach around 11 million and 22 million in 2021 and 2041respectively
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Bangalore Development Authority
[6]
With ever increasing boundaries and gross domestic product of 59123 billion in FY 06-07 Bengaluru
has some well-recognized IT companies and numerous public sector heavy industries aerospace
telecommunications and defence organisations located within Bengaluru also has some well known
colleges and research institutes
Geography
With an average elevation from the sea level of 920 m and total area of 741 km2 Bengaluru is located
in the south-eastern part of Karnataka in the Mysore Plateau - a region of Deccan Plateau The city
has an uneven landscape of hills and valleys to the south and relatively more level plateau towards
the north
Because of its elevation the city enjoys a pleasant and equable climate throughout the year The city
is situated in the Bengaluru Urban district which is divided into four taluks - Bangalore North
Bangalore East Bangalore South and Anekal and covers a total geographical area of 2190 sq km
Bangalore District is surrounded by Kolar District to the northeast Tumkur District on the northwest
Mandya District on the southwest Chamarajanagar District on the south and neighbouring state of
Tamil Nadu on the southeast
Connectivity
Bangalore is well connected to other Indian cities by road rail and air transport The connectivity by
rail road and air is detailed in the sections below
Road
Bengaluru is located at the junction of National Highways 4 7 and 48 connecting to various important
cities in India including Chennai Hyderabad Kanyakumari Madurai Mangalore Mumbai Nagpur
Pune and Varanasi
Railways
Bengaluru has two major railway stations Bengaluru City railway station and Yeswantpur Junction
The city has a well maintained railway network connecting major cities of the country and is
connected to the rest of the country both by metre gauge and broad gauge rail services
Air
Bengaluru has an International Airport at Devanahalli and is well connected to all cities in India
Internationally Bengaluru is connected to European and Asian cities like Frankfurt Singapore Kuala
Lumpur London Dubai Paris Bangkok and Hong Kong
Major commercial areas
The following are the major commercial areas in and around Bangalore
Central Business District Seshadripuram Jayanagar JP Nagar Yeshwantapura
Eastern Suburb Marathalli-sarjapur ORR Sarjapur Road Whitefield and Brookfield
Secondary Business District Indiranagar JP Nagar RT Nagar Vijayanagar
Northern Suburb HRBR Layout Bellary Road Jakkur
Southern Suburb Mysore Road Hosur Road
West Suburb BEL Factory HMT Layout
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Bangalore Development Authority
[7]
33 Key issues
The recessionary trends in 2007 across the world had also adversely affected the entire real estate
market in Bengaluru All the three categories of residential commercial (office space) and retail had
experienced slump in market and the real estate market in several erstwhile prime locations of the citywere facing oversupply situation and a drastic fall in the capital as well as rental values
With the revival of the industry and economy the residential market is expected to witness a jump
across all the areas in Bengaluru as per CRISILrsquos analysis The eastern and southern areas are
estimated to emerge as up-scaled developments as these areas are expected to see maximum
supply in the next three years
Good quality developments have been the key feature of Bangalorersquos commercial developments The
boom in IT sector especially in South India has enabled the city to have a metropolitan culture which
brings along the urban demands like malls and multiplexes
Recently the market in Bangalore has stabilized to a large extent after the sudden jump in prices post
recession However this is cyclical in nature and the saturation of IT services has led to a scenario
where there would not be much increase in the lease rentals
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Bangalore Development Authorit
4 Project
41 Description of
It is proposed that for the redev
over to the developer on long
Finance Design Construction
period Ownership of the land wi
BUP area will be transferred b
proposed commercial develop
vendors
42 Components o
The project would be develope
basis The structure of the mode
Figure 4-1 Development struc
43 Description of
The site is located at Indiranaga
the main commercial centres in
Road in the North Old Airport
the East Indiranagar is located
famous for housing the Somes
and educational institutions like
y
the project
lopment of BDA Complex at Indiranagar the la
erm lease basis The selected developer woul
and Operation amp Maintenance of the project t
ll always be with BDA After the lease period th
ack to BDA free of cost We have assumed
ent shall be reserved for BDA for rehabilit
f the project
on a Design Build Finance Operate and Tra
l has been illustrated below
ture of the Commercial Complex
the site
r a suburb of Bangalore located about 4 km ea
the city This medium sized suburb is enclose
oad in the South Halasura in the West and Je
within a diameter of few kilometre radii from the
ara Temple several reputed hospitals like Amrj
r Ambedkar College KH Patel College etc
[8]
nd would be handed
d be responsible for
hroughout the lease
e land along with the
hat a portion of the
tion of the existing
sfer model on PPP
t of MG road one of
by the Old Madras
vanbheemanagar in
airport The place is
yoti Vijaya and ESI
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Bangalore Development Authority
[9]
The site is situated at a junction near a residential area and is frequented by elders and youngsters
alike The present building consists of Motor driving schools RTO office computer vendors and travel
agents There is a water tank situated in the site
Figure 4-2 BDA Complex at Indiranagar
44 Interaction with stakeholders
CRISIL conducted a series of interactions with the stakeholders namely the BDA officials Citizens
and the establishment owners The interactions revealed that the building has to undergo
redevelopment The condition of the BDA office is not up to the standards expected and the officials
complained about leaks and short circuits The establishment owners suggested that the building was
planned with less road facing establishments due to which they are not able to attract footfalls
45 Case studies
In order to generate revenues from the real estate value of the land in the ownership of the ULBrsquos
commercial projects have been developed on a PPP basis on these lands Typically under such
arrangements the ULB would have identified a site under its ownership where a property for
commercial use can be developed Commercial development would include the development of
shopping complexes markets bus terminals multi-level car parking townships etc
Under such an arrangement the ULB would require of the private developer to undertake
construction of a commercial complex on the land The land would be provided by the ULB to the
private operator on a lease basis The ULB would provide specifications on the nature and type of
commercial development required The private developer would need to bear all the capital costs
associated with the construction of the commercial complex Post construction of the commercial
complex as per the arrangement the private developer would either hand over the constructed
facility to the ULB or would sub-lease the property The private developer would be required to make
to the ULB an upfront payment or provide a share in the ULB revenues earned from sub-leasing the
properties
The following case study compiled by the Ministry of Urban Development Government of India
highlights the development of municipalurban lands on a PPP basis
Category Details
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Bangalore Development Authority
[10]
Category Details
Project Construction of Commercial Complex at Ranipura Market
Cost of
ProjectRs 1500 lakhs
Description
The land was allotted to the concessionaire to construct the Commercial Complex by
the Corporation
Corporation continues to own the land
After the concession period the built-up structure (Commercial Complex) will be
transferred to the Corporation by the concessionaire
The concessionaire was given the right to recover its investment from the premium
received for ldquoRight of Occupationrdquo of the constructed shops
At the time of award of concession it was estimated that a profit of Rs 200 lakh will
be accrued from the venture which will be shared by the concessionaire with the
Corporation
The Corporation is expected to receive a profit share of Rs 100 lakh from the
concessionaire
Source Compendium on Public Private Partnership in Urban Infrastructure Case Studies Ministry of Urban
Development Government of India in association with Confederation of Indian Industry (CII)
We have also studied another case wherein the development affordable housing units was structure
on a PPP basis by the Pimpri Chinchwad New Township Development Authority (PCNTDA)
451 Public private partnership in affordable housing under Jawaharlal
Nehru National Urban Renewal Mission (JNNURM)
The Pune metropolitan region comprising Pune and Pimpri Chinchwad cities is one of the fastest
growing urban agglomerations in India A major automobile and auto-ancillary hub and a well-known
international education destination it also ranks among the top IT destinations of India Besides the
region has many industrial clusters housing industries focused on FMCG engineering agro-based
technology
The Pimpri-Chinchwad New Town Develompent Authority (PCNTDA) a key development authority of
the PMR is responsible for development of peri-urban especially in its north In line with the
phenomenal growth of the region and its strident aspirations PCNTDA has envisioned the
development of an integrated township at Sector 12 spanning 53 hectares Given the success of the
Public Private Partnership (PPP) model in involving private sector participation for development based
projects PCNTDS proposed to develop the integrated township on PPP basis
With this objective PCNTDA appointed the consortium of CRISIL Risk and Infrastructure Solutions
Limited (CRIS) Omkar Associates and Creations as project development consultants for the
development of an eco-friendly affordable township at Bhosari Sector 12 CRISILrsquos role was to
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Bangalore Development Authority
[11]
undertake a detailed demand assessment financial feasibility project structuring and management of
the bid process
The concept
Keep in mind the PCNTDArsquos vision CRIS designed integrated township such that it compriseshousing untis for the poor affordable housing units for the general public a primary health care
centre a hospital and a school
As per the structure the Developer shall construct 5040 housing units under the Basic Services for
Urban Poor (BSUP) scheme of JNNURM PCNTDA shall transfer the amount of grant sanctioned for
developing these units under the JNNURM scheme to the developer The remaining project cost of
the BUSP units was to be financed by the developer
In addition to this the Developer shall also construct affordable housing units as per pre-specified
specifications and hand over to PCNTDA free of cost The developer shall also construction the
physical and social infrastructure for the integrated township thereby ensuring good road adequate
water supply an efficient sewerage system as well as schools and hospitals The project shall bedeveloped in a manner such that it has minimum possible impact on the surrounding environment and
is in harmony with nature To this end the developer shall undertake eco-friendly initiatives including
rain water harvesting use of solar power environment-friendly materials and vermin-composting
The project
The developer has to complete the BSUP housing units within 2 years and hand over to the PCNTDA
For the remaining portion of the land PCNTDA shall execute a lease deed for 99 years with the
developer The lease rights shall be granted to the developer in phases upon completion of
milestones as defined in the project agreement The main scope of work for the developer shall
include
Master planning for the entire 53 hectares of land and construction of common physical and
social infrastructure for the entire area
Development construction and marketing of 795 lakhs square meters of integrated real
estate space
Construction and handing over of 5040 housing units under the BSUP scheme of JNNURM
on a separate layout carved out of the said land PCNTDA will provide the developer the grant
sanctioned by the Government of India for these housing units
Successful selection of private developer
With the objective of undertaking this project on a PPP basis in a transparent and objective manner
PCNTDA launched a three-cover Request for Proposal in June 2009 The bidding parameter was theconstructed ldquoCarpet Areardquo in ldquosquare metersrdquo of affordable housing units that the bidder shall
construct and hand over free of cost to PCNTDA
The tender received good response from four interested bidders Of the four bidders two bidders
were adjudged technically and financially capable and short-listed for the final stage The bidder with
the highest construction carpet area offered to PCNTDA was selected The successful bidder quoted
a carpet area of 130599 square meters of affordable housing units
Thereby the PCNTDA derived a value of 7369 housing units (including 5040 BSUP units) a school
and a hospital for the BSUP units a school and hospital for the general public and development of
public amenities
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Bangalore Development Authority
[12]
Value addition to PCNTDA
In commercial terms PCNTDA saved (i) Rs 190 crores as the gap amount required to fund the BSUP
scheme (ii) Rs 210 crores of construction cost of affordable housing units and (iii) Rs 100 crores on
the development of physical and social infrastructure In addition to this PCNTDA shall receive anupfront payment of Rs 50 crores from the successful bidder The project structure also protects
PCNTDA from cost escalation risks valuation risks and engineering risks
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
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Bangalore Development Authorit
5 Market asse
51 Bangalore gro
The growth of Bangalore has be
from the growth in population in
to the economic opportunities it
Bangalore an obvious choice for
Bangalore has grown at averag
decades It is projected that B
explosive growth has meant th
pressure
Figure 5-1 Population growth
Source City Development Plan Ba
The city leads the country in
available However Bengaluru a
of projects under development a
983089983086983094983091 983089983086983096983097 983090983086983092
983088
983089983088
983090983088
983091983088
983092983088
983093983088
983094983088
983095983088
983096983088
983097983088
983089983097983088983089 983089983097983089983089 983089983097983090983089
983120 983151 983152 983157 983148 983137 983156 983145 983151 983150 983145 983150 983116
983137 983147 983144 983155
y
sment
th overview
en unprecedented in the past couple of decades
the last century Bangalore continues to attract t
offers This is also supported by a salubrious
not only businesses but also for people
compounded annual growth rate (CAGR) of 3
ngalorersquos population will cross the 10 million
at the infrastructure in Bangalore has been p
in Bangalore between 1901 and 2011
galore Development Authority and Census of India
ffice space with 738 million square feet of
lso has 22 per cent of the available space vacan
nd reduced demand
983091983086983089 983092983086983089983089983095983086983096983094
983089983090983086983088983094
983089983094983086983094983092
983090983097983086983090983090
983092
983089983097983091983089 983089983097983092983089 983089983097983093983089 983089983097983094983089 983089983097983095983089 983089983097983096983089 983089983097
[13]
This fact is laid bare
rongs of people due
eather which makes
58 in the last three
mark by 2021 This
t under tremendous
commercial capacity
with a large number
983086983091
983093983094983086983096983094
983096983092
983097983089 983090983088983088983089 983090983088983089983089
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Bangalore Development Authority
[14]
52 Demand projections
Bangalore is the largest commercial market and third largest residential market in India The city has
typically been preferred by home buyers because of its favorable socio-economic conditions and a
salubrious climate In recent years Bangalore has attracted a large influx of population engaged inthe thriving IT sector City residential demand is more end-user driven with moderate price
appreciation The average residential real estate price in the city is 20-25 lesser than in Delhi and
Mumbai In the recent National Housing Bank Residex the index indicating property prices across key
cities in India Bangalore witnessed a mere 1 YoY fall in residential prices in 2011-12 Mumbai saw
an 116 YoY jump in home prices while Delhi witnessed 358 YoY increase during 2011-12 The
city witnessed tremendous growth in terms of population and the number of companies setting up
offices there Thus the ongoing projects such as Bengaluru metro rail project various flyovers and
the under-pass construction activities in Outer Ring Road (ORR) CNR and BHEL circles would ease
the congestion and provide better connectivity for all commuters This will boost real estate demand in
and around Bangalore city
In 2011-12 Bangalorersquos commercial market exhibited resiliency with comparatively high demand
levels despite the discomfort in the market on account of global uncertainty Though commercial
property demand in Bangalore is largely dependent on ITITES sectors the share of manufacturing is
increasing at a faster pace and thereby giving further boost to office space demand According to real
estate consultancy firm Knight Frank the manufacturing sector witnessed a quantum leap as its share
of absorption increased from 3 in 4QCY10 to 23 in 4QCY11 The absorption of commercial space
has gone up from 5mn sq ftquarter in CY09 to 7mn sq ftquarter in CY11 thanks to sustained
demand for Bangalore commercial space which witnessed 43 CAGR in absorption level over CY09-
11 Subdued supply during the first two quarters of 2011 coupled with high absorption level has
substantially lowered the vacancy level in the city (bringing it down from 17 in CY10 to 12 in
CY11) With the expansion of existing operations in the IT sector and the entry of newer sectors dueto renewed optimism in the market we expect the level of absorption of office space to remain stable
Revised Master Plan-2015 for the BMA has been published This document gives the likely growth to
take place in various areas of the BMA The population of the BMA is expected to grow from 61 lakh
in 2001 to 122 lakh in 2025
The proposed growth rate and the ever changing urban scenario is bound to increase the commercial
space demand in the region The site at Indiranagar is situated at a junction and has two road facing
sides which makes it very attractive for commercial development The site is also huge in size and
can easily accommodate a mall
Hence in view of the above it can be safely recommended that the site would generate huge interest
within the developers
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Bangalore Development Authority
[15]
6 Project financials
The project costs have been largely derived from the costs indicated by the Bangalore Development
Authority (BDA)
61 Cost estimation
The estimated cost of development of the project is Rs 23931 lakhs The costs have been outlined
below
Table 6-1 Project Cost of the proposed development
Particular Amount inRs Lakhs
Construction Cost 19967
Land Development 793
Other Infrastructure 50
Total Hard Costs 20810
Contingencies 3121
Total Project Development Cost 23931
Apart from the above mentioned project development cost the Concessionaire would incur the
development premium and Interest during construction (IDC) cost
Particulars 25 years 33 Years 66 years
Upfront Premium (Rs Lakh) 965000 1230000 600000
IDC Cost (Rs Lakh) 315600 361500 259100
Revenue Share every year 15 15 15
Total Project Cost (Rs Lakhs) 36737 39846 33022
62 Revenue stream
The Revenues to the Developer would accrue from the revenue earned from the lease rentals and the
maintenance charges which the developer earns from the tenants The total revenue from both the
heads has been arrived at Rs 6720 Lakhs for the base year It has been assumed that the
occupancy of the commercial complex 80 in the base year and stabilizes to a maximum of 95towards the end of the concession period The average lease rentals have been assumed at Rs 70
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Bangalore Development Authority
[16]
per square feet and the maintenance charges have been assumed at Rs 225 per square feet Both
the revenues are escalating at the rate of 10 per annum The income statement for the developer
has been provided in Annexure 1
63 Viability assessment
The viability assessment has been carried out over two concession period ie 25 33 and 66 years
The debt to equity ratio has been assumed to be 121
The project level internal rate of return (IRR) IRR of equity and the net present value of the equity
have been worked out
Table 6-2 Viability assessment for BDA complex at Indiranagar
Concession Period Project IRR Equity IRR NPV of Equity
Upfront Premium
(Rs in Lakhs)
25 years 1777 2007 96 9650
33 years 1818 2006 108 12300
66 years 2101 2333 5285 6000
It is evident that the project is viable for the developer for all the 3 concession periods In case of the
25 year concession period it is estimated that the developer would pay BDA an estimated upfront
premium of Rs 9650 lakhs Similarly the developer would pay BDA an amount of Rs 12300 lakhsand Rs 6000 lakhs for the concession periods of 33 years and 66 years respectively
64 Ranking of options based on commercial viability
Having assessed the project for two concession periods of 25 33 and 66 years we are of the view
that the 25 year concession option will be more suitable since it allows the developer to make
reasonable returns on the projects and his own investments along with a sizeable upfront premium for
BDA BDA would be in a position to renew the contract or retender the project after 25 years which
may enable BDA to earn as per the prevailing market rates
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Bangalore Development Authority
[17]
7 Statutory amp legal framework
71 Legal amp regulatory framework
Development Control Regulations (DCR)
As per RMP ndash 2015 published by BDA the project site has been classified as ldquoCommercial Businessrdquo
As per the definitions of RMP-2015 Commercial Business Zone allows development of Commercial
and Corporate offices Retail Shopping Complexes Restaurants and Hotels Convention centres and
banquet halls financial institutions Cinema and multiplexes places of assembly exhibition centres
Entertainment and amusement centres and stores
Permissible land uses under Commercial (Business) Zone as per RMP-2015 of BDA
Main land use category C3
Other land uses permissible (as main land use) R I-3 T3 amp U4
If the road width is less than 120 m and plot area is less than 240 square metre then C2 I-2
R and U4 only are allowed
The plot size is 24000 square metre Presently it has 18m wide access road The applicable DCR for
the plot as per proposed road width is as follows
Table 7-1 Plot details of Indiranagar site
Sr No Particulars Description Unit
1 Land Use Commercial Business
2 Road Width 18 Metre
3 Permissible FAR 325
4Permissible ground
coverage50
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Bangalore Development Authority
[18]
8 Indicative environmental amp social impacts
81 Environmental impacts
The proposed development is in line with the layout of BDA Due to the reasonably large site area the
development will be on the higher side A set back of 50 is found to be acceptable for the site
however an Environmental Impact Assessment studies have to be undertaken for the sites Since
already a commercial complex is existent redevelopment of the complex would need demolition of
the existent structures Hence a suitable disposal of construction and debris has to be undertaken by
the developer Also a Green building can be developed to ensure minimal effect on nature
82 Social impactsDuring the construction period the existing establishments have to be shifted or compensated
temporarily Hence a clear resettlement plan has to be decided before the implementation of the
project It is envisaged that if due care is taken about the existing tenants the development would go
smoothly
83 Mitigation measures
It is necessary that the impacts are identified early and action plans are prepared for their mitigation in
advance For instance for environmental impacts the BDA may insist on the developer to use clean
and green building technologies
It is also necessary that the project development plan is also accompanied by a Relocation and
Rehabilitation plan which will layout detailed action points with the requisite intervening entity
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Bangalore Development Authority
[19]
9 Operating framework
91 Risks amp mitigation
The risk framework for this project has been outlined below
Table 9-1 Risk mitigation measures
Risk Category Risk implication Mitigation measure
Sponsor risk BDA scraps the project Termination payments in case of BDA scrapping the
project
Environment
risk
Adverse impact on
surrounding environment
Penalty clauses in case of default on
Concessionairersquos part
Environmental Impact Assessment to identify all
risks in advance
Political riskChange in government may
put project in jeopardy
Termination payments in case of project being
scrapped
Force
majeure riskProject is abandoned
Force majeure clauses in the concession
agreement
Operating riskThe operations of the
facility are stalled
Performance security clause in case of default on
Concessionairersquos part
Design risk Overdesign of the projectProject design to be finalized in mutual agreement
of concessionaire and BDA
Completion
risk
Completion of project is
delayed inconvenience to
citizens and tenants
Penalty clauses for time overrun in the concession
agreement
Cost overrun
risk
Project cost increases
beyond reasonable limits
Project cost increment ceiling to be specified in the
concession agreement Increase beyond this ceiling
to be borne by the developer No change in revenue
sharing
92 Indicative project structure
The best approach for such a large ticket project would be for the BDA to become a key actor in the
entire process of development The BDA may ask the private sector partner to form a Special
Purpose Company where the equity will be brought in by the private sector developer The designs
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Bangalore Development Authority
[20]
should be left to the developer and BDArsquos role would be in approving the same in accordance with the
Development Control Regulations
The SPC will develop and maintain Complex throughout the concession period The tenants would
pay the developer a sub-lease premium or lease rentals which will be escrowed in a separate accountand can be withdrawn based on the revenue sharing structure adopted
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Bangalore Development Authorit
10 Way ahead
101 Project develo
The key task for BDA is to ap
feasibility of the project Once t
the bid process
Figure 10-1 Project developm
The transaction advisor shall stralso prepare the relevant bid
management on behalf of BDA
102 Procurement
The foremost step for BDA is
feasibility The detailed financial
parameter Also an optimum str
bid documents would be prepar
process be conducted as a 2 sta
983105983152983152983151983145983150983156983149983141983150983156 983151983142 983156983154983137
983108983141983156983137983145983148983141983140 983142983141983137983155983145983138
983155983156983154983157983139983156983157983154983145983150983143
983120983154983141983152983137983154983137983156983145983151
983123983141983148983141983139
y
pment framework
oint a Transaction Advisor in order to conduc
e financial numbers are acceptable BDA BDA
nt framework
ucture the project upon completion of the feasibidocuments The transaction advisor shall un
nd will assist in appointment of the private secto
lan
to appoint a Transaction Advisor for the co
feasibility would determine the tentative revenue
cture would be arrived at Post the approval of
d for the selection of the developer It is recom
ge process involving Technical qualification and
983155983137983139983156983145983151983150 983137983140983158983145983155983151983154
983148983145983156983161 983155983156983157983140983145983141983155 983137983150983140 983152983154983151983146983141983139983156
983150 983151983142 983138983145983140 983140983151983139983157983149983141983150983156983155
983145983151983150 983151983142 983152983154983145983158983137983156983141 983155983141983139983156983151983154 983152983137983154983156983150983141983154
[21]
a detailed financial
should proceed with
ility studies and shallertake bid process
partner
nducting the project
for BDA and the bid
easibility Report the
mended that the Bid
inancial proposal
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B a n g a l o r e D e v e l o p m e n t A u t h o r i t y
B D A s h o u l d i n i t i a t e t h e p r o c e s s o f a p p o
i n t i n g a t r a n s a c t i o n a d v i s o r a t t h e
e a r l i e s t T h i s p r o c e s s c a n b e c o m p l e t e d i n 2 m o n t h s
O n c e t h e T A
i s i n p l a c e
t h e B D
A s h o u l d a l l o w
a t l e a s t 4 m o n t h s f o r t h e p r e p a r a t i o n o f f e a s i b i l i t y p r o j e c t s t r u c t u r i n g a n d b i d d o c u m e n
t s
O n c e t
h e b i d d o c u m e n t s a r e i n p l a c e t h
e B D A
s h o u l d i n i t i a t e t h e p r o c e s s
o f s e l e c t i n g t h e p r i v a t e s e c t o r p a
r t n e r w h i c h c a n b e c o m p l e t e d o v e r a 4 m o n t h
p e r i o d
T h e c u
r r e n t p r o c u r e m e n t p l a n i s s p r e a d
o v e r 1 1 m o n t h s w h i c h c a n b e s
h o r t e n e d d e p e n d i n g o n t h e m a n n e r i n w h i c h B D A
m a k e s d e c i s i o n
s r e l a t i n g t o
a p p o i n
t m e n t o f T A a n d p r i v a t e d e v e l o p e r
A c t i v i t y
M 1
M 2
M 3
M 4
M 5
M 6
M 7
M 8 M
9
M 1 0
M 1 1
M 1 2
A p p o i n t m e t o f t r a n s a c t i o n a d v i s o r
D e t a i l e d t e c h n o - e c o n o m i c f e a s i b i l i t y a n d
b i d d o c u m e n t p r e p a r a t i o n
B i d p r
o c e s s m a n a g e m e n t
S e l e c t i o n o f p r e f e r r e d b i d d e r a n d f o r m a t i o n o f S P C
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B a n g a l o r e D e v e l o p m e n t A u t h o r i t y
1 1
A n n e x u r e 1 ndash C a s h - f l o w
s t a t e m e n t
R e v e n u e H e a d
S u b H e a d R a t e
U n i t
3 1 - M a r - 1 4
3 1 - M
a r - 1 7
3 1 - M a r - 2 2
3 1 - M a r - 2 7
3 1 - M a r - 3 2
3 1 - M a r - 3 7
3 1 - M a r - 4 2
3 1 - M a r - 4 7
3 1 - M
a r - 5 2
3 1 - M a r - 5 7
3 1 - M a r - 6 2
C o m m e
r c i a l S p a c e
O c c u p a
n c y
P e r c e n t a g
0
9 0
9 5
9 5
9 5
9 5
9 5
9 5
9 5
9 5
9 5
C o m m e
r c i a l s p a c e l e a s e d o u t
s q f t
-
7 2 0 6
9 0
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6
0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
D e p o s i t f o r L e a s e
( N o o f m o n t h s r e n t )
1 2
A v e r a g e
L e a s e R e n t a l s
7 0
R s p s f p e r m o n t h
E s c a l a t i o n
1 0
M a i n t e n
a n c e c h a r g e s
2 2 5
R s p s f p e r m o n t h
R e v e n u e f r o m
L e a s e R e n t a l
R s
L a k h s
-
8 8
6 3
1 5 0
6 8
2 4 2
6 6
3 9 0
8 1
6 2 9
4 1
1 0 1 3
6 7
1 6 3 2
5 3
2 6
2 9
2 0
4 2 3 4
3 5
6 8 1 9
4 7
R e v e n u e f r o m
M a i n t e n a n c e c h a r g e s
-
2 8 5
4 8 4
7 8 0
1 2
5 6
2 0
2 3
3 2
5 8
5 2
4 7
8 4
5 1
1 3 6
1 0
2 1 9
2 0
T o t a l R
e v e n u e
-
9 1 4 8
1 5 5 5 2
2 5 0 4 6
4 0 3 3 8
6 4 9 6 4
1 0 4 6 2 5
1 6 8 5 0 0
2 7
1 3 7 1
4 3 7 0 4 6
7 0 3 8 6 7
R e v e n
u e H e a d
S u b H e a d R a t e
U n i t
3 1 - M a r - 6
7
3 1 - M a r - 7 2
3 1 - M a r - 7 8
3 1 - M a r - 7 9
C o m m e r c i a l S p a c e
O c c u p a n c y
P e r c e n t a g
9 5
9 5
9 5
9 5
C o m m e r c i a l s p a c e l e a s e d o u t
s q f t
7 6 0 7 2
8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
D e p o s i t f o r L e a s e
( N o o f m o n t h s r e n t )
1 2
A v e r a g
e L e a s e R e n t a l s
7 0 R s p s f p e r m o n t h
E s c a l a
t i o n
1 0
M a i n t e
n a n c e c h a r g e s
2 2
5 R s p s f p e r m o n t h
R e v e n u
e f r o m
L e a s e R e n t a l
R s
L a k h s
1 0
9 8 2 8 2
1 7
6 8 7
9 4
3 1
3 3 5
2 7
3 4
4 6 8
8 0
R e v e n u
e f r o m
M a i n t e n a n c e c h a r g e s
3 5 3 0 2
5 6 8
5 4
1 0 0 7
2 1
1 1 0 7
9 3
T o t a l R e v e n u e
1 1 3 3 5 8 4
1 8 2 5 6 4 8
3 2 3 4 2 4 8
3 5 5 7 6 7 2
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[x]
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[y]
Disclaimer
CRISIL Risk and Infrastructure Solutions Limited (CRIS) has taken due care and caution in preparation of this Report for
Bangalore Development Authority which is under the purview of the Urban Development Department Government of
Karnataka This Report is based on the information documents provided by the Company andor information available publicly
andor obtained by CRIS from sources which it considers reliable CRIS does not guarantee the accuracy adequacy or
completeness of the information documents Report and is not responsible for any errors or omissions or for the results
obtained from the use of the same The Report and results stated therein are subject to change CRIS especially states that it
has no financial liability whatsoever to the Company users of this Report This Report is strictly confidential and should not be
reproduced or redistributed or communicated directly or indirectly in any form or published or copied in whole or in part
especially outside India for any purpose
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ai
1 amp 2
About CRISIL Infrastructu
CRISIL Infrastructure Advisory
CRISIL Risk and Infrastructure
Limited a 100 subsidiary of
Indiarsquos leading Ratings Resear
Policy Advisory Company
CRISIL Infrastructure Advisory
premier advisor focusing on po
well as commercial and contra
the areas of transport energyinfrastructure We also provide
international firms planning inv
India Over a period of time C
Infrastructure Advisory has buil
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considered the preferred cons
governments multilateral agen
sector clients We have extend
operations beyond India and ar
other emerging markets in Afri
and South Asia
re Advisory
is a division of
Solutions
RISIL Limited ndash
ch Risk and
is Indiarsquos
licy issues as
tual issues in
nd urbansupport to
stments in
ISIL
t a unique
ins and is
ltant by
cies and private-
ed our
e present in
a Middle East
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[b]
Abbreviations
Acronym Definition
ATM Automated Teller Machine
BDA Bangalore Development Authority
BEL Bharat Electronics Limited
BHEL Bharat Heavy Electricals Limited
BMA Bangalore Metropolitan Area
BSUP Basic Services for Urban Poor
BUP Built-Up (Area)
CAGR Compounded Annual Growth Rate
CITB City Improvement Trust Board
CRIS CRISIL Risk amp Infrastructure Solutions Limited
CRRI Central Road Research Institute
DCR Development Control Regulations
FAR Floor Area Ratio
IRR Internal Rate of Return
ITeS Information Technology Enabled Services
JNNURM Jawaharlal Nehru National Urban Renewal Mission
LPG Liquefied Petroleum Gas
NPV Net Present Value
ORR Outer Ring Road
PCNTDA Pimpri Chinchwad New Township Development Authority
PPP Public Private Partnership
RMP Revised Master Plan
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[c]
Acronym Definition
SPC Special Purpose Company
ULB Urban Local Body
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[iv]
Contents
1
Executive summary 1
2
Introduction 3
21
Project idea 3
22
Approach amp methodology 3
23
Review of previous studies 4
3
Sector profile 5
31
Industry overview 5
32
Regional profile 5
Geography 6
Connectivity 6
Major commercial areas 6
33
Key issues 7
4
Project 8
41
Description of the project 8
42
Components of the project 8
43
Description of the site 8
44 Interaction with stakeholders 9
45 Case studies 9
451 Public private partnership in affordable housing under Jawaharlal Nehru National
Urban Renewal Mission (JNNURM) 10
5
Market assessment 13
51
Bangalore growth overview 13
52
Demand projections 14
6
Project financials 15
61
Cost estimation 15
62
Revenue stream 15
63
Viability assessment 16
64
Ranking of options based on commercial viability 16
7
Statutory amp legal framework 17
71
Legal amp regulatory framework 17
8
Indicative environmental amp social impacts 18
81
Environmental impacts 18
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[v]
82
Social impacts 18
83
Mitigation measures 18
9
Operating framework 19
91
Risks amp mitigation 19
92
Indicative project structure 19
10
Way ahead 21
101 Project development framework 21
102 Procurement plan 21
11 Annexure 1 ndash Cash-flow statement 23
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[vi]
List of Tables
Table 7-1 Project Cost of the proposed development 15
Table 7-2 Viability assessment for BDA complex at Indiranagar 16
Table 8-1 Plot details of Indiranagar site 17
Table 10-1 Risk mitigation measures 19
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[vii]
List of Figures
Figure 2-1 Approach and Methodology 4
Figure 4-1 Development structure of the Commercial Complex 8
Figure 4-2 BDA Complex at Indiranagar 9
Figure 6-1 Population growth in Bangalore between 1901 and 2011 13
Figure 11-1 Project development framework 21
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Bangalore Development Authority
[1]
1 Executive summary
Infrastructure Development Department proposes to strengthen the project development process inthe Departments responsible for implementing Infrastructure Projects through Public Private
Partnership (PPP) The PPP concept is relatively new and the implementing officers require
necessary insight orientation and assistance into the project development for effective marketing and
implementation of the projects
CRISIL Infrastructure Advisory a division of CRISIL Risk and Infrastructure Solutions Limited (CRIS)
has been appointed by the Infrastructure Development Department Government of Karnataka to
work closely with the Bangalore Development Authority for the assignment ldquoInstitutional Strengthening
and Sector Specific Inventory for PPP Mainstreaming in Sectorsrdquo Under this BDA has identified a set
of nine projects for which pre-feasibility assessments are to be carried out Redevelopment of BDA
Complex at Indiranagar is one of the nine projects proposed by BDA
In line with the objectives of BDA the BDA Complexes were built at strategic locations and near
residential localities in order to provide a one stop solution for shopping Hence facilities like motor
training schools travel agents RTO etc started operating within the complexes The complexes are
now in dilapidated condition and in order to provide better facilities to the citizens BDA proposes to
redevelop the old BDA Complex at Indiranagar
This report examines the possibility of redeveloping the commercial complex on a PPP Basis In order
to bring in private sector participation in the redevelopment of the complex it is proposed that the land
is handed over to the developer on long term lease basis The selected developer would be
responsible for Finance Design Construction and Operation amp Maintenance of the project
throughout the lease period Ownership of the land will always be with BDA After the lease period
the land along with the BUP area will be transferred back to BDA free of cost One portion of the
proposed commercial development shall be reserved for BDA for rehabilitation of the existing
vendors
For the purpose of cost estimation we have studied the feasibility report developed by SREI
Infrastructure Finance Limited and have also consulted with the BDA The estimated cost of
development of the project is Rs 20810 lakhs
The revenues to the developer would accrue from the revenue earned from the lease rentals as well
as maintenance charges The total revenue from both the heads has been arrived at Rs 6720 Lakhs
for the base year Occupancy of 80 has been assumed for the base year which will stabilize at a
maximum of 95 towards the end of the concession period The average lease rentals have been
assumed at Rs 70 per square feet and maintenance charges have been assumed at Rs 225 per
square feet Appropriate escalation factors have been assumed for both revenue heads
The viability assessment has been carried out over three concession periods of 25 33 and 66 years
The debt to equity ratio has been assumed to be 121
The viability assessment has been worked out with determinants like the project level internal rate of
return (IRR) IRR of equity and the net present value of the equity The project is found to be viable for
all the 3 concession periods In case of the 25 year concession period it is estimated that the
developer would pay BDA an upfront premium of Rs 9650 Lakhs For the concession period of 33
and 66 years the upfront premium to be paid by the developer would be Rs 12300 Lakhs and Rs
6000 lakhs respectively
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Bangalore Development Authority
[2]
A key issue that the BDA will need to address is the relocation of the existing tenants of the
complexes The BDA needs to prepare a rehabilitation plan for the existing tenants and should also
clearly lay out the rehabilitation mechanism for these tenants As part of the project configuration we
have assumed that a certain proportion of the developed spaces would be handed over to the BDA
which can be utilized for the rehabilitation of the existing tenants However if the BDA chooses to
accommodate these tenants in the redeveloped facility the commercial terms may have to be in line
with the rentals being charged to the new tenants We are of the opinion that the BDA should make
an informed decision on this only after a detailed feasibility has been conducted for the site
We have examined the way forward for the project We propose that the BDA should appoint a
transaction advisor for the project who will conduct a detailed feasibility for the project and would also
facilitate the appointment of the developer through bid process management
The procurement plan for the project has been developed to be spread over 11 months which can be
shortened depending on the swiftness of decision making at BDA
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Bangalore Development Authority
[3]
2 Introduction
CRISIL Infrastructure Advisory a division of CRISIL Risk and Infrastructure Solutions Limited (CRIS)
has been appointed by the Infrastructure Development Department Government of Karnataka to
work closely with the Bangalore Development Authority for the assignment ldquoInstitutional Strengthening
and Sector Specific Inventory for PPP Mainstreaming in Sectorsrdquo Under this BDA has identified a set
of nine projects for which pre-feasibility assessments are to be carried out
In order to provide advanced recreational facilities and services to the citizens BDA has proposed the
redevelopment of its Complexes through Public Private Partnership model Redevelopment of BDA
Complex at Indiranagar is one of the nine projects proposed by BDA
21 Project idea
Bangalore Development Authority (BDA) is one of the premier urban planning and development
agencies that oversee the growth of the city The BDA came into being with effect from 6th January
1976 under a separate Act of the State Legislature viz the BDA Act 1976 This Authority combined in
itself the Planning functions of the City Planning Authority and the developmental functions of the
erstwhile City Improvement Trust Board (CITB)
The key objectives of the authority as per the BDA Act shall be to promote and secure the
development of the Bangalore Metropolitan Area (BMA) and for that purpose the Authority shall have
the power to acquire hold manage and dispose of moveable and immoveable property whether
within or outside the area under its jurisdiction to carry out building engineering and other operations
and generally to do all things necessary or expedient for the purposes of such development and for
purposes incidental thereto
In line with the objectives of BDA the BDA Complexes were built at strategic locations in near
residential localities in order to provide a one stop solution for shopping Hence convenient stores like
motor training schools travel agents RTO etc started operating within the complexes The complexes
are now in dilapidated condition and in order to provide better facilities to the citizens BDA proposed
to develop the old BDA Complex at Indiranagar The project is also an outcome of reducing
commercial spaces in key residential areas
22 Approach amp methodologyThe broad approach and methodology followed for study of these projects has been depicted
graphically below
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Bangalore Development Authorit
Figure 2-1 Approach and Met
23 Review of pre
Bangalore Development Authori
development works identified by
29102010 BDA retained Tand
identified projects namely ldquoDevel
TUSPL had submitted their Fe
estimations The report submitte
been presented as below
The project cost indicate
to reflect the market
contingencies prelimina
The financials indicated
Developer and BDA an
given the market conditi
The report does not cle
1062701 sq ft And an
2440023 square metre
officials
1 The cost incurred towards upfront pre
figure
Study of existingreports
y
odology
ious studies
ty had invited proposals for appointment of Co
BDA vide Tender Notification No BDAEMTA-
on Urban Solutions Pvt Ltd (TUSPL) as Cons
opment of Commercial Complex at Indiranagar
sibility Report for the Indiranagar site along
d by TUSPL was studied in detail and the CRISI
d in the report is Rs 39165 Lakhs The project c
rates The Revised project cost is Rs 239
ry and pre-operative expenses
in the Feasibility Report is assuming a revenu
an upfront premium which the developer woul
ns and rates this has been revised
arly mention the area of the plot It indicates a
open land development area of 131322 sq f
has been assumed for the pre-feasibility in c
ium and the interest during construction period is not includ
Discussions withBDA personnel
Be
a
Finalrecommendation
[4]
nsultants for various
3802010-11 dated
ultant for one of the
angalorerdquo
ith the designs and
Lrsquos observations has
ost has been revised
11 Lakhs including
share between the
ld provide However
construction area of
t Hence an area of
nsultation with BDA
d in the above mentioned
lock coststimation
inancialsessment
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
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Bangalore Development Authority
[5]
3 Sector profile
The city of Bangalore has witnessed very rapid growth The city today is home to over 84 million
people (2011 Census) The salubrious weather and the rapid concentration of economic activities in
Bangalore have fuelled the growth of Bangalore As one of the worldrsquos fastest growing cities
Bangalore is experiencing a steady growth in population
Bangalore has been substantially affected by globalization and rapid urbanization over the last
decade The demand for services and quality of life is not confined to the central core or the erstwhile
Bangalore Mahanagra Palike jurisdiction but spreads beyond into the peri-urban areas the
Metropolitan Area and outwards into Bangalore Metropolitan Region With the emergence of the
Bangalore-Mysore Infrastructure Corridor the Bangalore International Airport and the planned ring
roads urbanization has sprawled out
Banaglore has incontestable advantages to develop into an international metropolis but at the same
time faces significant constraints The city is embedded in its history and depicts the greatness of a
truly Indian city established before the invasions and colonization It has a diverse set of activities
from silk to aeronautics from clothing to information technology and is a gauge of dynamism and
solidity of the city Natural drainage climatic advantage and the availability of water in the Cauvery
baisn are factors assisting in improving the quality of life
31 Industry overview
Bengaluru is countryrsquos third leading realty market With the IT boom and corresponding growth of the
economy saw large-scale increase in the cityrsquos population mostly due to migration from across India
Bengalurursquos population grew about 35 percent in the last six years
This increase in population along with steady demand and restricted supply led to saturation in central
Bengaluru region and pushed development to peripheral areas like Whitefield Sarjapur road Outer
Ring Road (ORR) Bannerghatta Road Hosur Road
With the opening of International Airport Real estate in North Bangalore (Bellary Road to Yelahanka)
has also witnessed the launch of numerous projects with apartments and villas Given the improved
infrastructure accessibility and the future potential for this area the area has been attracting both the
segments of investors and end-users alike
The city leads the country in office space with 738 million square feet of commercial capacityavailable However Bengaluru also has 22 per cent of the available space vacant with a large number
of projects under development and reduced demand
32 Regional profile
Bengaluru (formerly Bangalore) also known as Garden City for its beautiful gardens is the
administrative industrial commercial educational and cultural capital of Karnataka and located on
the Deccan Plateau in the South-Western part of India Bengaluru is Indias third most populous city
fastest growing and fifth largest metropolitan area with population of about 57 million (as per 2001
census) The population is expected to reach around 11 million and 22 million in 2021 and 2041respectively
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Bangalore Development Authority
[6]
With ever increasing boundaries and gross domestic product of 59123 billion in FY 06-07 Bengaluru
has some well-recognized IT companies and numerous public sector heavy industries aerospace
telecommunications and defence organisations located within Bengaluru also has some well known
colleges and research institutes
Geography
With an average elevation from the sea level of 920 m and total area of 741 km2 Bengaluru is located
in the south-eastern part of Karnataka in the Mysore Plateau - a region of Deccan Plateau The city
has an uneven landscape of hills and valleys to the south and relatively more level plateau towards
the north
Because of its elevation the city enjoys a pleasant and equable climate throughout the year The city
is situated in the Bengaluru Urban district which is divided into four taluks - Bangalore North
Bangalore East Bangalore South and Anekal and covers a total geographical area of 2190 sq km
Bangalore District is surrounded by Kolar District to the northeast Tumkur District on the northwest
Mandya District on the southwest Chamarajanagar District on the south and neighbouring state of
Tamil Nadu on the southeast
Connectivity
Bangalore is well connected to other Indian cities by road rail and air transport The connectivity by
rail road and air is detailed in the sections below
Road
Bengaluru is located at the junction of National Highways 4 7 and 48 connecting to various important
cities in India including Chennai Hyderabad Kanyakumari Madurai Mangalore Mumbai Nagpur
Pune and Varanasi
Railways
Bengaluru has two major railway stations Bengaluru City railway station and Yeswantpur Junction
The city has a well maintained railway network connecting major cities of the country and is
connected to the rest of the country both by metre gauge and broad gauge rail services
Air
Bengaluru has an International Airport at Devanahalli and is well connected to all cities in India
Internationally Bengaluru is connected to European and Asian cities like Frankfurt Singapore Kuala
Lumpur London Dubai Paris Bangkok and Hong Kong
Major commercial areas
The following are the major commercial areas in and around Bangalore
Central Business District Seshadripuram Jayanagar JP Nagar Yeshwantapura
Eastern Suburb Marathalli-sarjapur ORR Sarjapur Road Whitefield and Brookfield
Secondary Business District Indiranagar JP Nagar RT Nagar Vijayanagar
Northern Suburb HRBR Layout Bellary Road Jakkur
Southern Suburb Mysore Road Hosur Road
West Suburb BEL Factory HMT Layout
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Bangalore Development Authority
[7]
33 Key issues
The recessionary trends in 2007 across the world had also adversely affected the entire real estate
market in Bengaluru All the three categories of residential commercial (office space) and retail had
experienced slump in market and the real estate market in several erstwhile prime locations of the citywere facing oversupply situation and a drastic fall in the capital as well as rental values
With the revival of the industry and economy the residential market is expected to witness a jump
across all the areas in Bengaluru as per CRISILrsquos analysis The eastern and southern areas are
estimated to emerge as up-scaled developments as these areas are expected to see maximum
supply in the next three years
Good quality developments have been the key feature of Bangalorersquos commercial developments The
boom in IT sector especially in South India has enabled the city to have a metropolitan culture which
brings along the urban demands like malls and multiplexes
Recently the market in Bangalore has stabilized to a large extent after the sudden jump in prices post
recession However this is cyclical in nature and the saturation of IT services has led to a scenario
where there would not be much increase in the lease rentals
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Bangalore Development Authorit
4 Project
41 Description of
It is proposed that for the redev
over to the developer on long
Finance Design Construction
period Ownership of the land wi
BUP area will be transferred b
proposed commercial develop
vendors
42 Components o
The project would be develope
basis The structure of the mode
Figure 4-1 Development struc
43 Description of
The site is located at Indiranaga
the main commercial centres in
Road in the North Old Airport
the East Indiranagar is located
famous for housing the Somes
and educational institutions like
y
the project
lopment of BDA Complex at Indiranagar the la
erm lease basis The selected developer woul
and Operation amp Maintenance of the project t
ll always be with BDA After the lease period th
ack to BDA free of cost We have assumed
ent shall be reserved for BDA for rehabilit
f the project
on a Design Build Finance Operate and Tra
l has been illustrated below
ture of the Commercial Complex
the site
r a suburb of Bangalore located about 4 km ea
the city This medium sized suburb is enclose
oad in the South Halasura in the West and Je
within a diameter of few kilometre radii from the
ara Temple several reputed hospitals like Amrj
r Ambedkar College KH Patel College etc
[8]
nd would be handed
d be responsible for
hroughout the lease
e land along with the
hat a portion of the
tion of the existing
sfer model on PPP
t of MG road one of
by the Old Madras
vanbheemanagar in
airport The place is
yoti Vijaya and ESI
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Bangalore Development Authority
[9]
The site is situated at a junction near a residential area and is frequented by elders and youngsters
alike The present building consists of Motor driving schools RTO office computer vendors and travel
agents There is a water tank situated in the site
Figure 4-2 BDA Complex at Indiranagar
44 Interaction with stakeholders
CRISIL conducted a series of interactions with the stakeholders namely the BDA officials Citizens
and the establishment owners The interactions revealed that the building has to undergo
redevelopment The condition of the BDA office is not up to the standards expected and the officials
complained about leaks and short circuits The establishment owners suggested that the building was
planned with less road facing establishments due to which they are not able to attract footfalls
45 Case studies
In order to generate revenues from the real estate value of the land in the ownership of the ULBrsquos
commercial projects have been developed on a PPP basis on these lands Typically under such
arrangements the ULB would have identified a site under its ownership where a property for
commercial use can be developed Commercial development would include the development of
shopping complexes markets bus terminals multi-level car parking townships etc
Under such an arrangement the ULB would require of the private developer to undertake
construction of a commercial complex on the land The land would be provided by the ULB to the
private operator on a lease basis The ULB would provide specifications on the nature and type of
commercial development required The private developer would need to bear all the capital costs
associated with the construction of the commercial complex Post construction of the commercial
complex as per the arrangement the private developer would either hand over the constructed
facility to the ULB or would sub-lease the property The private developer would be required to make
to the ULB an upfront payment or provide a share in the ULB revenues earned from sub-leasing the
properties
The following case study compiled by the Ministry of Urban Development Government of India
highlights the development of municipalurban lands on a PPP basis
Category Details
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Bangalore Development Authority
[10]
Category Details
Project Construction of Commercial Complex at Ranipura Market
Cost of
ProjectRs 1500 lakhs
Description
The land was allotted to the concessionaire to construct the Commercial Complex by
the Corporation
Corporation continues to own the land
After the concession period the built-up structure (Commercial Complex) will be
transferred to the Corporation by the concessionaire
The concessionaire was given the right to recover its investment from the premium
received for ldquoRight of Occupationrdquo of the constructed shops
At the time of award of concession it was estimated that a profit of Rs 200 lakh will
be accrued from the venture which will be shared by the concessionaire with the
Corporation
The Corporation is expected to receive a profit share of Rs 100 lakh from the
concessionaire
Source Compendium on Public Private Partnership in Urban Infrastructure Case Studies Ministry of Urban
Development Government of India in association with Confederation of Indian Industry (CII)
We have also studied another case wherein the development affordable housing units was structure
on a PPP basis by the Pimpri Chinchwad New Township Development Authority (PCNTDA)
451 Public private partnership in affordable housing under Jawaharlal
Nehru National Urban Renewal Mission (JNNURM)
The Pune metropolitan region comprising Pune and Pimpri Chinchwad cities is one of the fastest
growing urban agglomerations in India A major automobile and auto-ancillary hub and a well-known
international education destination it also ranks among the top IT destinations of India Besides the
region has many industrial clusters housing industries focused on FMCG engineering agro-based
technology
The Pimpri-Chinchwad New Town Develompent Authority (PCNTDA) a key development authority of
the PMR is responsible for development of peri-urban especially in its north In line with the
phenomenal growth of the region and its strident aspirations PCNTDA has envisioned the
development of an integrated township at Sector 12 spanning 53 hectares Given the success of the
Public Private Partnership (PPP) model in involving private sector participation for development based
projects PCNTDS proposed to develop the integrated township on PPP basis
With this objective PCNTDA appointed the consortium of CRISIL Risk and Infrastructure Solutions
Limited (CRIS) Omkar Associates and Creations as project development consultants for the
development of an eco-friendly affordable township at Bhosari Sector 12 CRISILrsquos role was to
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Bangalore Development Authority
[11]
undertake a detailed demand assessment financial feasibility project structuring and management of
the bid process
The concept
Keep in mind the PCNTDArsquos vision CRIS designed integrated township such that it compriseshousing untis for the poor affordable housing units for the general public a primary health care
centre a hospital and a school
As per the structure the Developer shall construct 5040 housing units under the Basic Services for
Urban Poor (BSUP) scheme of JNNURM PCNTDA shall transfer the amount of grant sanctioned for
developing these units under the JNNURM scheme to the developer The remaining project cost of
the BUSP units was to be financed by the developer
In addition to this the Developer shall also construct affordable housing units as per pre-specified
specifications and hand over to PCNTDA free of cost The developer shall also construction the
physical and social infrastructure for the integrated township thereby ensuring good road adequate
water supply an efficient sewerage system as well as schools and hospitals The project shall bedeveloped in a manner such that it has minimum possible impact on the surrounding environment and
is in harmony with nature To this end the developer shall undertake eco-friendly initiatives including
rain water harvesting use of solar power environment-friendly materials and vermin-composting
The project
The developer has to complete the BSUP housing units within 2 years and hand over to the PCNTDA
For the remaining portion of the land PCNTDA shall execute a lease deed for 99 years with the
developer The lease rights shall be granted to the developer in phases upon completion of
milestones as defined in the project agreement The main scope of work for the developer shall
include
Master planning for the entire 53 hectares of land and construction of common physical and
social infrastructure for the entire area
Development construction and marketing of 795 lakhs square meters of integrated real
estate space
Construction and handing over of 5040 housing units under the BSUP scheme of JNNURM
on a separate layout carved out of the said land PCNTDA will provide the developer the grant
sanctioned by the Government of India for these housing units
Successful selection of private developer
With the objective of undertaking this project on a PPP basis in a transparent and objective manner
PCNTDA launched a three-cover Request for Proposal in June 2009 The bidding parameter was theconstructed ldquoCarpet Areardquo in ldquosquare metersrdquo of affordable housing units that the bidder shall
construct and hand over free of cost to PCNTDA
The tender received good response from four interested bidders Of the four bidders two bidders
were adjudged technically and financially capable and short-listed for the final stage The bidder with
the highest construction carpet area offered to PCNTDA was selected The successful bidder quoted
a carpet area of 130599 square meters of affordable housing units
Thereby the PCNTDA derived a value of 7369 housing units (including 5040 BSUP units) a school
and a hospital for the BSUP units a school and hospital for the general public and development of
public amenities
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Bangalore Development Authority
[12]
Value addition to PCNTDA
In commercial terms PCNTDA saved (i) Rs 190 crores as the gap amount required to fund the BSUP
scheme (ii) Rs 210 crores of construction cost of affordable housing units and (iii) Rs 100 crores on
the development of physical and social infrastructure In addition to this PCNTDA shall receive anupfront payment of Rs 50 crores from the successful bidder The project structure also protects
PCNTDA from cost escalation risks valuation risks and engineering risks
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Bangalore Development Authorit
5 Market asse
51 Bangalore gro
The growth of Bangalore has be
from the growth in population in
to the economic opportunities it
Bangalore an obvious choice for
Bangalore has grown at averag
decades It is projected that B
explosive growth has meant th
pressure
Figure 5-1 Population growth
Source City Development Plan Ba
The city leads the country in
available However Bengaluru a
of projects under development a
983089983086983094983091 983089983086983096983097 983090983086983092
983088
983089983088
983090983088
983091983088
983092983088
983093983088
983094983088
983095983088
983096983088
983097983088
983089983097983088983089 983089983097983089983089 983089983097983090983089
983120 983151 983152 983157 983148 983137 983156 983145 983151 983150 983145 983150 983116
983137 983147 983144 983155
y
sment
th overview
en unprecedented in the past couple of decades
the last century Bangalore continues to attract t
offers This is also supported by a salubrious
not only businesses but also for people
compounded annual growth rate (CAGR) of 3
ngalorersquos population will cross the 10 million
at the infrastructure in Bangalore has been p
in Bangalore between 1901 and 2011
galore Development Authority and Census of India
ffice space with 738 million square feet of
lso has 22 per cent of the available space vacan
nd reduced demand
983091983086983089 983092983086983089983089983095983086983096983094
983089983090983086983088983094
983089983094983086983094983092
983090983097983086983090983090
983092
983089983097983091983089 983089983097983092983089 983089983097983093983089 983089983097983094983089 983089983097983095983089 983089983097983096983089 983089983097
[13]
This fact is laid bare
rongs of people due
eather which makes
58 in the last three
mark by 2021 This
t under tremendous
commercial capacity
with a large number
983086983091
983093983094983086983096983094
983096983092
983097983089 983090983088983088983089 983090983088983089983089
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Bangalore Development Authority
[14]
52 Demand projections
Bangalore is the largest commercial market and third largest residential market in India The city has
typically been preferred by home buyers because of its favorable socio-economic conditions and a
salubrious climate In recent years Bangalore has attracted a large influx of population engaged inthe thriving IT sector City residential demand is more end-user driven with moderate price
appreciation The average residential real estate price in the city is 20-25 lesser than in Delhi and
Mumbai In the recent National Housing Bank Residex the index indicating property prices across key
cities in India Bangalore witnessed a mere 1 YoY fall in residential prices in 2011-12 Mumbai saw
an 116 YoY jump in home prices while Delhi witnessed 358 YoY increase during 2011-12 The
city witnessed tremendous growth in terms of population and the number of companies setting up
offices there Thus the ongoing projects such as Bengaluru metro rail project various flyovers and
the under-pass construction activities in Outer Ring Road (ORR) CNR and BHEL circles would ease
the congestion and provide better connectivity for all commuters This will boost real estate demand in
and around Bangalore city
In 2011-12 Bangalorersquos commercial market exhibited resiliency with comparatively high demand
levels despite the discomfort in the market on account of global uncertainty Though commercial
property demand in Bangalore is largely dependent on ITITES sectors the share of manufacturing is
increasing at a faster pace and thereby giving further boost to office space demand According to real
estate consultancy firm Knight Frank the manufacturing sector witnessed a quantum leap as its share
of absorption increased from 3 in 4QCY10 to 23 in 4QCY11 The absorption of commercial space
has gone up from 5mn sq ftquarter in CY09 to 7mn sq ftquarter in CY11 thanks to sustained
demand for Bangalore commercial space which witnessed 43 CAGR in absorption level over CY09-
11 Subdued supply during the first two quarters of 2011 coupled with high absorption level has
substantially lowered the vacancy level in the city (bringing it down from 17 in CY10 to 12 in
CY11) With the expansion of existing operations in the IT sector and the entry of newer sectors dueto renewed optimism in the market we expect the level of absorption of office space to remain stable
Revised Master Plan-2015 for the BMA has been published This document gives the likely growth to
take place in various areas of the BMA The population of the BMA is expected to grow from 61 lakh
in 2001 to 122 lakh in 2025
The proposed growth rate and the ever changing urban scenario is bound to increase the commercial
space demand in the region The site at Indiranagar is situated at a junction and has two road facing
sides which makes it very attractive for commercial development The site is also huge in size and
can easily accommodate a mall
Hence in view of the above it can be safely recommended that the site would generate huge interest
within the developers
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Bangalore Development Authority
[15]
6 Project financials
The project costs have been largely derived from the costs indicated by the Bangalore Development
Authority (BDA)
61 Cost estimation
The estimated cost of development of the project is Rs 23931 lakhs The costs have been outlined
below
Table 6-1 Project Cost of the proposed development
Particular Amount inRs Lakhs
Construction Cost 19967
Land Development 793
Other Infrastructure 50
Total Hard Costs 20810
Contingencies 3121
Total Project Development Cost 23931
Apart from the above mentioned project development cost the Concessionaire would incur the
development premium and Interest during construction (IDC) cost
Particulars 25 years 33 Years 66 years
Upfront Premium (Rs Lakh) 965000 1230000 600000
IDC Cost (Rs Lakh) 315600 361500 259100
Revenue Share every year 15 15 15
Total Project Cost (Rs Lakhs) 36737 39846 33022
62 Revenue stream
The Revenues to the Developer would accrue from the revenue earned from the lease rentals and the
maintenance charges which the developer earns from the tenants The total revenue from both the
heads has been arrived at Rs 6720 Lakhs for the base year It has been assumed that the
occupancy of the commercial complex 80 in the base year and stabilizes to a maximum of 95towards the end of the concession period The average lease rentals have been assumed at Rs 70
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Bangalore Development Authority
[16]
per square feet and the maintenance charges have been assumed at Rs 225 per square feet Both
the revenues are escalating at the rate of 10 per annum The income statement for the developer
has been provided in Annexure 1
63 Viability assessment
The viability assessment has been carried out over two concession period ie 25 33 and 66 years
The debt to equity ratio has been assumed to be 121
The project level internal rate of return (IRR) IRR of equity and the net present value of the equity
have been worked out
Table 6-2 Viability assessment for BDA complex at Indiranagar
Concession Period Project IRR Equity IRR NPV of Equity
Upfront Premium
(Rs in Lakhs)
25 years 1777 2007 96 9650
33 years 1818 2006 108 12300
66 years 2101 2333 5285 6000
It is evident that the project is viable for the developer for all the 3 concession periods In case of the
25 year concession period it is estimated that the developer would pay BDA an estimated upfront
premium of Rs 9650 lakhs Similarly the developer would pay BDA an amount of Rs 12300 lakhsand Rs 6000 lakhs for the concession periods of 33 years and 66 years respectively
64 Ranking of options based on commercial viability
Having assessed the project for two concession periods of 25 33 and 66 years we are of the view
that the 25 year concession option will be more suitable since it allows the developer to make
reasonable returns on the projects and his own investments along with a sizeable upfront premium for
BDA BDA would be in a position to renew the contract or retender the project after 25 years which
may enable BDA to earn as per the prevailing market rates
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Bangalore Development Authority
[17]
7 Statutory amp legal framework
71 Legal amp regulatory framework
Development Control Regulations (DCR)
As per RMP ndash 2015 published by BDA the project site has been classified as ldquoCommercial Businessrdquo
As per the definitions of RMP-2015 Commercial Business Zone allows development of Commercial
and Corporate offices Retail Shopping Complexes Restaurants and Hotels Convention centres and
banquet halls financial institutions Cinema and multiplexes places of assembly exhibition centres
Entertainment and amusement centres and stores
Permissible land uses under Commercial (Business) Zone as per RMP-2015 of BDA
Main land use category C3
Other land uses permissible (as main land use) R I-3 T3 amp U4
If the road width is less than 120 m and plot area is less than 240 square metre then C2 I-2
R and U4 only are allowed
The plot size is 24000 square metre Presently it has 18m wide access road The applicable DCR for
the plot as per proposed road width is as follows
Table 7-1 Plot details of Indiranagar site
Sr No Particulars Description Unit
1 Land Use Commercial Business
2 Road Width 18 Metre
3 Permissible FAR 325
4Permissible ground
coverage50
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Bangalore Development Authority
[18]
8 Indicative environmental amp social impacts
81 Environmental impacts
The proposed development is in line with the layout of BDA Due to the reasonably large site area the
development will be on the higher side A set back of 50 is found to be acceptable for the site
however an Environmental Impact Assessment studies have to be undertaken for the sites Since
already a commercial complex is existent redevelopment of the complex would need demolition of
the existent structures Hence a suitable disposal of construction and debris has to be undertaken by
the developer Also a Green building can be developed to ensure minimal effect on nature
82 Social impactsDuring the construction period the existing establishments have to be shifted or compensated
temporarily Hence a clear resettlement plan has to be decided before the implementation of the
project It is envisaged that if due care is taken about the existing tenants the development would go
smoothly
83 Mitigation measures
It is necessary that the impacts are identified early and action plans are prepared for their mitigation in
advance For instance for environmental impacts the BDA may insist on the developer to use clean
and green building technologies
It is also necessary that the project development plan is also accompanied by a Relocation and
Rehabilitation plan which will layout detailed action points with the requisite intervening entity
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Bangalore Development Authority
[19]
9 Operating framework
91 Risks amp mitigation
The risk framework for this project has been outlined below
Table 9-1 Risk mitigation measures
Risk Category Risk implication Mitigation measure
Sponsor risk BDA scraps the project Termination payments in case of BDA scrapping the
project
Environment
risk
Adverse impact on
surrounding environment
Penalty clauses in case of default on
Concessionairersquos part
Environmental Impact Assessment to identify all
risks in advance
Political riskChange in government may
put project in jeopardy
Termination payments in case of project being
scrapped
Force
majeure riskProject is abandoned
Force majeure clauses in the concession
agreement
Operating riskThe operations of the
facility are stalled
Performance security clause in case of default on
Concessionairersquos part
Design risk Overdesign of the projectProject design to be finalized in mutual agreement
of concessionaire and BDA
Completion
risk
Completion of project is
delayed inconvenience to
citizens and tenants
Penalty clauses for time overrun in the concession
agreement
Cost overrun
risk
Project cost increases
beyond reasonable limits
Project cost increment ceiling to be specified in the
concession agreement Increase beyond this ceiling
to be borne by the developer No change in revenue
sharing
92 Indicative project structure
The best approach for such a large ticket project would be for the BDA to become a key actor in the
entire process of development The BDA may ask the private sector partner to form a Special
Purpose Company where the equity will be brought in by the private sector developer The designs
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Bangalore Development Authority
[20]
should be left to the developer and BDArsquos role would be in approving the same in accordance with the
Development Control Regulations
The SPC will develop and maintain Complex throughout the concession period The tenants would
pay the developer a sub-lease premium or lease rentals which will be escrowed in a separate accountand can be withdrawn based on the revenue sharing structure adopted
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Bangalore Development Authorit
10 Way ahead
101 Project develo
The key task for BDA is to ap
feasibility of the project Once t
the bid process
Figure 10-1 Project developm
The transaction advisor shall stralso prepare the relevant bid
management on behalf of BDA
102 Procurement
The foremost step for BDA is
feasibility The detailed financial
parameter Also an optimum str
bid documents would be prepar
process be conducted as a 2 sta
983105983152983152983151983145983150983156983149983141983150983156 983151983142 983156983154983137
983108983141983156983137983145983148983141983140 983142983141983137983155983145983138
983155983156983154983157983139983156983157983154983145983150983143
983120983154983141983152983137983154983137983156983145983151
983123983141983148983141983139
y
pment framework
oint a Transaction Advisor in order to conduc
e financial numbers are acceptable BDA BDA
nt framework
ucture the project upon completion of the feasibidocuments The transaction advisor shall un
nd will assist in appointment of the private secto
lan
to appoint a Transaction Advisor for the co
feasibility would determine the tentative revenue
cture would be arrived at Post the approval of
d for the selection of the developer It is recom
ge process involving Technical qualification and
983155983137983139983156983145983151983150 983137983140983158983145983155983151983154
983148983145983156983161 983155983156983157983140983145983141983155 983137983150983140 983152983154983151983146983141983139983156
983150 983151983142 983138983145983140 983140983151983139983157983149983141983150983156983155
983145983151983150 983151983142 983152983154983145983158983137983156983141 983155983141983139983156983151983154 983152983137983154983156983150983141983154
[21]
a detailed financial
should proceed with
ility studies and shallertake bid process
partner
nducting the project
for BDA and the bid
easibility Report the
mended that the Bid
inancial proposal
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B a n g a l o r e D e v e l o p m e n t A u t h o r i t y
B D A s h o u l d i n i t i a t e t h e p r o c e s s o f a p p o
i n t i n g a t r a n s a c t i o n a d v i s o r a t t h e
e a r l i e s t T h i s p r o c e s s c a n b e c o m p l e t e d i n 2 m o n t h s
O n c e t h e T A
i s i n p l a c e
t h e B D
A s h o u l d a l l o w
a t l e a s t 4 m o n t h s f o r t h e p r e p a r a t i o n o f f e a s i b i l i t y p r o j e c t s t r u c t u r i n g a n d b i d d o c u m e n
t s
O n c e t
h e b i d d o c u m e n t s a r e i n p l a c e t h
e B D A
s h o u l d i n i t i a t e t h e p r o c e s s
o f s e l e c t i n g t h e p r i v a t e s e c t o r p a
r t n e r w h i c h c a n b e c o m p l e t e d o v e r a 4 m o n t h
p e r i o d
T h e c u
r r e n t p r o c u r e m e n t p l a n i s s p r e a d
o v e r 1 1 m o n t h s w h i c h c a n b e s
h o r t e n e d d e p e n d i n g o n t h e m a n n e r i n w h i c h B D A
m a k e s d e c i s i o n
s r e l a t i n g t o
a p p o i n
t m e n t o f T A a n d p r i v a t e d e v e l o p e r
A c t i v i t y
M 1
M 2
M 3
M 4
M 5
M 6
M 7
M 8 M
9
M 1 0
M 1 1
M 1 2
A p p o i n t m e t o f t r a n s a c t i o n a d v i s o r
D e t a i l e d t e c h n o - e c o n o m i c f e a s i b i l i t y a n d
b i d d o c u m e n t p r e p a r a t i o n
B i d p r
o c e s s m a n a g e m e n t
S e l e c t i o n o f p r e f e r r e d b i d d e r a n d f o r m a t i o n o f S P C
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B a n g a l o r e D e v e l o p m e n t A u t h o r i t y
1 1
A n n e x u r e 1 ndash C a s h - f l o w
s t a t e m e n t
R e v e n u e H e a d
S u b H e a d R a t e
U n i t
3 1 - M a r - 1 4
3 1 - M
a r - 1 7
3 1 - M a r - 2 2
3 1 - M a r - 2 7
3 1 - M a r - 3 2
3 1 - M a r - 3 7
3 1 - M a r - 4 2
3 1 - M a r - 4 7
3 1 - M
a r - 5 2
3 1 - M a r - 5 7
3 1 - M a r - 6 2
C o m m e
r c i a l S p a c e
O c c u p a
n c y
P e r c e n t a g
0
9 0
9 5
9 5
9 5
9 5
9 5
9 5
9 5
9 5
9 5
C o m m e
r c i a l s p a c e l e a s e d o u t
s q f t
-
7 2 0 6
9 0
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6
0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
D e p o s i t f o r L e a s e
( N o o f m o n t h s r e n t )
1 2
A v e r a g e
L e a s e R e n t a l s
7 0
R s p s f p e r m o n t h
E s c a l a t i o n
1 0
M a i n t e n
a n c e c h a r g e s
2 2 5
R s p s f p e r m o n t h
R e v e n u e f r o m
L e a s e R e n t a l
R s
L a k h s
-
8 8
6 3
1 5 0
6 8
2 4 2
6 6
3 9 0
8 1
6 2 9
4 1
1 0 1 3
6 7
1 6 3 2
5 3
2 6
2 9
2 0
4 2 3 4
3 5
6 8 1 9
4 7
R e v e n u e f r o m
M a i n t e n a n c e c h a r g e s
-
2 8 5
4 8 4
7 8 0
1 2
5 6
2 0
2 3
3 2
5 8
5 2
4 7
8 4
5 1
1 3 6
1 0
2 1 9
2 0
T o t a l R
e v e n u e
-
9 1 4 8
1 5 5 5 2
2 5 0 4 6
4 0 3 3 8
6 4 9 6 4
1 0 4 6 2 5
1 6 8 5 0 0
2 7
1 3 7 1
4 3 7 0 4 6
7 0 3 8 6 7
R e v e n
u e H e a d
S u b H e a d R a t e
U n i t
3 1 - M a r - 6
7
3 1 - M a r - 7 2
3 1 - M a r - 7 8
3 1 - M a r - 7 9
C o m m e r c i a l S p a c e
O c c u p a n c y
P e r c e n t a g
9 5
9 5
9 5
9 5
C o m m e r c i a l s p a c e l e a s e d o u t
s q f t
7 6 0 7 2
8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
D e p o s i t f o r L e a s e
( N o o f m o n t h s r e n t )
1 2
A v e r a g
e L e a s e R e n t a l s
7 0 R s p s f p e r m o n t h
E s c a l a
t i o n
1 0
M a i n t e
n a n c e c h a r g e s
2 2
5 R s p s f p e r m o n t h
R e v e n u
e f r o m
L e a s e R e n t a l
R s
L a k h s
1 0
9 8 2 8 2
1 7
6 8 7
9 4
3 1
3 3 5
2 7
3 4
4 6 8
8 0
R e v e n u
e f r o m
M a i n t e n a n c e c h a r g e s
3 5 3 0 2
5 6 8
5 4
1 0 0 7
2 1
1 1 0 7
9 3
T o t a l R e v e n u e
1 1 3 3 5 8 4
1 8 2 5 6 4 8
3 2 3 4 2 4 8
3 5 5 7 6 7 2
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[x]
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[y]
Disclaimer
CRISIL Risk and Infrastructure Solutions Limited (CRIS) has taken due care and caution in preparation of this Report for
Bangalore Development Authority which is under the purview of the Urban Development Department Government of
Karnataka This Report is based on the information documents provided by the Company andor information available publicly
andor obtained by CRIS from sources which it considers reliable CRIS does not guarantee the accuracy adequacy or
completeness of the information documents Report and is not responsible for any errors or omissions or for the results
obtained from the use of the same The Report and results stated therein are subject to change CRIS especially states that it
has no financial liability whatsoever to the Company users of this Report This Report is strictly confidential and should not be
reproduced or redistributed or communicated directly or indirectly in any form or published or copied in whole or in part
especially outside India for any purpose
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Registered Office ndash Mum
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The Mira G-1 1st Floor Plot NoIshwar Nagar Mathura Road
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Hyderabad
3rd Floor Uma ChambersPlot No 9amp10 Nagarjuna HillsNear Punjagutta Cross RoadHyderabad - 500 082Phone 91-40-40328200Fax 91-40-2335 7507
Bengaluru
W-101 Sunrise Chambers22 Ulsoor RoadBengaluru - 560 042Phone 91-80-2558 0899Fax 91-80-2559 4801
Ahmedabad
706 Venus AtlantisNear Reliance Petrol PumpPrahladnagarAhmedabad -Phone 91-79-4024 4500Fax 91-79-2755 9863
Visit us atwwwcrisilcom
ai
1 amp 2
About CRISIL Infrastructu
CRISIL Infrastructure Advisory
CRISIL Risk and Infrastructure
Limited a 100 subsidiary of
Indiarsquos leading Ratings Resear
Policy Advisory Company
CRISIL Infrastructure Advisory
premier advisor focusing on po
well as commercial and contra
the areas of transport energyinfrastructure We also provide
international firms planning inv
India Over a period of time C
Infrastructure Advisory has buil
position for itself in these doma
considered the preferred cons
governments multilateral agen
sector clients We have extend
operations beyond India and ar
other emerging markets in Afri
and South Asia
re Advisory
is a division of
Solutions
RISIL Limited ndash
ch Risk and
is Indiarsquos
licy issues as
tual issues in
nd urbansupport to
stments in
ISIL
t a unique
ins and is
ltant by
cies and private-
ed our
e present in
a Middle East
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[c]
Acronym Definition
SPC Special Purpose Company
ULB Urban Local Body
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[iv]
Contents
1
Executive summary 1
2
Introduction 3
21
Project idea 3
22
Approach amp methodology 3
23
Review of previous studies 4
3
Sector profile 5
31
Industry overview 5
32
Regional profile 5
Geography 6
Connectivity 6
Major commercial areas 6
33
Key issues 7
4
Project 8
41
Description of the project 8
42
Components of the project 8
43
Description of the site 8
44 Interaction with stakeholders 9
45 Case studies 9
451 Public private partnership in affordable housing under Jawaharlal Nehru National
Urban Renewal Mission (JNNURM) 10
5
Market assessment 13
51
Bangalore growth overview 13
52
Demand projections 14
6
Project financials 15
61
Cost estimation 15
62
Revenue stream 15
63
Viability assessment 16
64
Ranking of options based on commercial viability 16
7
Statutory amp legal framework 17
71
Legal amp regulatory framework 17
8
Indicative environmental amp social impacts 18
81
Environmental impacts 18
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[v]
82
Social impacts 18
83
Mitigation measures 18
9
Operating framework 19
91
Risks amp mitigation 19
92
Indicative project structure 19
10
Way ahead 21
101 Project development framework 21
102 Procurement plan 21
11 Annexure 1 ndash Cash-flow statement 23
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[vi]
List of Tables
Table 7-1 Project Cost of the proposed development 15
Table 7-2 Viability assessment for BDA complex at Indiranagar 16
Table 8-1 Plot details of Indiranagar site 17
Table 10-1 Risk mitigation measures 19
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[vii]
List of Figures
Figure 2-1 Approach and Methodology 4
Figure 4-1 Development structure of the Commercial Complex 8
Figure 4-2 BDA Complex at Indiranagar 9
Figure 6-1 Population growth in Bangalore between 1901 and 2011 13
Figure 11-1 Project development framework 21
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Bangalore Development Authority
[1]
1 Executive summary
Infrastructure Development Department proposes to strengthen the project development process inthe Departments responsible for implementing Infrastructure Projects through Public Private
Partnership (PPP) The PPP concept is relatively new and the implementing officers require
necessary insight orientation and assistance into the project development for effective marketing and
implementation of the projects
CRISIL Infrastructure Advisory a division of CRISIL Risk and Infrastructure Solutions Limited (CRIS)
has been appointed by the Infrastructure Development Department Government of Karnataka to
work closely with the Bangalore Development Authority for the assignment ldquoInstitutional Strengthening
and Sector Specific Inventory for PPP Mainstreaming in Sectorsrdquo Under this BDA has identified a set
of nine projects for which pre-feasibility assessments are to be carried out Redevelopment of BDA
Complex at Indiranagar is one of the nine projects proposed by BDA
In line with the objectives of BDA the BDA Complexes were built at strategic locations and near
residential localities in order to provide a one stop solution for shopping Hence facilities like motor
training schools travel agents RTO etc started operating within the complexes The complexes are
now in dilapidated condition and in order to provide better facilities to the citizens BDA proposes to
redevelop the old BDA Complex at Indiranagar
This report examines the possibility of redeveloping the commercial complex on a PPP Basis In order
to bring in private sector participation in the redevelopment of the complex it is proposed that the land
is handed over to the developer on long term lease basis The selected developer would be
responsible for Finance Design Construction and Operation amp Maintenance of the project
throughout the lease period Ownership of the land will always be with BDA After the lease period
the land along with the BUP area will be transferred back to BDA free of cost One portion of the
proposed commercial development shall be reserved for BDA for rehabilitation of the existing
vendors
For the purpose of cost estimation we have studied the feasibility report developed by SREI
Infrastructure Finance Limited and have also consulted with the BDA The estimated cost of
development of the project is Rs 20810 lakhs
The revenues to the developer would accrue from the revenue earned from the lease rentals as well
as maintenance charges The total revenue from both the heads has been arrived at Rs 6720 Lakhs
for the base year Occupancy of 80 has been assumed for the base year which will stabilize at a
maximum of 95 towards the end of the concession period The average lease rentals have been
assumed at Rs 70 per square feet and maintenance charges have been assumed at Rs 225 per
square feet Appropriate escalation factors have been assumed for both revenue heads
The viability assessment has been carried out over three concession periods of 25 33 and 66 years
The debt to equity ratio has been assumed to be 121
The viability assessment has been worked out with determinants like the project level internal rate of
return (IRR) IRR of equity and the net present value of the equity The project is found to be viable for
all the 3 concession periods In case of the 25 year concession period it is estimated that the
developer would pay BDA an upfront premium of Rs 9650 Lakhs For the concession period of 33
and 66 years the upfront premium to be paid by the developer would be Rs 12300 Lakhs and Rs
6000 lakhs respectively
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Bangalore Development Authority
[2]
A key issue that the BDA will need to address is the relocation of the existing tenants of the
complexes The BDA needs to prepare a rehabilitation plan for the existing tenants and should also
clearly lay out the rehabilitation mechanism for these tenants As part of the project configuration we
have assumed that a certain proportion of the developed spaces would be handed over to the BDA
which can be utilized for the rehabilitation of the existing tenants However if the BDA chooses to
accommodate these tenants in the redeveloped facility the commercial terms may have to be in line
with the rentals being charged to the new tenants We are of the opinion that the BDA should make
an informed decision on this only after a detailed feasibility has been conducted for the site
We have examined the way forward for the project We propose that the BDA should appoint a
transaction advisor for the project who will conduct a detailed feasibility for the project and would also
facilitate the appointment of the developer through bid process management
The procurement plan for the project has been developed to be spread over 11 months which can be
shortened depending on the swiftness of decision making at BDA
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Bangalore Development Authority
[3]
2 Introduction
CRISIL Infrastructure Advisory a division of CRISIL Risk and Infrastructure Solutions Limited (CRIS)
has been appointed by the Infrastructure Development Department Government of Karnataka to
work closely with the Bangalore Development Authority for the assignment ldquoInstitutional Strengthening
and Sector Specific Inventory for PPP Mainstreaming in Sectorsrdquo Under this BDA has identified a set
of nine projects for which pre-feasibility assessments are to be carried out
In order to provide advanced recreational facilities and services to the citizens BDA has proposed the
redevelopment of its Complexes through Public Private Partnership model Redevelopment of BDA
Complex at Indiranagar is one of the nine projects proposed by BDA
21 Project idea
Bangalore Development Authority (BDA) is one of the premier urban planning and development
agencies that oversee the growth of the city The BDA came into being with effect from 6th January
1976 under a separate Act of the State Legislature viz the BDA Act 1976 This Authority combined in
itself the Planning functions of the City Planning Authority and the developmental functions of the
erstwhile City Improvement Trust Board (CITB)
The key objectives of the authority as per the BDA Act shall be to promote and secure the
development of the Bangalore Metropolitan Area (BMA) and for that purpose the Authority shall have
the power to acquire hold manage and dispose of moveable and immoveable property whether
within or outside the area under its jurisdiction to carry out building engineering and other operations
and generally to do all things necessary or expedient for the purposes of such development and for
purposes incidental thereto
In line with the objectives of BDA the BDA Complexes were built at strategic locations in near
residential localities in order to provide a one stop solution for shopping Hence convenient stores like
motor training schools travel agents RTO etc started operating within the complexes The complexes
are now in dilapidated condition and in order to provide better facilities to the citizens BDA proposed
to develop the old BDA Complex at Indiranagar The project is also an outcome of reducing
commercial spaces in key residential areas
22 Approach amp methodologyThe broad approach and methodology followed for study of these projects has been depicted
graphically below
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Bangalore Development Authorit
Figure 2-1 Approach and Met
23 Review of pre
Bangalore Development Authori
development works identified by
29102010 BDA retained Tand
identified projects namely ldquoDevel
TUSPL had submitted their Fe
estimations The report submitte
been presented as below
The project cost indicate
to reflect the market
contingencies prelimina
The financials indicated
Developer and BDA an
given the market conditi
The report does not cle
1062701 sq ft And an
2440023 square metre
officials
1 The cost incurred towards upfront pre
figure
Study of existingreports
y
odology
ious studies
ty had invited proposals for appointment of Co
BDA vide Tender Notification No BDAEMTA-
on Urban Solutions Pvt Ltd (TUSPL) as Cons
opment of Commercial Complex at Indiranagar
sibility Report for the Indiranagar site along
d by TUSPL was studied in detail and the CRISI
d in the report is Rs 39165 Lakhs The project c
rates The Revised project cost is Rs 239
ry and pre-operative expenses
in the Feasibility Report is assuming a revenu
an upfront premium which the developer woul
ns and rates this has been revised
arly mention the area of the plot It indicates a
open land development area of 131322 sq f
has been assumed for the pre-feasibility in c
ium and the interest during construction period is not includ
Discussions withBDA personnel
Be
a
Finalrecommendation
[4]
nsultants for various
3802010-11 dated
ultant for one of the
angalorerdquo
ith the designs and
Lrsquos observations has
ost has been revised
11 Lakhs including
share between the
ld provide However
construction area of
t Hence an area of
nsultation with BDA
d in the above mentioned
lock coststimation
inancialsessment
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
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Bangalore Development Authority
[5]
3 Sector profile
The city of Bangalore has witnessed very rapid growth The city today is home to over 84 million
people (2011 Census) The salubrious weather and the rapid concentration of economic activities in
Bangalore have fuelled the growth of Bangalore As one of the worldrsquos fastest growing cities
Bangalore is experiencing a steady growth in population
Bangalore has been substantially affected by globalization and rapid urbanization over the last
decade The demand for services and quality of life is not confined to the central core or the erstwhile
Bangalore Mahanagra Palike jurisdiction but spreads beyond into the peri-urban areas the
Metropolitan Area and outwards into Bangalore Metropolitan Region With the emergence of the
Bangalore-Mysore Infrastructure Corridor the Bangalore International Airport and the planned ring
roads urbanization has sprawled out
Banaglore has incontestable advantages to develop into an international metropolis but at the same
time faces significant constraints The city is embedded in its history and depicts the greatness of a
truly Indian city established before the invasions and colonization It has a diverse set of activities
from silk to aeronautics from clothing to information technology and is a gauge of dynamism and
solidity of the city Natural drainage climatic advantage and the availability of water in the Cauvery
baisn are factors assisting in improving the quality of life
31 Industry overview
Bengaluru is countryrsquos third leading realty market With the IT boom and corresponding growth of the
economy saw large-scale increase in the cityrsquos population mostly due to migration from across India
Bengalurursquos population grew about 35 percent in the last six years
This increase in population along with steady demand and restricted supply led to saturation in central
Bengaluru region and pushed development to peripheral areas like Whitefield Sarjapur road Outer
Ring Road (ORR) Bannerghatta Road Hosur Road
With the opening of International Airport Real estate in North Bangalore (Bellary Road to Yelahanka)
has also witnessed the launch of numerous projects with apartments and villas Given the improved
infrastructure accessibility and the future potential for this area the area has been attracting both the
segments of investors and end-users alike
The city leads the country in office space with 738 million square feet of commercial capacityavailable However Bengaluru also has 22 per cent of the available space vacant with a large number
of projects under development and reduced demand
32 Regional profile
Bengaluru (formerly Bangalore) also known as Garden City for its beautiful gardens is the
administrative industrial commercial educational and cultural capital of Karnataka and located on
the Deccan Plateau in the South-Western part of India Bengaluru is Indias third most populous city
fastest growing and fifth largest metropolitan area with population of about 57 million (as per 2001
census) The population is expected to reach around 11 million and 22 million in 2021 and 2041respectively
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Bangalore Development Authority
[6]
With ever increasing boundaries and gross domestic product of 59123 billion in FY 06-07 Bengaluru
has some well-recognized IT companies and numerous public sector heavy industries aerospace
telecommunications and defence organisations located within Bengaluru also has some well known
colleges and research institutes
Geography
With an average elevation from the sea level of 920 m and total area of 741 km2 Bengaluru is located
in the south-eastern part of Karnataka in the Mysore Plateau - a region of Deccan Plateau The city
has an uneven landscape of hills and valleys to the south and relatively more level plateau towards
the north
Because of its elevation the city enjoys a pleasant and equable climate throughout the year The city
is situated in the Bengaluru Urban district which is divided into four taluks - Bangalore North
Bangalore East Bangalore South and Anekal and covers a total geographical area of 2190 sq km
Bangalore District is surrounded by Kolar District to the northeast Tumkur District on the northwest
Mandya District on the southwest Chamarajanagar District on the south and neighbouring state of
Tamil Nadu on the southeast
Connectivity
Bangalore is well connected to other Indian cities by road rail and air transport The connectivity by
rail road and air is detailed in the sections below
Road
Bengaluru is located at the junction of National Highways 4 7 and 48 connecting to various important
cities in India including Chennai Hyderabad Kanyakumari Madurai Mangalore Mumbai Nagpur
Pune and Varanasi
Railways
Bengaluru has two major railway stations Bengaluru City railway station and Yeswantpur Junction
The city has a well maintained railway network connecting major cities of the country and is
connected to the rest of the country both by metre gauge and broad gauge rail services
Air
Bengaluru has an International Airport at Devanahalli and is well connected to all cities in India
Internationally Bengaluru is connected to European and Asian cities like Frankfurt Singapore Kuala
Lumpur London Dubai Paris Bangkok and Hong Kong
Major commercial areas
The following are the major commercial areas in and around Bangalore
Central Business District Seshadripuram Jayanagar JP Nagar Yeshwantapura
Eastern Suburb Marathalli-sarjapur ORR Sarjapur Road Whitefield and Brookfield
Secondary Business District Indiranagar JP Nagar RT Nagar Vijayanagar
Northern Suburb HRBR Layout Bellary Road Jakkur
Southern Suburb Mysore Road Hosur Road
West Suburb BEL Factory HMT Layout
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Bangalore Development Authority
[7]
33 Key issues
The recessionary trends in 2007 across the world had also adversely affected the entire real estate
market in Bengaluru All the three categories of residential commercial (office space) and retail had
experienced slump in market and the real estate market in several erstwhile prime locations of the citywere facing oversupply situation and a drastic fall in the capital as well as rental values
With the revival of the industry and economy the residential market is expected to witness a jump
across all the areas in Bengaluru as per CRISILrsquos analysis The eastern and southern areas are
estimated to emerge as up-scaled developments as these areas are expected to see maximum
supply in the next three years
Good quality developments have been the key feature of Bangalorersquos commercial developments The
boom in IT sector especially in South India has enabled the city to have a metropolitan culture which
brings along the urban demands like malls and multiplexes
Recently the market in Bangalore has stabilized to a large extent after the sudden jump in prices post
recession However this is cyclical in nature and the saturation of IT services has led to a scenario
where there would not be much increase in the lease rentals
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Bangalore Development Authorit
4 Project
41 Description of
It is proposed that for the redev
over to the developer on long
Finance Design Construction
period Ownership of the land wi
BUP area will be transferred b
proposed commercial develop
vendors
42 Components o
The project would be develope
basis The structure of the mode
Figure 4-1 Development struc
43 Description of
The site is located at Indiranaga
the main commercial centres in
Road in the North Old Airport
the East Indiranagar is located
famous for housing the Somes
and educational institutions like
y
the project
lopment of BDA Complex at Indiranagar the la
erm lease basis The selected developer woul
and Operation amp Maintenance of the project t
ll always be with BDA After the lease period th
ack to BDA free of cost We have assumed
ent shall be reserved for BDA for rehabilit
f the project
on a Design Build Finance Operate and Tra
l has been illustrated below
ture of the Commercial Complex
the site
r a suburb of Bangalore located about 4 km ea
the city This medium sized suburb is enclose
oad in the South Halasura in the West and Je
within a diameter of few kilometre radii from the
ara Temple several reputed hospitals like Amrj
r Ambedkar College KH Patel College etc
[8]
nd would be handed
d be responsible for
hroughout the lease
e land along with the
hat a portion of the
tion of the existing
sfer model on PPP
t of MG road one of
by the Old Madras
vanbheemanagar in
airport The place is
yoti Vijaya and ESI
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Bangalore Development Authority
[9]
The site is situated at a junction near a residential area and is frequented by elders and youngsters
alike The present building consists of Motor driving schools RTO office computer vendors and travel
agents There is a water tank situated in the site
Figure 4-2 BDA Complex at Indiranagar
44 Interaction with stakeholders
CRISIL conducted a series of interactions with the stakeholders namely the BDA officials Citizens
and the establishment owners The interactions revealed that the building has to undergo
redevelopment The condition of the BDA office is not up to the standards expected and the officials
complained about leaks and short circuits The establishment owners suggested that the building was
planned with less road facing establishments due to which they are not able to attract footfalls
45 Case studies
In order to generate revenues from the real estate value of the land in the ownership of the ULBrsquos
commercial projects have been developed on a PPP basis on these lands Typically under such
arrangements the ULB would have identified a site under its ownership where a property for
commercial use can be developed Commercial development would include the development of
shopping complexes markets bus terminals multi-level car parking townships etc
Under such an arrangement the ULB would require of the private developer to undertake
construction of a commercial complex on the land The land would be provided by the ULB to the
private operator on a lease basis The ULB would provide specifications on the nature and type of
commercial development required The private developer would need to bear all the capital costs
associated with the construction of the commercial complex Post construction of the commercial
complex as per the arrangement the private developer would either hand over the constructed
facility to the ULB or would sub-lease the property The private developer would be required to make
to the ULB an upfront payment or provide a share in the ULB revenues earned from sub-leasing the
properties
The following case study compiled by the Ministry of Urban Development Government of India
highlights the development of municipalurban lands on a PPP basis
Category Details
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Bangalore Development Authority
[10]
Category Details
Project Construction of Commercial Complex at Ranipura Market
Cost of
ProjectRs 1500 lakhs
Description
The land was allotted to the concessionaire to construct the Commercial Complex by
the Corporation
Corporation continues to own the land
After the concession period the built-up structure (Commercial Complex) will be
transferred to the Corporation by the concessionaire
The concessionaire was given the right to recover its investment from the premium
received for ldquoRight of Occupationrdquo of the constructed shops
At the time of award of concession it was estimated that a profit of Rs 200 lakh will
be accrued from the venture which will be shared by the concessionaire with the
Corporation
The Corporation is expected to receive a profit share of Rs 100 lakh from the
concessionaire
Source Compendium on Public Private Partnership in Urban Infrastructure Case Studies Ministry of Urban
Development Government of India in association with Confederation of Indian Industry (CII)
We have also studied another case wherein the development affordable housing units was structure
on a PPP basis by the Pimpri Chinchwad New Township Development Authority (PCNTDA)
451 Public private partnership in affordable housing under Jawaharlal
Nehru National Urban Renewal Mission (JNNURM)
The Pune metropolitan region comprising Pune and Pimpri Chinchwad cities is one of the fastest
growing urban agglomerations in India A major automobile and auto-ancillary hub and a well-known
international education destination it also ranks among the top IT destinations of India Besides the
region has many industrial clusters housing industries focused on FMCG engineering agro-based
technology
The Pimpri-Chinchwad New Town Develompent Authority (PCNTDA) a key development authority of
the PMR is responsible for development of peri-urban especially in its north In line with the
phenomenal growth of the region and its strident aspirations PCNTDA has envisioned the
development of an integrated township at Sector 12 spanning 53 hectares Given the success of the
Public Private Partnership (PPP) model in involving private sector participation for development based
projects PCNTDS proposed to develop the integrated township on PPP basis
With this objective PCNTDA appointed the consortium of CRISIL Risk and Infrastructure Solutions
Limited (CRIS) Omkar Associates and Creations as project development consultants for the
development of an eco-friendly affordable township at Bhosari Sector 12 CRISILrsquos role was to
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Bangalore Development Authority
[11]
undertake a detailed demand assessment financial feasibility project structuring and management of
the bid process
The concept
Keep in mind the PCNTDArsquos vision CRIS designed integrated township such that it compriseshousing untis for the poor affordable housing units for the general public a primary health care
centre a hospital and a school
As per the structure the Developer shall construct 5040 housing units under the Basic Services for
Urban Poor (BSUP) scheme of JNNURM PCNTDA shall transfer the amount of grant sanctioned for
developing these units under the JNNURM scheme to the developer The remaining project cost of
the BUSP units was to be financed by the developer
In addition to this the Developer shall also construct affordable housing units as per pre-specified
specifications and hand over to PCNTDA free of cost The developer shall also construction the
physical and social infrastructure for the integrated township thereby ensuring good road adequate
water supply an efficient sewerage system as well as schools and hospitals The project shall bedeveloped in a manner such that it has minimum possible impact on the surrounding environment and
is in harmony with nature To this end the developer shall undertake eco-friendly initiatives including
rain water harvesting use of solar power environment-friendly materials and vermin-composting
The project
The developer has to complete the BSUP housing units within 2 years and hand over to the PCNTDA
For the remaining portion of the land PCNTDA shall execute a lease deed for 99 years with the
developer The lease rights shall be granted to the developer in phases upon completion of
milestones as defined in the project agreement The main scope of work for the developer shall
include
Master planning for the entire 53 hectares of land and construction of common physical and
social infrastructure for the entire area
Development construction and marketing of 795 lakhs square meters of integrated real
estate space
Construction and handing over of 5040 housing units under the BSUP scheme of JNNURM
on a separate layout carved out of the said land PCNTDA will provide the developer the grant
sanctioned by the Government of India for these housing units
Successful selection of private developer
With the objective of undertaking this project on a PPP basis in a transparent and objective manner
PCNTDA launched a three-cover Request for Proposal in June 2009 The bidding parameter was theconstructed ldquoCarpet Areardquo in ldquosquare metersrdquo of affordable housing units that the bidder shall
construct and hand over free of cost to PCNTDA
The tender received good response from four interested bidders Of the four bidders two bidders
were adjudged technically and financially capable and short-listed for the final stage The bidder with
the highest construction carpet area offered to PCNTDA was selected The successful bidder quoted
a carpet area of 130599 square meters of affordable housing units
Thereby the PCNTDA derived a value of 7369 housing units (including 5040 BSUP units) a school
and a hospital for the BSUP units a school and hospital for the general public and development of
public amenities
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Bangalore Development Authority
[12]
Value addition to PCNTDA
In commercial terms PCNTDA saved (i) Rs 190 crores as the gap amount required to fund the BSUP
scheme (ii) Rs 210 crores of construction cost of affordable housing units and (iii) Rs 100 crores on
the development of physical and social infrastructure In addition to this PCNTDA shall receive anupfront payment of Rs 50 crores from the successful bidder The project structure also protects
PCNTDA from cost escalation risks valuation risks and engineering risks
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Bangalore Development Authorit
5 Market asse
51 Bangalore gro
The growth of Bangalore has be
from the growth in population in
to the economic opportunities it
Bangalore an obvious choice for
Bangalore has grown at averag
decades It is projected that B
explosive growth has meant th
pressure
Figure 5-1 Population growth
Source City Development Plan Ba
The city leads the country in
available However Bengaluru a
of projects under development a
983089983086983094983091 983089983086983096983097 983090983086983092
983088
983089983088
983090983088
983091983088
983092983088
983093983088
983094983088
983095983088
983096983088
983097983088
983089983097983088983089 983089983097983089983089 983089983097983090983089
983120 983151 983152 983157 983148 983137 983156 983145 983151 983150 983145 983150 983116
983137 983147 983144 983155
y
sment
th overview
en unprecedented in the past couple of decades
the last century Bangalore continues to attract t
offers This is also supported by a salubrious
not only businesses but also for people
compounded annual growth rate (CAGR) of 3
ngalorersquos population will cross the 10 million
at the infrastructure in Bangalore has been p
in Bangalore between 1901 and 2011
galore Development Authority and Census of India
ffice space with 738 million square feet of
lso has 22 per cent of the available space vacan
nd reduced demand
983091983086983089 983092983086983089983089983095983086983096983094
983089983090983086983088983094
983089983094983086983094983092
983090983097983086983090983090
983092
983089983097983091983089 983089983097983092983089 983089983097983093983089 983089983097983094983089 983089983097983095983089 983089983097983096983089 983089983097
[13]
This fact is laid bare
rongs of people due
eather which makes
58 in the last three
mark by 2021 This
t under tremendous
commercial capacity
with a large number
983086983091
983093983094983086983096983094
983096983092
983097983089 983090983088983088983089 983090983088983089983089
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Bangalore Development Authority
[14]
52 Demand projections
Bangalore is the largest commercial market and third largest residential market in India The city has
typically been preferred by home buyers because of its favorable socio-economic conditions and a
salubrious climate In recent years Bangalore has attracted a large influx of population engaged inthe thriving IT sector City residential demand is more end-user driven with moderate price
appreciation The average residential real estate price in the city is 20-25 lesser than in Delhi and
Mumbai In the recent National Housing Bank Residex the index indicating property prices across key
cities in India Bangalore witnessed a mere 1 YoY fall in residential prices in 2011-12 Mumbai saw
an 116 YoY jump in home prices while Delhi witnessed 358 YoY increase during 2011-12 The
city witnessed tremendous growth in terms of population and the number of companies setting up
offices there Thus the ongoing projects such as Bengaluru metro rail project various flyovers and
the under-pass construction activities in Outer Ring Road (ORR) CNR and BHEL circles would ease
the congestion and provide better connectivity for all commuters This will boost real estate demand in
and around Bangalore city
In 2011-12 Bangalorersquos commercial market exhibited resiliency with comparatively high demand
levels despite the discomfort in the market on account of global uncertainty Though commercial
property demand in Bangalore is largely dependent on ITITES sectors the share of manufacturing is
increasing at a faster pace and thereby giving further boost to office space demand According to real
estate consultancy firm Knight Frank the manufacturing sector witnessed a quantum leap as its share
of absorption increased from 3 in 4QCY10 to 23 in 4QCY11 The absorption of commercial space
has gone up from 5mn sq ftquarter in CY09 to 7mn sq ftquarter in CY11 thanks to sustained
demand for Bangalore commercial space which witnessed 43 CAGR in absorption level over CY09-
11 Subdued supply during the first two quarters of 2011 coupled with high absorption level has
substantially lowered the vacancy level in the city (bringing it down from 17 in CY10 to 12 in
CY11) With the expansion of existing operations in the IT sector and the entry of newer sectors dueto renewed optimism in the market we expect the level of absorption of office space to remain stable
Revised Master Plan-2015 for the BMA has been published This document gives the likely growth to
take place in various areas of the BMA The population of the BMA is expected to grow from 61 lakh
in 2001 to 122 lakh in 2025
The proposed growth rate and the ever changing urban scenario is bound to increase the commercial
space demand in the region The site at Indiranagar is situated at a junction and has two road facing
sides which makes it very attractive for commercial development The site is also huge in size and
can easily accommodate a mall
Hence in view of the above it can be safely recommended that the site would generate huge interest
within the developers
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Bangalore Development Authority
[15]
6 Project financials
The project costs have been largely derived from the costs indicated by the Bangalore Development
Authority (BDA)
61 Cost estimation
The estimated cost of development of the project is Rs 23931 lakhs The costs have been outlined
below
Table 6-1 Project Cost of the proposed development
Particular Amount inRs Lakhs
Construction Cost 19967
Land Development 793
Other Infrastructure 50
Total Hard Costs 20810
Contingencies 3121
Total Project Development Cost 23931
Apart from the above mentioned project development cost the Concessionaire would incur the
development premium and Interest during construction (IDC) cost
Particulars 25 years 33 Years 66 years
Upfront Premium (Rs Lakh) 965000 1230000 600000
IDC Cost (Rs Lakh) 315600 361500 259100
Revenue Share every year 15 15 15
Total Project Cost (Rs Lakhs) 36737 39846 33022
62 Revenue stream
The Revenues to the Developer would accrue from the revenue earned from the lease rentals and the
maintenance charges which the developer earns from the tenants The total revenue from both the
heads has been arrived at Rs 6720 Lakhs for the base year It has been assumed that the
occupancy of the commercial complex 80 in the base year and stabilizes to a maximum of 95towards the end of the concession period The average lease rentals have been assumed at Rs 70
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Bangalore Development Authority
[16]
per square feet and the maintenance charges have been assumed at Rs 225 per square feet Both
the revenues are escalating at the rate of 10 per annum The income statement for the developer
has been provided in Annexure 1
63 Viability assessment
The viability assessment has been carried out over two concession period ie 25 33 and 66 years
The debt to equity ratio has been assumed to be 121
The project level internal rate of return (IRR) IRR of equity and the net present value of the equity
have been worked out
Table 6-2 Viability assessment for BDA complex at Indiranagar
Concession Period Project IRR Equity IRR NPV of Equity
Upfront Premium
(Rs in Lakhs)
25 years 1777 2007 96 9650
33 years 1818 2006 108 12300
66 years 2101 2333 5285 6000
It is evident that the project is viable for the developer for all the 3 concession periods In case of the
25 year concession period it is estimated that the developer would pay BDA an estimated upfront
premium of Rs 9650 lakhs Similarly the developer would pay BDA an amount of Rs 12300 lakhsand Rs 6000 lakhs for the concession periods of 33 years and 66 years respectively
64 Ranking of options based on commercial viability
Having assessed the project for two concession periods of 25 33 and 66 years we are of the view
that the 25 year concession option will be more suitable since it allows the developer to make
reasonable returns on the projects and his own investments along with a sizeable upfront premium for
BDA BDA would be in a position to renew the contract or retender the project after 25 years which
may enable BDA to earn as per the prevailing market rates
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Bangalore Development Authority
[17]
7 Statutory amp legal framework
71 Legal amp regulatory framework
Development Control Regulations (DCR)
As per RMP ndash 2015 published by BDA the project site has been classified as ldquoCommercial Businessrdquo
As per the definitions of RMP-2015 Commercial Business Zone allows development of Commercial
and Corporate offices Retail Shopping Complexes Restaurants and Hotels Convention centres and
banquet halls financial institutions Cinema and multiplexes places of assembly exhibition centres
Entertainment and amusement centres and stores
Permissible land uses under Commercial (Business) Zone as per RMP-2015 of BDA
Main land use category C3
Other land uses permissible (as main land use) R I-3 T3 amp U4
If the road width is less than 120 m and plot area is less than 240 square metre then C2 I-2
R and U4 only are allowed
The plot size is 24000 square metre Presently it has 18m wide access road The applicable DCR for
the plot as per proposed road width is as follows
Table 7-1 Plot details of Indiranagar site
Sr No Particulars Description Unit
1 Land Use Commercial Business
2 Road Width 18 Metre
3 Permissible FAR 325
4Permissible ground
coverage50
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[18]
8 Indicative environmental amp social impacts
81 Environmental impacts
The proposed development is in line with the layout of BDA Due to the reasonably large site area the
development will be on the higher side A set back of 50 is found to be acceptable for the site
however an Environmental Impact Assessment studies have to be undertaken for the sites Since
already a commercial complex is existent redevelopment of the complex would need demolition of
the existent structures Hence a suitable disposal of construction and debris has to be undertaken by
the developer Also a Green building can be developed to ensure minimal effect on nature
82 Social impactsDuring the construction period the existing establishments have to be shifted or compensated
temporarily Hence a clear resettlement plan has to be decided before the implementation of the
project It is envisaged that if due care is taken about the existing tenants the development would go
smoothly
83 Mitigation measures
It is necessary that the impacts are identified early and action plans are prepared for their mitigation in
advance For instance for environmental impacts the BDA may insist on the developer to use clean
and green building technologies
It is also necessary that the project development plan is also accompanied by a Relocation and
Rehabilitation plan which will layout detailed action points with the requisite intervening entity
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
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Bangalore Development Authority
[19]
9 Operating framework
91 Risks amp mitigation
The risk framework for this project has been outlined below
Table 9-1 Risk mitigation measures
Risk Category Risk implication Mitigation measure
Sponsor risk BDA scraps the project Termination payments in case of BDA scrapping the
project
Environment
risk
Adverse impact on
surrounding environment
Penalty clauses in case of default on
Concessionairersquos part
Environmental Impact Assessment to identify all
risks in advance
Political riskChange in government may
put project in jeopardy
Termination payments in case of project being
scrapped
Force
majeure riskProject is abandoned
Force majeure clauses in the concession
agreement
Operating riskThe operations of the
facility are stalled
Performance security clause in case of default on
Concessionairersquos part
Design risk Overdesign of the projectProject design to be finalized in mutual agreement
of concessionaire and BDA
Completion
risk
Completion of project is
delayed inconvenience to
citizens and tenants
Penalty clauses for time overrun in the concession
agreement
Cost overrun
risk
Project cost increases
beyond reasonable limits
Project cost increment ceiling to be specified in the
concession agreement Increase beyond this ceiling
to be borne by the developer No change in revenue
sharing
92 Indicative project structure
The best approach for such a large ticket project would be for the BDA to become a key actor in the
entire process of development The BDA may ask the private sector partner to form a Special
Purpose Company where the equity will be brought in by the private sector developer The designs
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Bangalore Development Authority
[20]
should be left to the developer and BDArsquos role would be in approving the same in accordance with the
Development Control Regulations
The SPC will develop and maintain Complex throughout the concession period The tenants would
pay the developer a sub-lease premium or lease rentals which will be escrowed in a separate accountand can be withdrawn based on the revenue sharing structure adopted
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Bangalore Development Authorit
10 Way ahead
101 Project develo
The key task for BDA is to ap
feasibility of the project Once t
the bid process
Figure 10-1 Project developm
The transaction advisor shall stralso prepare the relevant bid
management on behalf of BDA
102 Procurement
The foremost step for BDA is
feasibility The detailed financial
parameter Also an optimum str
bid documents would be prepar
process be conducted as a 2 sta
983105983152983152983151983145983150983156983149983141983150983156 983151983142 983156983154983137
983108983141983156983137983145983148983141983140 983142983141983137983155983145983138
983155983156983154983157983139983156983157983154983145983150983143
983120983154983141983152983137983154983137983156983145983151
983123983141983148983141983139
y
pment framework
oint a Transaction Advisor in order to conduc
e financial numbers are acceptable BDA BDA
nt framework
ucture the project upon completion of the feasibidocuments The transaction advisor shall un
nd will assist in appointment of the private secto
lan
to appoint a Transaction Advisor for the co
feasibility would determine the tentative revenue
cture would be arrived at Post the approval of
d for the selection of the developer It is recom
ge process involving Technical qualification and
983155983137983139983156983145983151983150 983137983140983158983145983155983151983154
983148983145983156983161 983155983156983157983140983145983141983155 983137983150983140 983152983154983151983146983141983139983156
983150 983151983142 983138983145983140 983140983151983139983157983149983141983150983156983155
983145983151983150 983151983142 983152983154983145983158983137983156983141 983155983141983139983156983151983154 983152983137983154983156983150983141983154
[21]
a detailed financial
should proceed with
ility studies and shallertake bid process
partner
nducting the project
for BDA and the bid
easibility Report the
mended that the Bid
inancial proposal
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
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B a n g a l o r e D e v e l o p m e n t A u t h o r i t y
B D A s h o u l d i n i t i a t e t h e p r o c e s s o f a p p o
i n t i n g a t r a n s a c t i o n a d v i s o r a t t h e
e a r l i e s t T h i s p r o c e s s c a n b e c o m p l e t e d i n 2 m o n t h s
O n c e t h e T A
i s i n p l a c e
t h e B D
A s h o u l d a l l o w
a t l e a s t 4 m o n t h s f o r t h e p r e p a r a t i o n o f f e a s i b i l i t y p r o j e c t s t r u c t u r i n g a n d b i d d o c u m e n
t s
O n c e t
h e b i d d o c u m e n t s a r e i n p l a c e t h
e B D A
s h o u l d i n i t i a t e t h e p r o c e s s
o f s e l e c t i n g t h e p r i v a t e s e c t o r p a
r t n e r w h i c h c a n b e c o m p l e t e d o v e r a 4 m o n t h
p e r i o d
T h e c u
r r e n t p r o c u r e m e n t p l a n i s s p r e a d
o v e r 1 1 m o n t h s w h i c h c a n b e s
h o r t e n e d d e p e n d i n g o n t h e m a n n e r i n w h i c h B D A
m a k e s d e c i s i o n
s r e l a t i n g t o
a p p o i n
t m e n t o f T A a n d p r i v a t e d e v e l o p e r
A c t i v i t y
M 1
M 2
M 3
M 4
M 5
M 6
M 7
M 8 M
9
M 1 0
M 1 1
M 1 2
A p p o i n t m e t o f t r a n s a c t i o n a d v i s o r
D e t a i l e d t e c h n o - e c o n o m i c f e a s i b i l i t y a n d
b i d d o c u m e n t p r e p a r a t i o n
B i d p r
o c e s s m a n a g e m e n t
S e l e c t i o n o f p r e f e r r e d b i d d e r a n d f o r m a t i o n o f S P C
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
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B a n g a l o r e D e v e l o p m e n t A u t h o r i t y
1 1
A n n e x u r e 1 ndash C a s h - f l o w
s t a t e m e n t
R e v e n u e H e a d
S u b H e a d R a t e
U n i t
3 1 - M a r - 1 4
3 1 - M
a r - 1 7
3 1 - M a r - 2 2
3 1 - M a r - 2 7
3 1 - M a r - 3 2
3 1 - M a r - 3 7
3 1 - M a r - 4 2
3 1 - M a r - 4 7
3 1 - M
a r - 5 2
3 1 - M a r - 5 7
3 1 - M a r - 6 2
C o m m e
r c i a l S p a c e
O c c u p a
n c y
P e r c e n t a g
0
9 0
9 5
9 5
9 5
9 5
9 5
9 5
9 5
9 5
9 5
C o m m e
r c i a l s p a c e l e a s e d o u t
s q f t
-
7 2 0 6
9 0
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6
0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
D e p o s i t f o r L e a s e
( N o o f m o n t h s r e n t )
1 2
A v e r a g e
L e a s e R e n t a l s
7 0
R s p s f p e r m o n t h
E s c a l a t i o n
1 0
M a i n t e n
a n c e c h a r g e s
2 2 5
R s p s f p e r m o n t h
R e v e n u e f r o m
L e a s e R e n t a l
R s
L a k h s
-
8 8
6 3
1 5 0
6 8
2 4 2
6 6
3 9 0
8 1
6 2 9
4 1
1 0 1 3
6 7
1 6 3 2
5 3
2 6
2 9
2 0
4 2 3 4
3 5
6 8 1 9
4 7
R e v e n u e f r o m
M a i n t e n a n c e c h a r g e s
-
2 8 5
4 8 4
7 8 0
1 2
5 6
2 0
2 3
3 2
5 8
5 2
4 7
8 4
5 1
1 3 6
1 0
2 1 9
2 0
T o t a l R
e v e n u e
-
9 1 4 8
1 5 5 5 2
2 5 0 4 6
4 0 3 3 8
6 4 9 6 4
1 0 4 6 2 5
1 6 8 5 0 0
2 7
1 3 7 1
4 3 7 0 4 6
7 0 3 8 6 7
R e v e n
u e H e a d
S u b H e a d R a t e
U n i t
3 1 - M a r - 6
7
3 1 - M a r - 7 2
3 1 - M a r - 7 8
3 1 - M a r - 7 9
C o m m e r c i a l S p a c e
O c c u p a n c y
P e r c e n t a g
9 5
9 5
9 5
9 5
C o m m e r c i a l s p a c e l e a s e d o u t
s q f t
7 6 0 7 2
8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
D e p o s i t f o r L e a s e
( N o o f m o n t h s r e n t )
1 2
A v e r a g
e L e a s e R e n t a l s
7 0 R s p s f p e r m o n t h
E s c a l a
t i o n
1 0
M a i n t e
n a n c e c h a r g e s
2 2
5 R s p s f p e r m o n t h
R e v e n u
e f r o m
L e a s e R e n t a l
R s
L a k h s
1 0
9 8 2 8 2
1 7
6 8 7
9 4
3 1
3 3 5
2 7
3 4
4 6 8
8 0
R e v e n u
e f r o m
M a i n t e n a n c e c h a r g e s
3 5 3 0 2
5 6 8
5 4
1 0 0 7
2 1
1 1 0 7
9 3
T o t a l R e v e n u e
1 1 3 3 5 8 4
1 8 2 5 6 4 8
3 2 3 4 2 4 8
3 5 5 7 6 7 2
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[x]
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
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[y]
Disclaimer
CRISIL Risk and Infrastructure Solutions Limited (CRIS) has taken due care and caution in preparation of this Report for
Bangalore Development Authority which is under the purview of the Urban Development Department Government of
Karnataka This Report is based on the information documents provided by the Company andor information available publicly
andor obtained by CRIS from sources which it considers reliable CRIS does not guarantee the accuracy adequacy or
completeness of the information documents Report and is not responsible for any errors or omissions or for the results
obtained from the use of the same The Report and results stated therein are subject to change CRIS especially states that it
has no financial liability whatsoever to the Company users of this Report This Report is strictly confidential and should not be
reproduced or redistributed or communicated directly or indirectly in any form or published or copied in whole or in part
especially outside India for any purpose
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Registered Office ndash Mum
CRISIL House Central AvenueHiranandani Business ParkPowai Mumbai- 400 076Phone 91-22-3342 3000Fax 91-22-3342 3810
New Delhi
The Mira G-1 1st Floor Plot NoIshwar Nagar Mathura Road
New Delhi - 110 065 IndiaPhone 91-11-4250 510091-11-2693 0117 - 121Fax 91-11-2684 2213
Hyderabad
3rd Floor Uma ChambersPlot No 9amp10 Nagarjuna HillsNear Punjagutta Cross RoadHyderabad - 500 082Phone 91-40-40328200Fax 91-40-2335 7507
Bengaluru
W-101 Sunrise Chambers22 Ulsoor RoadBengaluru - 560 042Phone 91-80-2558 0899Fax 91-80-2559 4801
Ahmedabad
706 Venus AtlantisNear Reliance Petrol PumpPrahladnagarAhmedabad -Phone 91-79-4024 4500Fax 91-79-2755 9863
Visit us atwwwcrisilcom
ai
1 amp 2
About CRISIL Infrastructu
CRISIL Infrastructure Advisory
CRISIL Risk and Infrastructure
Limited a 100 subsidiary of
Indiarsquos leading Ratings Resear
Policy Advisory Company
CRISIL Infrastructure Advisory
premier advisor focusing on po
well as commercial and contra
the areas of transport energyinfrastructure We also provide
international firms planning inv
India Over a period of time C
Infrastructure Advisory has buil
position for itself in these doma
considered the preferred cons
governments multilateral agen
sector clients We have extend
operations beyond India and ar
other emerging markets in Afri
and South Asia
re Advisory
is a division of
Solutions
RISIL Limited ndash
ch Risk and
is Indiarsquos
licy issues as
tual issues in
nd urbansupport to
stments in
ISIL
t a unique
ins and is
ltant by
cies and private-
ed our
e present in
a Middle East
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
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[iv]
Contents
1
Executive summary 1
2
Introduction 3
21
Project idea 3
22
Approach amp methodology 3
23
Review of previous studies 4
3
Sector profile 5
31
Industry overview 5
32
Regional profile 5
Geography 6
Connectivity 6
Major commercial areas 6
33
Key issues 7
4
Project 8
41
Description of the project 8
42
Components of the project 8
43
Description of the site 8
44 Interaction with stakeholders 9
45 Case studies 9
451 Public private partnership in affordable housing under Jawaharlal Nehru National
Urban Renewal Mission (JNNURM) 10
5
Market assessment 13
51
Bangalore growth overview 13
52
Demand projections 14
6
Project financials 15
61
Cost estimation 15
62
Revenue stream 15
63
Viability assessment 16
64
Ranking of options based on commercial viability 16
7
Statutory amp legal framework 17
71
Legal amp regulatory framework 17
8
Indicative environmental amp social impacts 18
81
Environmental impacts 18
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[v]
82
Social impacts 18
83
Mitigation measures 18
9
Operating framework 19
91
Risks amp mitigation 19
92
Indicative project structure 19
10
Way ahead 21
101 Project development framework 21
102 Procurement plan 21
11 Annexure 1 ndash Cash-flow statement 23
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[vi]
List of Tables
Table 7-1 Project Cost of the proposed development 15
Table 7-2 Viability assessment for BDA complex at Indiranagar 16
Table 8-1 Plot details of Indiranagar site 17
Table 10-1 Risk mitigation measures 19
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[vii]
List of Figures
Figure 2-1 Approach and Methodology 4
Figure 4-1 Development structure of the Commercial Complex 8
Figure 4-2 BDA Complex at Indiranagar 9
Figure 6-1 Population growth in Bangalore between 1901 and 2011 13
Figure 11-1 Project development framework 21
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Bangalore Development Authority
[1]
1 Executive summary
Infrastructure Development Department proposes to strengthen the project development process inthe Departments responsible for implementing Infrastructure Projects through Public Private
Partnership (PPP) The PPP concept is relatively new and the implementing officers require
necessary insight orientation and assistance into the project development for effective marketing and
implementation of the projects
CRISIL Infrastructure Advisory a division of CRISIL Risk and Infrastructure Solutions Limited (CRIS)
has been appointed by the Infrastructure Development Department Government of Karnataka to
work closely with the Bangalore Development Authority for the assignment ldquoInstitutional Strengthening
and Sector Specific Inventory for PPP Mainstreaming in Sectorsrdquo Under this BDA has identified a set
of nine projects for which pre-feasibility assessments are to be carried out Redevelopment of BDA
Complex at Indiranagar is one of the nine projects proposed by BDA
In line with the objectives of BDA the BDA Complexes were built at strategic locations and near
residential localities in order to provide a one stop solution for shopping Hence facilities like motor
training schools travel agents RTO etc started operating within the complexes The complexes are
now in dilapidated condition and in order to provide better facilities to the citizens BDA proposes to
redevelop the old BDA Complex at Indiranagar
This report examines the possibility of redeveloping the commercial complex on a PPP Basis In order
to bring in private sector participation in the redevelopment of the complex it is proposed that the land
is handed over to the developer on long term lease basis The selected developer would be
responsible for Finance Design Construction and Operation amp Maintenance of the project
throughout the lease period Ownership of the land will always be with BDA After the lease period
the land along with the BUP area will be transferred back to BDA free of cost One portion of the
proposed commercial development shall be reserved for BDA for rehabilitation of the existing
vendors
For the purpose of cost estimation we have studied the feasibility report developed by SREI
Infrastructure Finance Limited and have also consulted with the BDA The estimated cost of
development of the project is Rs 20810 lakhs
The revenues to the developer would accrue from the revenue earned from the lease rentals as well
as maintenance charges The total revenue from both the heads has been arrived at Rs 6720 Lakhs
for the base year Occupancy of 80 has been assumed for the base year which will stabilize at a
maximum of 95 towards the end of the concession period The average lease rentals have been
assumed at Rs 70 per square feet and maintenance charges have been assumed at Rs 225 per
square feet Appropriate escalation factors have been assumed for both revenue heads
The viability assessment has been carried out over three concession periods of 25 33 and 66 years
The debt to equity ratio has been assumed to be 121
The viability assessment has been worked out with determinants like the project level internal rate of
return (IRR) IRR of equity and the net present value of the equity The project is found to be viable for
all the 3 concession periods In case of the 25 year concession period it is estimated that the
developer would pay BDA an upfront premium of Rs 9650 Lakhs For the concession period of 33
and 66 years the upfront premium to be paid by the developer would be Rs 12300 Lakhs and Rs
6000 lakhs respectively
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Bangalore Development Authority
[2]
A key issue that the BDA will need to address is the relocation of the existing tenants of the
complexes The BDA needs to prepare a rehabilitation plan for the existing tenants and should also
clearly lay out the rehabilitation mechanism for these tenants As part of the project configuration we
have assumed that a certain proportion of the developed spaces would be handed over to the BDA
which can be utilized for the rehabilitation of the existing tenants However if the BDA chooses to
accommodate these tenants in the redeveloped facility the commercial terms may have to be in line
with the rentals being charged to the new tenants We are of the opinion that the BDA should make
an informed decision on this only after a detailed feasibility has been conducted for the site
We have examined the way forward for the project We propose that the BDA should appoint a
transaction advisor for the project who will conduct a detailed feasibility for the project and would also
facilitate the appointment of the developer through bid process management
The procurement plan for the project has been developed to be spread over 11 months which can be
shortened depending on the swiftness of decision making at BDA
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Bangalore Development Authority
[3]
2 Introduction
CRISIL Infrastructure Advisory a division of CRISIL Risk and Infrastructure Solutions Limited (CRIS)
has been appointed by the Infrastructure Development Department Government of Karnataka to
work closely with the Bangalore Development Authority for the assignment ldquoInstitutional Strengthening
and Sector Specific Inventory for PPP Mainstreaming in Sectorsrdquo Under this BDA has identified a set
of nine projects for which pre-feasibility assessments are to be carried out
In order to provide advanced recreational facilities and services to the citizens BDA has proposed the
redevelopment of its Complexes through Public Private Partnership model Redevelopment of BDA
Complex at Indiranagar is one of the nine projects proposed by BDA
21 Project idea
Bangalore Development Authority (BDA) is one of the premier urban planning and development
agencies that oversee the growth of the city The BDA came into being with effect from 6th January
1976 under a separate Act of the State Legislature viz the BDA Act 1976 This Authority combined in
itself the Planning functions of the City Planning Authority and the developmental functions of the
erstwhile City Improvement Trust Board (CITB)
The key objectives of the authority as per the BDA Act shall be to promote and secure the
development of the Bangalore Metropolitan Area (BMA) and for that purpose the Authority shall have
the power to acquire hold manage and dispose of moveable and immoveable property whether
within or outside the area under its jurisdiction to carry out building engineering and other operations
and generally to do all things necessary or expedient for the purposes of such development and for
purposes incidental thereto
In line with the objectives of BDA the BDA Complexes were built at strategic locations in near
residential localities in order to provide a one stop solution for shopping Hence convenient stores like
motor training schools travel agents RTO etc started operating within the complexes The complexes
are now in dilapidated condition and in order to provide better facilities to the citizens BDA proposed
to develop the old BDA Complex at Indiranagar The project is also an outcome of reducing
commercial spaces in key residential areas
22 Approach amp methodologyThe broad approach and methodology followed for study of these projects has been depicted
graphically below
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Bangalore Development Authorit
Figure 2-1 Approach and Met
23 Review of pre
Bangalore Development Authori
development works identified by
29102010 BDA retained Tand
identified projects namely ldquoDevel
TUSPL had submitted their Fe
estimations The report submitte
been presented as below
The project cost indicate
to reflect the market
contingencies prelimina
The financials indicated
Developer and BDA an
given the market conditi
The report does not cle
1062701 sq ft And an
2440023 square metre
officials
1 The cost incurred towards upfront pre
figure
Study of existingreports
y
odology
ious studies
ty had invited proposals for appointment of Co
BDA vide Tender Notification No BDAEMTA-
on Urban Solutions Pvt Ltd (TUSPL) as Cons
opment of Commercial Complex at Indiranagar
sibility Report for the Indiranagar site along
d by TUSPL was studied in detail and the CRISI
d in the report is Rs 39165 Lakhs The project c
rates The Revised project cost is Rs 239
ry and pre-operative expenses
in the Feasibility Report is assuming a revenu
an upfront premium which the developer woul
ns and rates this has been revised
arly mention the area of the plot It indicates a
open land development area of 131322 sq f
has been assumed for the pre-feasibility in c
ium and the interest during construction period is not includ
Discussions withBDA personnel
Be
a
Finalrecommendation
[4]
nsultants for various
3802010-11 dated
ultant for one of the
angalorerdquo
ith the designs and
Lrsquos observations has
ost has been revised
11 Lakhs including
share between the
ld provide However
construction area of
t Hence an area of
nsultation with BDA
d in the above mentioned
lock coststimation
inancialsessment
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Bangalore Development Authority
[5]
3 Sector profile
The city of Bangalore has witnessed very rapid growth The city today is home to over 84 million
people (2011 Census) The salubrious weather and the rapid concentration of economic activities in
Bangalore have fuelled the growth of Bangalore As one of the worldrsquos fastest growing cities
Bangalore is experiencing a steady growth in population
Bangalore has been substantially affected by globalization and rapid urbanization over the last
decade The demand for services and quality of life is not confined to the central core or the erstwhile
Bangalore Mahanagra Palike jurisdiction but spreads beyond into the peri-urban areas the
Metropolitan Area and outwards into Bangalore Metropolitan Region With the emergence of the
Bangalore-Mysore Infrastructure Corridor the Bangalore International Airport and the planned ring
roads urbanization has sprawled out
Banaglore has incontestable advantages to develop into an international metropolis but at the same
time faces significant constraints The city is embedded in its history and depicts the greatness of a
truly Indian city established before the invasions and colonization It has a diverse set of activities
from silk to aeronautics from clothing to information technology and is a gauge of dynamism and
solidity of the city Natural drainage climatic advantage and the availability of water in the Cauvery
baisn are factors assisting in improving the quality of life
31 Industry overview
Bengaluru is countryrsquos third leading realty market With the IT boom and corresponding growth of the
economy saw large-scale increase in the cityrsquos population mostly due to migration from across India
Bengalurursquos population grew about 35 percent in the last six years
This increase in population along with steady demand and restricted supply led to saturation in central
Bengaluru region and pushed development to peripheral areas like Whitefield Sarjapur road Outer
Ring Road (ORR) Bannerghatta Road Hosur Road
With the opening of International Airport Real estate in North Bangalore (Bellary Road to Yelahanka)
has also witnessed the launch of numerous projects with apartments and villas Given the improved
infrastructure accessibility and the future potential for this area the area has been attracting both the
segments of investors and end-users alike
The city leads the country in office space with 738 million square feet of commercial capacityavailable However Bengaluru also has 22 per cent of the available space vacant with a large number
of projects under development and reduced demand
32 Regional profile
Bengaluru (formerly Bangalore) also known as Garden City for its beautiful gardens is the
administrative industrial commercial educational and cultural capital of Karnataka and located on
the Deccan Plateau in the South-Western part of India Bengaluru is Indias third most populous city
fastest growing and fifth largest metropolitan area with population of about 57 million (as per 2001
census) The population is expected to reach around 11 million and 22 million in 2021 and 2041respectively
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Bangalore Development Authority
[6]
With ever increasing boundaries and gross domestic product of 59123 billion in FY 06-07 Bengaluru
has some well-recognized IT companies and numerous public sector heavy industries aerospace
telecommunications and defence organisations located within Bengaluru also has some well known
colleges and research institutes
Geography
With an average elevation from the sea level of 920 m and total area of 741 km2 Bengaluru is located
in the south-eastern part of Karnataka in the Mysore Plateau - a region of Deccan Plateau The city
has an uneven landscape of hills and valleys to the south and relatively more level plateau towards
the north
Because of its elevation the city enjoys a pleasant and equable climate throughout the year The city
is situated in the Bengaluru Urban district which is divided into four taluks - Bangalore North
Bangalore East Bangalore South and Anekal and covers a total geographical area of 2190 sq km
Bangalore District is surrounded by Kolar District to the northeast Tumkur District on the northwest
Mandya District on the southwest Chamarajanagar District on the south and neighbouring state of
Tamil Nadu on the southeast
Connectivity
Bangalore is well connected to other Indian cities by road rail and air transport The connectivity by
rail road and air is detailed in the sections below
Road
Bengaluru is located at the junction of National Highways 4 7 and 48 connecting to various important
cities in India including Chennai Hyderabad Kanyakumari Madurai Mangalore Mumbai Nagpur
Pune and Varanasi
Railways
Bengaluru has two major railway stations Bengaluru City railway station and Yeswantpur Junction
The city has a well maintained railway network connecting major cities of the country and is
connected to the rest of the country both by metre gauge and broad gauge rail services
Air
Bengaluru has an International Airport at Devanahalli and is well connected to all cities in India
Internationally Bengaluru is connected to European and Asian cities like Frankfurt Singapore Kuala
Lumpur London Dubai Paris Bangkok and Hong Kong
Major commercial areas
The following are the major commercial areas in and around Bangalore
Central Business District Seshadripuram Jayanagar JP Nagar Yeshwantapura
Eastern Suburb Marathalli-sarjapur ORR Sarjapur Road Whitefield and Brookfield
Secondary Business District Indiranagar JP Nagar RT Nagar Vijayanagar
Northern Suburb HRBR Layout Bellary Road Jakkur
Southern Suburb Mysore Road Hosur Road
West Suburb BEL Factory HMT Layout
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Bangalore Development Authority
[7]
33 Key issues
The recessionary trends in 2007 across the world had also adversely affected the entire real estate
market in Bengaluru All the three categories of residential commercial (office space) and retail had
experienced slump in market and the real estate market in several erstwhile prime locations of the citywere facing oversupply situation and a drastic fall in the capital as well as rental values
With the revival of the industry and economy the residential market is expected to witness a jump
across all the areas in Bengaluru as per CRISILrsquos analysis The eastern and southern areas are
estimated to emerge as up-scaled developments as these areas are expected to see maximum
supply in the next three years
Good quality developments have been the key feature of Bangalorersquos commercial developments The
boom in IT sector especially in South India has enabled the city to have a metropolitan culture which
brings along the urban demands like malls and multiplexes
Recently the market in Bangalore has stabilized to a large extent after the sudden jump in prices post
recession However this is cyclical in nature and the saturation of IT services has led to a scenario
where there would not be much increase in the lease rentals
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Bangalore Development Authorit
4 Project
41 Description of
It is proposed that for the redev
over to the developer on long
Finance Design Construction
period Ownership of the land wi
BUP area will be transferred b
proposed commercial develop
vendors
42 Components o
The project would be develope
basis The structure of the mode
Figure 4-1 Development struc
43 Description of
The site is located at Indiranaga
the main commercial centres in
Road in the North Old Airport
the East Indiranagar is located
famous for housing the Somes
and educational institutions like
y
the project
lopment of BDA Complex at Indiranagar the la
erm lease basis The selected developer woul
and Operation amp Maintenance of the project t
ll always be with BDA After the lease period th
ack to BDA free of cost We have assumed
ent shall be reserved for BDA for rehabilit
f the project
on a Design Build Finance Operate and Tra
l has been illustrated below
ture of the Commercial Complex
the site
r a suburb of Bangalore located about 4 km ea
the city This medium sized suburb is enclose
oad in the South Halasura in the West and Je
within a diameter of few kilometre radii from the
ara Temple several reputed hospitals like Amrj
r Ambedkar College KH Patel College etc
[8]
nd would be handed
d be responsible for
hroughout the lease
e land along with the
hat a portion of the
tion of the existing
sfer model on PPP
t of MG road one of
by the Old Madras
vanbheemanagar in
airport The place is
yoti Vijaya and ESI
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Bangalore Development Authority
[9]
The site is situated at a junction near a residential area and is frequented by elders and youngsters
alike The present building consists of Motor driving schools RTO office computer vendors and travel
agents There is a water tank situated in the site
Figure 4-2 BDA Complex at Indiranagar
44 Interaction with stakeholders
CRISIL conducted a series of interactions with the stakeholders namely the BDA officials Citizens
and the establishment owners The interactions revealed that the building has to undergo
redevelopment The condition of the BDA office is not up to the standards expected and the officials
complained about leaks and short circuits The establishment owners suggested that the building was
planned with less road facing establishments due to which they are not able to attract footfalls
45 Case studies
In order to generate revenues from the real estate value of the land in the ownership of the ULBrsquos
commercial projects have been developed on a PPP basis on these lands Typically under such
arrangements the ULB would have identified a site under its ownership where a property for
commercial use can be developed Commercial development would include the development of
shopping complexes markets bus terminals multi-level car parking townships etc
Under such an arrangement the ULB would require of the private developer to undertake
construction of a commercial complex on the land The land would be provided by the ULB to the
private operator on a lease basis The ULB would provide specifications on the nature and type of
commercial development required The private developer would need to bear all the capital costs
associated with the construction of the commercial complex Post construction of the commercial
complex as per the arrangement the private developer would either hand over the constructed
facility to the ULB or would sub-lease the property The private developer would be required to make
to the ULB an upfront payment or provide a share in the ULB revenues earned from sub-leasing the
properties
The following case study compiled by the Ministry of Urban Development Government of India
highlights the development of municipalurban lands on a PPP basis
Category Details
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Bangalore Development Authority
[10]
Category Details
Project Construction of Commercial Complex at Ranipura Market
Cost of
ProjectRs 1500 lakhs
Description
The land was allotted to the concessionaire to construct the Commercial Complex by
the Corporation
Corporation continues to own the land
After the concession period the built-up structure (Commercial Complex) will be
transferred to the Corporation by the concessionaire
The concessionaire was given the right to recover its investment from the premium
received for ldquoRight of Occupationrdquo of the constructed shops
At the time of award of concession it was estimated that a profit of Rs 200 lakh will
be accrued from the venture which will be shared by the concessionaire with the
Corporation
The Corporation is expected to receive a profit share of Rs 100 lakh from the
concessionaire
Source Compendium on Public Private Partnership in Urban Infrastructure Case Studies Ministry of Urban
Development Government of India in association with Confederation of Indian Industry (CII)
We have also studied another case wherein the development affordable housing units was structure
on a PPP basis by the Pimpri Chinchwad New Township Development Authority (PCNTDA)
451 Public private partnership in affordable housing under Jawaharlal
Nehru National Urban Renewal Mission (JNNURM)
The Pune metropolitan region comprising Pune and Pimpri Chinchwad cities is one of the fastest
growing urban agglomerations in India A major automobile and auto-ancillary hub and a well-known
international education destination it also ranks among the top IT destinations of India Besides the
region has many industrial clusters housing industries focused on FMCG engineering agro-based
technology
The Pimpri-Chinchwad New Town Develompent Authority (PCNTDA) a key development authority of
the PMR is responsible for development of peri-urban especially in its north In line with the
phenomenal growth of the region and its strident aspirations PCNTDA has envisioned the
development of an integrated township at Sector 12 spanning 53 hectares Given the success of the
Public Private Partnership (PPP) model in involving private sector participation for development based
projects PCNTDS proposed to develop the integrated township on PPP basis
With this objective PCNTDA appointed the consortium of CRISIL Risk and Infrastructure Solutions
Limited (CRIS) Omkar Associates and Creations as project development consultants for the
development of an eco-friendly affordable township at Bhosari Sector 12 CRISILrsquos role was to
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Bangalore Development Authority
[11]
undertake a detailed demand assessment financial feasibility project structuring and management of
the bid process
The concept
Keep in mind the PCNTDArsquos vision CRIS designed integrated township such that it compriseshousing untis for the poor affordable housing units for the general public a primary health care
centre a hospital and a school
As per the structure the Developer shall construct 5040 housing units under the Basic Services for
Urban Poor (BSUP) scheme of JNNURM PCNTDA shall transfer the amount of grant sanctioned for
developing these units under the JNNURM scheme to the developer The remaining project cost of
the BUSP units was to be financed by the developer
In addition to this the Developer shall also construct affordable housing units as per pre-specified
specifications and hand over to PCNTDA free of cost The developer shall also construction the
physical and social infrastructure for the integrated township thereby ensuring good road adequate
water supply an efficient sewerage system as well as schools and hospitals The project shall bedeveloped in a manner such that it has minimum possible impact on the surrounding environment and
is in harmony with nature To this end the developer shall undertake eco-friendly initiatives including
rain water harvesting use of solar power environment-friendly materials and vermin-composting
The project
The developer has to complete the BSUP housing units within 2 years and hand over to the PCNTDA
For the remaining portion of the land PCNTDA shall execute a lease deed for 99 years with the
developer The lease rights shall be granted to the developer in phases upon completion of
milestones as defined in the project agreement The main scope of work for the developer shall
include
Master planning for the entire 53 hectares of land and construction of common physical and
social infrastructure for the entire area
Development construction and marketing of 795 lakhs square meters of integrated real
estate space
Construction and handing over of 5040 housing units under the BSUP scheme of JNNURM
on a separate layout carved out of the said land PCNTDA will provide the developer the grant
sanctioned by the Government of India for these housing units
Successful selection of private developer
With the objective of undertaking this project on a PPP basis in a transparent and objective manner
PCNTDA launched a three-cover Request for Proposal in June 2009 The bidding parameter was theconstructed ldquoCarpet Areardquo in ldquosquare metersrdquo of affordable housing units that the bidder shall
construct and hand over free of cost to PCNTDA
The tender received good response from four interested bidders Of the four bidders two bidders
were adjudged technically and financially capable and short-listed for the final stage The bidder with
the highest construction carpet area offered to PCNTDA was selected The successful bidder quoted
a carpet area of 130599 square meters of affordable housing units
Thereby the PCNTDA derived a value of 7369 housing units (including 5040 BSUP units) a school
and a hospital for the BSUP units a school and hospital for the general public and development of
public amenities
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Bangalore Development Authority
[12]
Value addition to PCNTDA
In commercial terms PCNTDA saved (i) Rs 190 crores as the gap amount required to fund the BSUP
scheme (ii) Rs 210 crores of construction cost of affordable housing units and (iii) Rs 100 crores on
the development of physical and social infrastructure In addition to this PCNTDA shall receive anupfront payment of Rs 50 crores from the successful bidder The project structure also protects
PCNTDA from cost escalation risks valuation risks and engineering risks
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Bangalore Development Authorit
5 Market asse
51 Bangalore gro
The growth of Bangalore has be
from the growth in population in
to the economic opportunities it
Bangalore an obvious choice for
Bangalore has grown at averag
decades It is projected that B
explosive growth has meant th
pressure
Figure 5-1 Population growth
Source City Development Plan Ba
The city leads the country in
available However Bengaluru a
of projects under development a
983089983086983094983091 983089983086983096983097 983090983086983092
983088
983089983088
983090983088
983091983088
983092983088
983093983088
983094983088
983095983088
983096983088
983097983088
983089983097983088983089 983089983097983089983089 983089983097983090983089
983120 983151 983152 983157 983148 983137 983156 983145 983151 983150 983145 983150 983116
983137 983147 983144 983155
y
sment
th overview
en unprecedented in the past couple of decades
the last century Bangalore continues to attract t
offers This is also supported by a salubrious
not only businesses but also for people
compounded annual growth rate (CAGR) of 3
ngalorersquos population will cross the 10 million
at the infrastructure in Bangalore has been p
in Bangalore between 1901 and 2011
galore Development Authority and Census of India
ffice space with 738 million square feet of
lso has 22 per cent of the available space vacan
nd reduced demand
983091983086983089 983092983086983089983089983095983086983096983094
983089983090983086983088983094
983089983094983086983094983092
983090983097983086983090983090
983092
983089983097983091983089 983089983097983092983089 983089983097983093983089 983089983097983094983089 983089983097983095983089 983089983097983096983089 983089983097
[13]
This fact is laid bare
rongs of people due
eather which makes
58 in the last three
mark by 2021 This
t under tremendous
commercial capacity
with a large number
983086983091
983093983094983086983096983094
983096983092
983097983089 983090983088983088983089 983090983088983089983089
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Bangalore Development Authority
[14]
52 Demand projections
Bangalore is the largest commercial market and third largest residential market in India The city has
typically been preferred by home buyers because of its favorable socio-economic conditions and a
salubrious climate In recent years Bangalore has attracted a large influx of population engaged inthe thriving IT sector City residential demand is more end-user driven with moderate price
appreciation The average residential real estate price in the city is 20-25 lesser than in Delhi and
Mumbai In the recent National Housing Bank Residex the index indicating property prices across key
cities in India Bangalore witnessed a mere 1 YoY fall in residential prices in 2011-12 Mumbai saw
an 116 YoY jump in home prices while Delhi witnessed 358 YoY increase during 2011-12 The
city witnessed tremendous growth in terms of population and the number of companies setting up
offices there Thus the ongoing projects such as Bengaluru metro rail project various flyovers and
the under-pass construction activities in Outer Ring Road (ORR) CNR and BHEL circles would ease
the congestion and provide better connectivity for all commuters This will boost real estate demand in
and around Bangalore city
In 2011-12 Bangalorersquos commercial market exhibited resiliency with comparatively high demand
levels despite the discomfort in the market on account of global uncertainty Though commercial
property demand in Bangalore is largely dependent on ITITES sectors the share of manufacturing is
increasing at a faster pace and thereby giving further boost to office space demand According to real
estate consultancy firm Knight Frank the manufacturing sector witnessed a quantum leap as its share
of absorption increased from 3 in 4QCY10 to 23 in 4QCY11 The absorption of commercial space
has gone up from 5mn sq ftquarter in CY09 to 7mn sq ftquarter in CY11 thanks to sustained
demand for Bangalore commercial space which witnessed 43 CAGR in absorption level over CY09-
11 Subdued supply during the first two quarters of 2011 coupled with high absorption level has
substantially lowered the vacancy level in the city (bringing it down from 17 in CY10 to 12 in
CY11) With the expansion of existing operations in the IT sector and the entry of newer sectors dueto renewed optimism in the market we expect the level of absorption of office space to remain stable
Revised Master Plan-2015 for the BMA has been published This document gives the likely growth to
take place in various areas of the BMA The population of the BMA is expected to grow from 61 lakh
in 2001 to 122 lakh in 2025
The proposed growth rate and the ever changing urban scenario is bound to increase the commercial
space demand in the region The site at Indiranagar is situated at a junction and has two road facing
sides which makes it very attractive for commercial development The site is also huge in size and
can easily accommodate a mall
Hence in view of the above it can be safely recommended that the site would generate huge interest
within the developers
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Bangalore Development Authority
[15]
6 Project financials
The project costs have been largely derived from the costs indicated by the Bangalore Development
Authority (BDA)
61 Cost estimation
The estimated cost of development of the project is Rs 23931 lakhs The costs have been outlined
below
Table 6-1 Project Cost of the proposed development
Particular Amount inRs Lakhs
Construction Cost 19967
Land Development 793
Other Infrastructure 50
Total Hard Costs 20810
Contingencies 3121
Total Project Development Cost 23931
Apart from the above mentioned project development cost the Concessionaire would incur the
development premium and Interest during construction (IDC) cost
Particulars 25 years 33 Years 66 years
Upfront Premium (Rs Lakh) 965000 1230000 600000
IDC Cost (Rs Lakh) 315600 361500 259100
Revenue Share every year 15 15 15
Total Project Cost (Rs Lakhs) 36737 39846 33022
62 Revenue stream
The Revenues to the Developer would accrue from the revenue earned from the lease rentals and the
maintenance charges which the developer earns from the tenants The total revenue from both the
heads has been arrived at Rs 6720 Lakhs for the base year It has been assumed that the
occupancy of the commercial complex 80 in the base year and stabilizes to a maximum of 95towards the end of the concession period The average lease rentals have been assumed at Rs 70
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Bangalore Development Authority
[16]
per square feet and the maintenance charges have been assumed at Rs 225 per square feet Both
the revenues are escalating at the rate of 10 per annum The income statement for the developer
has been provided in Annexure 1
63 Viability assessment
The viability assessment has been carried out over two concession period ie 25 33 and 66 years
The debt to equity ratio has been assumed to be 121
The project level internal rate of return (IRR) IRR of equity and the net present value of the equity
have been worked out
Table 6-2 Viability assessment for BDA complex at Indiranagar
Concession Period Project IRR Equity IRR NPV of Equity
Upfront Premium
(Rs in Lakhs)
25 years 1777 2007 96 9650
33 years 1818 2006 108 12300
66 years 2101 2333 5285 6000
It is evident that the project is viable for the developer for all the 3 concession periods In case of the
25 year concession period it is estimated that the developer would pay BDA an estimated upfront
premium of Rs 9650 lakhs Similarly the developer would pay BDA an amount of Rs 12300 lakhsand Rs 6000 lakhs for the concession periods of 33 years and 66 years respectively
64 Ranking of options based on commercial viability
Having assessed the project for two concession periods of 25 33 and 66 years we are of the view
that the 25 year concession option will be more suitable since it allows the developer to make
reasonable returns on the projects and his own investments along with a sizeable upfront premium for
BDA BDA would be in a position to renew the contract or retender the project after 25 years which
may enable BDA to earn as per the prevailing market rates
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Bangalore Development Authority
[17]
7 Statutory amp legal framework
71 Legal amp regulatory framework
Development Control Regulations (DCR)
As per RMP ndash 2015 published by BDA the project site has been classified as ldquoCommercial Businessrdquo
As per the definitions of RMP-2015 Commercial Business Zone allows development of Commercial
and Corporate offices Retail Shopping Complexes Restaurants and Hotels Convention centres and
banquet halls financial institutions Cinema and multiplexes places of assembly exhibition centres
Entertainment and amusement centres and stores
Permissible land uses under Commercial (Business) Zone as per RMP-2015 of BDA
Main land use category C3
Other land uses permissible (as main land use) R I-3 T3 amp U4
If the road width is less than 120 m and plot area is less than 240 square metre then C2 I-2
R and U4 only are allowed
The plot size is 24000 square metre Presently it has 18m wide access road The applicable DCR for
the plot as per proposed road width is as follows
Table 7-1 Plot details of Indiranagar site
Sr No Particulars Description Unit
1 Land Use Commercial Business
2 Road Width 18 Metre
3 Permissible FAR 325
4Permissible ground
coverage50
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[18]
8 Indicative environmental amp social impacts
81 Environmental impacts
The proposed development is in line with the layout of BDA Due to the reasonably large site area the
development will be on the higher side A set back of 50 is found to be acceptable for the site
however an Environmental Impact Assessment studies have to be undertaken for the sites Since
already a commercial complex is existent redevelopment of the complex would need demolition of
the existent structures Hence a suitable disposal of construction and debris has to be undertaken by
the developer Also a Green building can be developed to ensure minimal effect on nature
82 Social impactsDuring the construction period the existing establishments have to be shifted or compensated
temporarily Hence a clear resettlement plan has to be decided before the implementation of the
project It is envisaged that if due care is taken about the existing tenants the development would go
smoothly
83 Mitigation measures
It is necessary that the impacts are identified early and action plans are prepared for their mitigation in
advance For instance for environmental impacts the BDA may insist on the developer to use clean
and green building technologies
It is also necessary that the project development plan is also accompanied by a Relocation and
Rehabilitation plan which will layout detailed action points with the requisite intervening entity
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Bangalore Development Authority
[19]
9 Operating framework
91 Risks amp mitigation
The risk framework for this project has been outlined below
Table 9-1 Risk mitigation measures
Risk Category Risk implication Mitigation measure
Sponsor risk BDA scraps the project Termination payments in case of BDA scrapping the
project
Environment
risk
Adverse impact on
surrounding environment
Penalty clauses in case of default on
Concessionairersquos part
Environmental Impact Assessment to identify all
risks in advance
Political riskChange in government may
put project in jeopardy
Termination payments in case of project being
scrapped
Force
majeure riskProject is abandoned
Force majeure clauses in the concession
agreement
Operating riskThe operations of the
facility are stalled
Performance security clause in case of default on
Concessionairersquos part
Design risk Overdesign of the projectProject design to be finalized in mutual agreement
of concessionaire and BDA
Completion
risk
Completion of project is
delayed inconvenience to
citizens and tenants
Penalty clauses for time overrun in the concession
agreement
Cost overrun
risk
Project cost increases
beyond reasonable limits
Project cost increment ceiling to be specified in the
concession agreement Increase beyond this ceiling
to be borne by the developer No change in revenue
sharing
92 Indicative project structure
The best approach for such a large ticket project would be for the BDA to become a key actor in the
entire process of development The BDA may ask the private sector partner to form a Special
Purpose Company where the equity will be brought in by the private sector developer The designs
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Bangalore Development Authority
[20]
should be left to the developer and BDArsquos role would be in approving the same in accordance with the
Development Control Regulations
The SPC will develop and maintain Complex throughout the concession period The tenants would
pay the developer a sub-lease premium or lease rentals which will be escrowed in a separate accountand can be withdrawn based on the revenue sharing structure adopted
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Bangalore Development Authorit
10 Way ahead
101 Project develo
The key task for BDA is to ap
feasibility of the project Once t
the bid process
Figure 10-1 Project developm
The transaction advisor shall stralso prepare the relevant bid
management on behalf of BDA
102 Procurement
The foremost step for BDA is
feasibility The detailed financial
parameter Also an optimum str
bid documents would be prepar
process be conducted as a 2 sta
983105983152983152983151983145983150983156983149983141983150983156 983151983142 983156983154983137
983108983141983156983137983145983148983141983140 983142983141983137983155983145983138
983155983156983154983157983139983156983157983154983145983150983143
983120983154983141983152983137983154983137983156983145983151
983123983141983148983141983139
y
pment framework
oint a Transaction Advisor in order to conduc
e financial numbers are acceptable BDA BDA
nt framework
ucture the project upon completion of the feasibidocuments The transaction advisor shall un
nd will assist in appointment of the private secto
lan
to appoint a Transaction Advisor for the co
feasibility would determine the tentative revenue
cture would be arrived at Post the approval of
d for the selection of the developer It is recom
ge process involving Technical qualification and
983155983137983139983156983145983151983150 983137983140983158983145983155983151983154
983148983145983156983161 983155983156983157983140983145983141983155 983137983150983140 983152983154983151983146983141983139983156
983150 983151983142 983138983145983140 983140983151983139983157983149983141983150983156983155
983145983151983150 983151983142 983152983154983145983158983137983156983141 983155983141983139983156983151983154 983152983137983154983156983150983141983154
[21]
a detailed financial
should proceed with
ility studies and shallertake bid process
partner
nducting the project
for BDA and the bid
easibility Report the
mended that the Bid
inancial proposal
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B a n g a l o r e D e v e l o p m e n t A u t h o r i t y
B D A s h o u l d i n i t i a t e t h e p r o c e s s o f a p p o
i n t i n g a t r a n s a c t i o n a d v i s o r a t t h e
e a r l i e s t T h i s p r o c e s s c a n b e c o m p l e t e d i n 2 m o n t h s
O n c e t h e T A
i s i n p l a c e
t h e B D
A s h o u l d a l l o w
a t l e a s t 4 m o n t h s f o r t h e p r e p a r a t i o n o f f e a s i b i l i t y p r o j e c t s t r u c t u r i n g a n d b i d d o c u m e n
t s
O n c e t
h e b i d d o c u m e n t s a r e i n p l a c e t h
e B D A
s h o u l d i n i t i a t e t h e p r o c e s s
o f s e l e c t i n g t h e p r i v a t e s e c t o r p a
r t n e r w h i c h c a n b e c o m p l e t e d o v e r a 4 m o n t h
p e r i o d
T h e c u
r r e n t p r o c u r e m e n t p l a n i s s p r e a d
o v e r 1 1 m o n t h s w h i c h c a n b e s
h o r t e n e d d e p e n d i n g o n t h e m a n n e r i n w h i c h B D A
m a k e s d e c i s i o n
s r e l a t i n g t o
a p p o i n
t m e n t o f T A a n d p r i v a t e d e v e l o p e r
A c t i v i t y
M 1
M 2
M 3
M 4
M 5
M 6
M 7
M 8 M
9
M 1 0
M 1 1
M 1 2
A p p o i n t m e t o f t r a n s a c t i o n a d v i s o r
D e t a i l e d t e c h n o - e c o n o m i c f e a s i b i l i t y a n d
b i d d o c u m e n t p r e p a r a t i o n
B i d p r
o c e s s m a n a g e m e n t
S e l e c t i o n o f p r e f e r r e d b i d d e r a n d f o r m a t i o n o f S P C
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
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B a n g a l o r e D e v e l o p m e n t A u t h o r i t y
1 1
A n n e x u r e 1 ndash C a s h - f l o w
s t a t e m e n t
R e v e n u e H e a d
S u b H e a d R a t e
U n i t
3 1 - M a r - 1 4
3 1 - M
a r - 1 7
3 1 - M a r - 2 2
3 1 - M a r - 2 7
3 1 - M a r - 3 2
3 1 - M a r - 3 7
3 1 - M a r - 4 2
3 1 - M a r - 4 7
3 1 - M
a r - 5 2
3 1 - M a r - 5 7
3 1 - M a r - 6 2
C o m m e
r c i a l S p a c e
O c c u p a
n c y
P e r c e n t a g
0
9 0
9 5
9 5
9 5
9 5
9 5
9 5
9 5
9 5
9 5
C o m m e
r c i a l s p a c e l e a s e d o u t
s q f t
-
7 2 0 6
9 0
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6
0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
D e p o s i t f o r L e a s e
( N o o f m o n t h s r e n t )
1 2
A v e r a g e
L e a s e R e n t a l s
7 0
R s p s f p e r m o n t h
E s c a l a t i o n
1 0
M a i n t e n
a n c e c h a r g e s
2 2 5
R s p s f p e r m o n t h
R e v e n u e f r o m
L e a s e R e n t a l
R s
L a k h s
-
8 8
6 3
1 5 0
6 8
2 4 2
6 6
3 9 0
8 1
6 2 9
4 1
1 0 1 3
6 7
1 6 3 2
5 3
2 6
2 9
2 0
4 2 3 4
3 5
6 8 1 9
4 7
R e v e n u e f r o m
M a i n t e n a n c e c h a r g e s
-
2 8 5
4 8 4
7 8 0
1 2
5 6
2 0
2 3
3 2
5 8
5 2
4 7
8 4
5 1
1 3 6
1 0
2 1 9
2 0
T o t a l R
e v e n u e
-
9 1 4 8
1 5 5 5 2
2 5 0 4 6
4 0 3 3 8
6 4 9 6 4
1 0 4 6 2 5
1 6 8 5 0 0
2 7
1 3 7 1
4 3 7 0 4 6
7 0 3 8 6 7
R e v e n
u e H e a d
S u b H e a d R a t e
U n i t
3 1 - M a r - 6
7
3 1 - M a r - 7 2
3 1 - M a r - 7 8
3 1 - M a r - 7 9
C o m m e r c i a l S p a c e
O c c u p a n c y
P e r c e n t a g
9 5
9 5
9 5
9 5
C o m m e r c i a l s p a c e l e a s e d o u t
s q f t
7 6 0 7 2
8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
D e p o s i t f o r L e a s e
( N o o f m o n t h s r e n t )
1 2
A v e r a g
e L e a s e R e n t a l s
7 0 R s p s f p e r m o n t h
E s c a l a
t i o n
1 0
M a i n t e
n a n c e c h a r g e s
2 2
5 R s p s f p e r m o n t h
R e v e n u
e f r o m
L e a s e R e n t a l
R s
L a k h s
1 0
9 8 2 8 2
1 7
6 8 7
9 4
3 1
3 3 5
2 7
3 4
4 6 8
8 0
R e v e n u
e f r o m
M a i n t e n a n c e c h a r g e s
3 5 3 0 2
5 6 8
5 4
1 0 0 7
2 1
1 1 0 7
9 3
T o t a l R e v e n u e
1 1 3 3 5 8 4
1 8 2 5 6 4 8
3 2 3 4 2 4 8
3 5 5 7 6 7 2
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
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[x]
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
httpslidepdfcomreaderfullgim-pre-feasibility-report-indiranagarrevised 3233
[y]
Disclaimer
CRISIL Risk and Infrastructure Solutions Limited (CRIS) has taken due care and caution in preparation of this Report for
Bangalore Development Authority which is under the purview of the Urban Development Department Government of
Karnataka This Report is based on the information documents provided by the Company andor information available publicly
andor obtained by CRIS from sources which it considers reliable CRIS does not guarantee the accuracy adequacy or
completeness of the information documents Report and is not responsible for any errors or omissions or for the results
obtained from the use of the same The Report and results stated therein are subject to change CRIS especially states that it
has no financial liability whatsoever to the Company users of this Report This Report is strictly confidential and should not be
reproduced or redistributed or communicated directly or indirectly in any form or published or copied in whole or in part
especially outside India for any purpose
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
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Registered Office ndash Mum
CRISIL House Central AvenueHiranandani Business ParkPowai Mumbai- 400 076Phone 91-22-3342 3000Fax 91-22-3342 3810
New Delhi
The Mira G-1 1st Floor Plot NoIshwar Nagar Mathura Road
New Delhi - 110 065 IndiaPhone 91-11-4250 510091-11-2693 0117 - 121Fax 91-11-2684 2213
Hyderabad
3rd Floor Uma ChambersPlot No 9amp10 Nagarjuna HillsNear Punjagutta Cross RoadHyderabad - 500 082Phone 91-40-40328200Fax 91-40-2335 7507
Bengaluru
W-101 Sunrise Chambers22 Ulsoor RoadBengaluru - 560 042Phone 91-80-2558 0899Fax 91-80-2559 4801
Ahmedabad
706 Venus AtlantisNear Reliance Petrol PumpPrahladnagarAhmedabad -Phone 91-79-4024 4500Fax 91-79-2755 9863
Visit us atwwwcrisilcom
ai
1 amp 2
About CRISIL Infrastructu
CRISIL Infrastructure Advisory
CRISIL Risk and Infrastructure
Limited a 100 subsidiary of
Indiarsquos leading Ratings Resear
Policy Advisory Company
CRISIL Infrastructure Advisory
premier advisor focusing on po
well as commercial and contra
the areas of transport energyinfrastructure We also provide
international firms planning inv
India Over a period of time C
Infrastructure Advisory has buil
position for itself in these doma
considered the preferred cons
governments multilateral agen
sector clients We have extend
operations beyond India and ar
other emerging markets in Afri
and South Asia
re Advisory
is a division of
Solutions
RISIL Limited ndash
ch Risk and
is Indiarsquos
licy issues as
tual issues in
nd urbansupport to
stments in
ISIL
t a unique
ins and is
ltant by
cies and private-
ed our
e present in
a Middle East
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
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[v]
82
Social impacts 18
83
Mitigation measures 18
9
Operating framework 19
91
Risks amp mitigation 19
92
Indicative project structure 19
10
Way ahead 21
101 Project development framework 21
102 Procurement plan 21
11 Annexure 1 ndash Cash-flow statement 23
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[vi]
List of Tables
Table 7-1 Project Cost of the proposed development 15
Table 7-2 Viability assessment for BDA complex at Indiranagar 16
Table 8-1 Plot details of Indiranagar site 17
Table 10-1 Risk mitigation measures 19
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[vii]
List of Figures
Figure 2-1 Approach and Methodology 4
Figure 4-1 Development structure of the Commercial Complex 8
Figure 4-2 BDA Complex at Indiranagar 9
Figure 6-1 Population growth in Bangalore between 1901 and 2011 13
Figure 11-1 Project development framework 21
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Bangalore Development Authority
[1]
1 Executive summary
Infrastructure Development Department proposes to strengthen the project development process inthe Departments responsible for implementing Infrastructure Projects through Public Private
Partnership (PPP) The PPP concept is relatively new and the implementing officers require
necessary insight orientation and assistance into the project development for effective marketing and
implementation of the projects
CRISIL Infrastructure Advisory a division of CRISIL Risk and Infrastructure Solutions Limited (CRIS)
has been appointed by the Infrastructure Development Department Government of Karnataka to
work closely with the Bangalore Development Authority for the assignment ldquoInstitutional Strengthening
and Sector Specific Inventory for PPP Mainstreaming in Sectorsrdquo Under this BDA has identified a set
of nine projects for which pre-feasibility assessments are to be carried out Redevelopment of BDA
Complex at Indiranagar is one of the nine projects proposed by BDA
In line with the objectives of BDA the BDA Complexes were built at strategic locations and near
residential localities in order to provide a one stop solution for shopping Hence facilities like motor
training schools travel agents RTO etc started operating within the complexes The complexes are
now in dilapidated condition and in order to provide better facilities to the citizens BDA proposes to
redevelop the old BDA Complex at Indiranagar
This report examines the possibility of redeveloping the commercial complex on a PPP Basis In order
to bring in private sector participation in the redevelopment of the complex it is proposed that the land
is handed over to the developer on long term lease basis The selected developer would be
responsible for Finance Design Construction and Operation amp Maintenance of the project
throughout the lease period Ownership of the land will always be with BDA After the lease period
the land along with the BUP area will be transferred back to BDA free of cost One portion of the
proposed commercial development shall be reserved for BDA for rehabilitation of the existing
vendors
For the purpose of cost estimation we have studied the feasibility report developed by SREI
Infrastructure Finance Limited and have also consulted with the BDA The estimated cost of
development of the project is Rs 20810 lakhs
The revenues to the developer would accrue from the revenue earned from the lease rentals as well
as maintenance charges The total revenue from both the heads has been arrived at Rs 6720 Lakhs
for the base year Occupancy of 80 has been assumed for the base year which will stabilize at a
maximum of 95 towards the end of the concession period The average lease rentals have been
assumed at Rs 70 per square feet and maintenance charges have been assumed at Rs 225 per
square feet Appropriate escalation factors have been assumed for both revenue heads
The viability assessment has been carried out over three concession periods of 25 33 and 66 years
The debt to equity ratio has been assumed to be 121
The viability assessment has been worked out with determinants like the project level internal rate of
return (IRR) IRR of equity and the net present value of the equity The project is found to be viable for
all the 3 concession periods In case of the 25 year concession period it is estimated that the
developer would pay BDA an upfront premium of Rs 9650 Lakhs For the concession period of 33
and 66 years the upfront premium to be paid by the developer would be Rs 12300 Lakhs and Rs
6000 lakhs respectively
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Bangalore Development Authority
[2]
A key issue that the BDA will need to address is the relocation of the existing tenants of the
complexes The BDA needs to prepare a rehabilitation plan for the existing tenants and should also
clearly lay out the rehabilitation mechanism for these tenants As part of the project configuration we
have assumed that a certain proportion of the developed spaces would be handed over to the BDA
which can be utilized for the rehabilitation of the existing tenants However if the BDA chooses to
accommodate these tenants in the redeveloped facility the commercial terms may have to be in line
with the rentals being charged to the new tenants We are of the opinion that the BDA should make
an informed decision on this only after a detailed feasibility has been conducted for the site
We have examined the way forward for the project We propose that the BDA should appoint a
transaction advisor for the project who will conduct a detailed feasibility for the project and would also
facilitate the appointment of the developer through bid process management
The procurement plan for the project has been developed to be spread over 11 months which can be
shortened depending on the swiftness of decision making at BDA
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Bangalore Development Authority
[3]
2 Introduction
CRISIL Infrastructure Advisory a division of CRISIL Risk and Infrastructure Solutions Limited (CRIS)
has been appointed by the Infrastructure Development Department Government of Karnataka to
work closely with the Bangalore Development Authority for the assignment ldquoInstitutional Strengthening
and Sector Specific Inventory for PPP Mainstreaming in Sectorsrdquo Under this BDA has identified a set
of nine projects for which pre-feasibility assessments are to be carried out
In order to provide advanced recreational facilities and services to the citizens BDA has proposed the
redevelopment of its Complexes through Public Private Partnership model Redevelopment of BDA
Complex at Indiranagar is one of the nine projects proposed by BDA
21 Project idea
Bangalore Development Authority (BDA) is one of the premier urban planning and development
agencies that oversee the growth of the city The BDA came into being with effect from 6th January
1976 under a separate Act of the State Legislature viz the BDA Act 1976 This Authority combined in
itself the Planning functions of the City Planning Authority and the developmental functions of the
erstwhile City Improvement Trust Board (CITB)
The key objectives of the authority as per the BDA Act shall be to promote and secure the
development of the Bangalore Metropolitan Area (BMA) and for that purpose the Authority shall have
the power to acquire hold manage and dispose of moveable and immoveable property whether
within or outside the area under its jurisdiction to carry out building engineering and other operations
and generally to do all things necessary or expedient for the purposes of such development and for
purposes incidental thereto
In line with the objectives of BDA the BDA Complexes were built at strategic locations in near
residential localities in order to provide a one stop solution for shopping Hence convenient stores like
motor training schools travel agents RTO etc started operating within the complexes The complexes
are now in dilapidated condition and in order to provide better facilities to the citizens BDA proposed
to develop the old BDA Complex at Indiranagar The project is also an outcome of reducing
commercial spaces in key residential areas
22 Approach amp methodologyThe broad approach and methodology followed for study of these projects has been depicted
graphically below
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
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Bangalore Development Authorit
Figure 2-1 Approach and Met
23 Review of pre
Bangalore Development Authori
development works identified by
29102010 BDA retained Tand
identified projects namely ldquoDevel
TUSPL had submitted their Fe
estimations The report submitte
been presented as below
The project cost indicate
to reflect the market
contingencies prelimina
The financials indicated
Developer and BDA an
given the market conditi
The report does not cle
1062701 sq ft And an
2440023 square metre
officials
1 The cost incurred towards upfront pre
figure
Study of existingreports
y
odology
ious studies
ty had invited proposals for appointment of Co
BDA vide Tender Notification No BDAEMTA-
on Urban Solutions Pvt Ltd (TUSPL) as Cons
opment of Commercial Complex at Indiranagar
sibility Report for the Indiranagar site along
d by TUSPL was studied in detail and the CRISI
d in the report is Rs 39165 Lakhs The project c
rates The Revised project cost is Rs 239
ry and pre-operative expenses
in the Feasibility Report is assuming a revenu
an upfront premium which the developer woul
ns and rates this has been revised
arly mention the area of the plot It indicates a
open land development area of 131322 sq f
has been assumed for the pre-feasibility in c
ium and the interest during construction period is not includ
Discussions withBDA personnel
Be
a
Finalrecommendation
[4]
nsultants for various
3802010-11 dated
ultant for one of the
angalorerdquo
ith the designs and
Lrsquos observations has
ost has been revised
11 Lakhs including
share between the
ld provide However
construction area of
t Hence an area of
nsultation with BDA
d in the above mentioned
lock coststimation
inancialsessment
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
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Bangalore Development Authority
[5]
3 Sector profile
The city of Bangalore has witnessed very rapid growth The city today is home to over 84 million
people (2011 Census) The salubrious weather and the rapid concentration of economic activities in
Bangalore have fuelled the growth of Bangalore As one of the worldrsquos fastest growing cities
Bangalore is experiencing a steady growth in population
Bangalore has been substantially affected by globalization and rapid urbanization over the last
decade The demand for services and quality of life is not confined to the central core or the erstwhile
Bangalore Mahanagra Palike jurisdiction but spreads beyond into the peri-urban areas the
Metropolitan Area and outwards into Bangalore Metropolitan Region With the emergence of the
Bangalore-Mysore Infrastructure Corridor the Bangalore International Airport and the planned ring
roads urbanization has sprawled out
Banaglore has incontestable advantages to develop into an international metropolis but at the same
time faces significant constraints The city is embedded in its history and depicts the greatness of a
truly Indian city established before the invasions and colonization It has a diverse set of activities
from silk to aeronautics from clothing to information technology and is a gauge of dynamism and
solidity of the city Natural drainage climatic advantage and the availability of water in the Cauvery
baisn are factors assisting in improving the quality of life
31 Industry overview
Bengaluru is countryrsquos third leading realty market With the IT boom and corresponding growth of the
economy saw large-scale increase in the cityrsquos population mostly due to migration from across India
Bengalurursquos population grew about 35 percent in the last six years
This increase in population along with steady demand and restricted supply led to saturation in central
Bengaluru region and pushed development to peripheral areas like Whitefield Sarjapur road Outer
Ring Road (ORR) Bannerghatta Road Hosur Road
With the opening of International Airport Real estate in North Bangalore (Bellary Road to Yelahanka)
has also witnessed the launch of numerous projects with apartments and villas Given the improved
infrastructure accessibility and the future potential for this area the area has been attracting both the
segments of investors and end-users alike
The city leads the country in office space with 738 million square feet of commercial capacityavailable However Bengaluru also has 22 per cent of the available space vacant with a large number
of projects under development and reduced demand
32 Regional profile
Bengaluru (formerly Bangalore) also known as Garden City for its beautiful gardens is the
administrative industrial commercial educational and cultural capital of Karnataka and located on
the Deccan Plateau in the South-Western part of India Bengaluru is Indias third most populous city
fastest growing and fifth largest metropolitan area with population of about 57 million (as per 2001
census) The population is expected to reach around 11 million and 22 million in 2021 and 2041respectively
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Bangalore Development Authority
[6]
With ever increasing boundaries and gross domestic product of 59123 billion in FY 06-07 Bengaluru
has some well-recognized IT companies and numerous public sector heavy industries aerospace
telecommunications and defence organisations located within Bengaluru also has some well known
colleges and research institutes
Geography
With an average elevation from the sea level of 920 m and total area of 741 km2 Bengaluru is located
in the south-eastern part of Karnataka in the Mysore Plateau - a region of Deccan Plateau The city
has an uneven landscape of hills and valleys to the south and relatively more level plateau towards
the north
Because of its elevation the city enjoys a pleasant and equable climate throughout the year The city
is situated in the Bengaluru Urban district which is divided into four taluks - Bangalore North
Bangalore East Bangalore South and Anekal and covers a total geographical area of 2190 sq km
Bangalore District is surrounded by Kolar District to the northeast Tumkur District on the northwest
Mandya District on the southwest Chamarajanagar District on the south and neighbouring state of
Tamil Nadu on the southeast
Connectivity
Bangalore is well connected to other Indian cities by road rail and air transport The connectivity by
rail road and air is detailed in the sections below
Road
Bengaluru is located at the junction of National Highways 4 7 and 48 connecting to various important
cities in India including Chennai Hyderabad Kanyakumari Madurai Mangalore Mumbai Nagpur
Pune and Varanasi
Railways
Bengaluru has two major railway stations Bengaluru City railway station and Yeswantpur Junction
The city has a well maintained railway network connecting major cities of the country and is
connected to the rest of the country both by metre gauge and broad gauge rail services
Air
Bengaluru has an International Airport at Devanahalli and is well connected to all cities in India
Internationally Bengaluru is connected to European and Asian cities like Frankfurt Singapore Kuala
Lumpur London Dubai Paris Bangkok and Hong Kong
Major commercial areas
The following are the major commercial areas in and around Bangalore
Central Business District Seshadripuram Jayanagar JP Nagar Yeshwantapura
Eastern Suburb Marathalli-sarjapur ORR Sarjapur Road Whitefield and Brookfield
Secondary Business District Indiranagar JP Nagar RT Nagar Vijayanagar
Northern Suburb HRBR Layout Bellary Road Jakkur
Southern Suburb Mysore Road Hosur Road
West Suburb BEL Factory HMT Layout
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Bangalore Development Authority
[7]
33 Key issues
The recessionary trends in 2007 across the world had also adversely affected the entire real estate
market in Bengaluru All the three categories of residential commercial (office space) and retail had
experienced slump in market and the real estate market in several erstwhile prime locations of the citywere facing oversupply situation and a drastic fall in the capital as well as rental values
With the revival of the industry and economy the residential market is expected to witness a jump
across all the areas in Bengaluru as per CRISILrsquos analysis The eastern and southern areas are
estimated to emerge as up-scaled developments as these areas are expected to see maximum
supply in the next three years
Good quality developments have been the key feature of Bangalorersquos commercial developments The
boom in IT sector especially in South India has enabled the city to have a metropolitan culture which
brings along the urban demands like malls and multiplexes
Recently the market in Bangalore has stabilized to a large extent after the sudden jump in prices post
recession However this is cyclical in nature and the saturation of IT services has led to a scenario
where there would not be much increase in the lease rentals
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Bangalore Development Authorit
4 Project
41 Description of
It is proposed that for the redev
over to the developer on long
Finance Design Construction
period Ownership of the land wi
BUP area will be transferred b
proposed commercial develop
vendors
42 Components o
The project would be develope
basis The structure of the mode
Figure 4-1 Development struc
43 Description of
The site is located at Indiranaga
the main commercial centres in
Road in the North Old Airport
the East Indiranagar is located
famous for housing the Somes
and educational institutions like
y
the project
lopment of BDA Complex at Indiranagar the la
erm lease basis The selected developer woul
and Operation amp Maintenance of the project t
ll always be with BDA After the lease period th
ack to BDA free of cost We have assumed
ent shall be reserved for BDA for rehabilit
f the project
on a Design Build Finance Operate and Tra
l has been illustrated below
ture of the Commercial Complex
the site
r a suburb of Bangalore located about 4 km ea
the city This medium sized suburb is enclose
oad in the South Halasura in the West and Je
within a diameter of few kilometre radii from the
ara Temple several reputed hospitals like Amrj
r Ambedkar College KH Patel College etc
[8]
nd would be handed
d be responsible for
hroughout the lease
e land along with the
hat a portion of the
tion of the existing
sfer model on PPP
t of MG road one of
by the Old Madras
vanbheemanagar in
airport The place is
yoti Vijaya and ESI
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Bangalore Development Authority
[9]
The site is situated at a junction near a residential area and is frequented by elders and youngsters
alike The present building consists of Motor driving schools RTO office computer vendors and travel
agents There is a water tank situated in the site
Figure 4-2 BDA Complex at Indiranagar
44 Interaction with stakeholders
CRISIL conducted a series of interactions with the stakeholders namely the BDA officials Citizens
and the establishment owners The interactions revealed that the building has to undergo
redevelopment The condition of the BDA office is not up to the standards expected and the officials
complained about leaks and short circuits The establishment owners suggested that the building was
planned with less road facing establishments due to which they are not able to attract footfalls
45 Case studies
In order to generate revenues from the real estate value of the land in the ownership of the ULBrsquos
commercial projects have been developed on a PPP basis on these lands Typically under such
arrangements the ULB would have identified a site under its ownership where a property for
commercial use can be developed Commercial development would include the development of
shopping complexes markets bus terminals multi-level car parking townships etc
Under such an arrangement the ULB would require of the private developer to undertake
construction of a commercial complex on the land The land would be provided by the ULB to the
private operator on a lease basis The ULB would provide specifications on the nature and type of
commercial development required The private developer would need to bear all the capital costs
associated with the construction of the commercial complex Post construction of the commercial
complex as per the arrangement the private developer would either hand over the constructed
facility to the ULB or would sub-lease the property The private developer would be required to make
to the ULB an upfront payment or provide a share in the ULB revenues earned from sub-leasing the
properties
The following case study compiled by the Ministry of Urban Development Government of India
highlights the development of municipalurban lands on a PPP basis
Category Details
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Bangalore Development Authority
[10]
Category Details
Project Construction of Commercial Complex at Ranipura Market
Cost of
ProjectRs 1500 lakhs
Description
The land was allotted to the concessionaire to construct the Commercial Complex by
the Corporation
Corporation continues to own the land
After the concession period the built-up structure (Commercial Complex) will be
transferred to the Corporation by the concessionaire
The concessionaire was given the right to recover its investment from the premium
received for ldquoRight of Occupationrdquo of the constructed shops
At the time of award of concession it was estimated that a profit of Rs 200 lakh will
be accrued from the venture which will be shared by the concessionaire with the
Corporation
The Corporation is expected to receive a profit share of Rs 100 lakh from the
concessionaire
Source Compendium on Public Private Partnership in Urban Infrastructure Case Studies Ministry of Urban
Development Government of India in association with Confederation of Indian Industry (CII)
We have also studied another case wherein the development affordable housing units was structure
on a PPP basis by the Pimpri Chinchwad New Township Development Authority (PCNTDA)
451 Public private partnership in affordable housing under Jawaharlal
Nehru National Urban Renewal Mission (JNNURM)
The Pune metropolitan region comprising Pune and Pimpri Chinchwad cities is one of the fastest
growing urban agglomerations in India A major automobile and auto-ancillary hub and a well-known
international education destination it also ranks among the top IT destinations of India Besides the
region has many industrial clusters housing industries focused on FMCG engineering agro-based
technology
The Pimpri-Chinchwad New Town Develompent Authority (PCNTDA) a key development authority of
the PMR is responsible for development of peri-urban especially in its north In line with the
phenomenal growth of the region and its strident aspirations PCNTDA has envisioned the
development of an integrated township at Sector 12 spanning 53 hectares Given the success of the
Public Private Partnership (PPP) model in involving private sector participation for development based
projects PCNTDS proposed to develop the integrated township on PPP basis
With this objective PCNTDA appointed the consortium of CRISIL Risk and Infrastructure Solutions
Limited (CRIS) Omkar Associates and Creations as project development consultants for the
development of an eco-friendly affordable township at Bhosari Sector 12 CRISILrsquos role was to
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Bangalore Development Authority
[11]
undertake a detailed demand assessment financial feasibility project structuring and management of
the bid process
The concept
Keep in mind the PCNTDArsquos vision CRIS designed integrated township such that it compriseshousing untis for the poor affordable housing units for the general public a primary health care
centre a hospital and a school
As per the structure the Developer shall construct 5040 housing units under the Basic Services for
Urban Poor (BSUP) scheme of JNNURM PCNTDA shall transfer the amount of grant sanctioned for
developing these units under the JNNURM scheme to the developer The remaining project cost of
the BUSP units was to be financed by the developer
In addition to this the Developer shall also construct affordable housing units as per pre-specified
specifications and hand over to PCNTDA free of cost The developer shall also construction the
physical and social infrastructure for the integrated township thereby ensuring good road adequate
water supply an efficient sewerage system as well as schools and hospitals The project shall bedeveloped in a manner such that it has minimum possible impact on the surrounding environment and
is in harmony with nature To this end the developer shall undertake eco-friendly initiatives including
rain water harvesting use of solar power environment-friendly materials and vermin-composting
The project
The developer has to complete the BSUP housing units within 2 years and hand over to the PCNTDA
For the remaining portion of the land PCNTDA shall execute a lease deed for 99 years with the
developer The lease rights shall be granted to the developer in phases upon completion of
milestones as defined in the project agreement The main scope of work for the developer shall
include
Master planning for the entire 53 hectares of land and construction of common physical and
social infrastructure for the entire area
Development construction and marketing of 795 lakhs square meters of integrated real
estate space
Construction and handing over of 5040 housing units under the BSUP scheme of JNNURM
on a separate layout carved out of the said land PCNTDA will provide the developer the grant
sanctioned by the Government of India for these housing units
Successful selection of private developer
With the objective of undertaking this project on a PPP basis in a transparent and objective manner
PCNTDA launched a three-cover Request for Proposal in June 2009 The bidding parameter was theconstructed ldquoCarpet Areardquo in ldquosquare metersrdquo of affordable housing units that the bidder shall
construct and hand over free of cost to PCNTDA
The tender received good response from four interested bidders Of the four bidders two bidders
were adjudged technically and financially capable and short-listed for the final stage The bidder with
the highest construction carpet area offered to PCNTDA was selected The successful bidder quoted
a carpet area of 130599 square meters of affordable housing units
Thereby the PCNTDA derived a value of 7369 housing units (including 5040 BSUP units) a school
and a hospital for the BSUP units a school and hospital for the general public and development of
public amenities
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Bangalore Development Authority
[12]
Value addition to PCNTDA
In commercial terms PCNTDA saved (i) Rs 190 crores as the gap amount required to fund the BSUP
scheme (ii) Rs 210 crores of construction cost of affordable housing units and (iii) Rs 100 crores on
the development of physical and social infrastructure In addition to this PCNTDA shall receive anupfront payment of Rs 50 crores from the successful bidder The project structure also protects
PCNTDA from cost escalation risks valuation risks and engineering risks
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Bangalore Development Authorit
5 Market asse
51 Bangalore gro
The growth of Bangalore has be
from the growth in population in
to the economic opportunities it
Bangalore an obvious choice for
Bangalore has grown at averag
decades It is projected that B
explosive growth has meant th
pressure
Figure 5-1 Population growth
Source City Development Plan Ba
The city leads the country in
available However Bengaluru a
of projects under development a
983089983086983094983091 983089983086983096983097 983090983086983092
983088
983089983088
983090983088
983091983088
983092983088
983093983088
983094983088
983095983088
983096983088
983097983088
983089983097983088983089 983089983097983089983089 983089983097983090983089
983120 983151 983152 983157 983148 983137 983156 983145 983151 983150 983145 983150 983116
983137 983147 983144 983155
y
sment
th overview
en unprecedented in the past couple of decades
the last century Bangalore continues to attract t
offers This is also supported by a salubrious
not only businesses but also for people
compounded annual growth rate (CAGR) of 3
ngalorersquos population will cross the 10 million
at the infrastructure in Bangalore has been p
in Bangalore between 1901 and 2011
galore Development Authority and Census of India
ffice space with 738 million square feet of
lso has 22 per cent of the available space vacan
nd reduced demand
983091983086983089 983092983086983089983089983095983086983096983094
983089983090983086983088983094
983089983094983086983094983092
983090983097983086983090983090
983092
983089983097983091983089 983089983097983092983089 983089983097983093983089 983089983097983094983089 983089983097983095983089 983089983097983096983089 983089983097
[13]
This fact is laid bare
rongs of people due
eather which makes
58 in the last three
mark by 2021 This
t under tremendous
commercial capacity
with a large number
983086983091
983093983094983086983096983094
983096983092
983097983089 983090983088983088983089 983090983088983089983089
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Bangalore Development Authority
[14]
52 Demand projections
Bangalore is the largest commercial market and third largest residential market in India The city has
typically been preferred by home buyers because of its favorable socio-economic conditions and a
salubrious climate In recent years Bangalore has attracted a large influx of population engaged inthe thriving IT sector City residential demand is more end-user driven with moderate price
appreciation The average residential real estate price in the city is 20-25 lesser than in Delhi and
Mumbai In the recent National Housing Bank Residex the index indicating property prices across key
cities in India Bangalore witnessed a mere 1 YoY fall in residential prices in 2011-12 Mumbai saw
an 116 YoY jump in home prices while Delhi witnessed 358 YoY increase during 2011-12 The
city witnessed tremendous growth in terms of population and the number of companies setting up
offices there Thus the ongoing projects such as Bengaluru metro rail project various flyovers and
the under-pass construction activities in Outer Ring Road (ORR) CNR and BHEL circles would ease
the congestion and provide better connectivity for all commuters This will boost real estate demand in
and around Bangalore city
In 2011-12 Bangalorersquos commercial market exhibited resiliency with comparatively high demand
levels despite the discomfort in the market on account of global uncertainty Though commercial
property demand in Bangalore is largely dependent on ITITES sectors the share of manufacturing is
increasing at a faster pace and thereby giving further boost to office space demand According to real
estate consultancy firm Knight Frank the manufacturing sector witnessed a quantum leap as its share
of absorption increased from 3 in 4QCY10 to 23 in 4QCY11 The absorption of commercial space
has gone up from 5mn sq ftquarter in CY09 to 7mn sq ftquarter in CY11 thanks to sustained
demand for Bangalore commercial space which witnessed 43 CAGR in absorption level over CY09-
11 Subdued supply during the first two quarters of 2011 coupled with high absorption level has
substantially lowered the vacancy level in the city (bringing it down from 17 in CY10 to 12 in
CY11) With the expansion of existing operations in the IT sector and the entry of newer sectors dueto renewed optimism in the market we expect the level of absorption of office space to remain stable
Revised Master Plan-2015 for the BMA has been published This document gives the likely growth to
take place in various areas of the BMA The population of the BMA is expected to grow from 61 lakh
in 2001 to 122 lakh in 2025
The proposed growth rate and the ever changing urban scenario is bound to increase the commercial
space demand in the region The site at Indiranagar is situated at a junction and has two road facing
sides which makes it very attractive for commercial development The site is also huge in size and
can easily accommodate a mall
Hence in view of the above it can be safely recommended that the site would generate huge interest
within the developers
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Bangalore Development Authority
[15]
6 Project financials
The project costs have been largely derived from the costs indicated by the Bangalore Development
Authority (BDA)
61 Cost estimation
The estimated cost of development of the project is Rs 23931 lakhs The costs have been outlined
below
Table 6-1 Project Cost of the proposed development
Particular Amount inRs Lakhs
Construction Cost 19967
Land Development 793
Other Infrastructure 50
Total Hard Costs 20810
Contingencies 3121
Total Project Development Cost 23931
Apart from the above mentioned project development cost the Concessionaire would incur the
development premium and Interest during construction (IDC) cost
Particulars 25 years 33 Years 66 years
Upfront Premium (Rs Lakh) 965000 1230000 600000
IDC Cost (Rs Lakh) 315600 361500 259100
Revenue Share every year 15 15 15
Total Project Cost (Rs Lakhs) 36737 39846 33022
62 Revenue stream
The Revenues to the Developer would accrue from the revenue earned from the lease rentals and the
maintenance charges which the developer earns from the tenants The total revenue from both the
heads has been arrived at Rs 6720 Lakhs for the base year It has been assumed that the
occupancy of the commercial complex 80 in the base year and stabilizes to a maximum of 95towards the end of the concession period The average lease rentals have been assumed at Rs 70
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Bangalore Development Authority
[16]
per square feet and the maintenance charges have been assumed at Rs 225 per square feet Both
the revenues are escalating at the rate of 10 per annum The income statement for the developer
has been provided in Annexure 1
63 Viability assessment
The viability assessment has been carried out over two concession period ie 25 33 and 66 years
The debt to equity ratio has been assumed to be 121
The project level internal rate of return (IRR) IRR of equity and the net present value of the equity
have been worked out
Table 6-2 Viability assessment for BDA complex at Indiranagar
Concession Period Project IRR Equity IRR NPV of Equity
Upfront Premium
(Rs in Lakhs)
25 years 1777 2007 96 9650
33 years 1818 2006 108 12300
66 years 2101 2333 5285 6000
It is evident that the project is viable for the developer for all the 3 concession periods In case of the
25 year concession period it is estimated that the developer would pay BDA an estimated upfront
premium of Rs 9650 lakhs Similarly the developer would pay BDA an amount of Rs 12300 lakhsand Rs 6000 lakhs for the concession periods of 33 years and 66 years respectively
64 Ranking of options based on commercial viability
Having assessed the project for two concession periods of 25 33 and 66 years we are of the view
that the 25 year concession option will be more suitable since it allows the developer to make
reasonable returns on the projects and his own investments along with a sizeable upfront premium for
BDA BDA would be in a position to renew the contract or retender the project after 25 years which
may enable BDA to earn as per the prevailing market rates
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Bangalore Development Authority
[17]
7 Statutory amp legal framework
71 Legal amp regulatory framework
Development Control Regulations (DCR)
As per RMP ndash 2015 published by BDA the project site has been classified as ldquoCommercial Businessrdquo
As per the definitions of RMP-2015 Commercial Business Zone allows development of Commercial
and Corporate offices Retail Shopping Complexes Restaurants and Hotels Convention centres and
banquet halls financial institutions Cinema and multiplexes places of assembly exhibition centres
Entertainment and amusement centres and stores
Permissible land uses under Commercial (Business) Zone as per RMP-2015 of BDA
Main land use category C3
Other land uses permissible (as main land use) R I-3 T3 amp U4
If the road width is less than 120 m and plot area is less than 240 square metre then C2 I-2
R and U4 only are allowed
The plot size is 24000 square metre Presently it has 18m wide access road The applicable DCR for
the plot as per proposed road width is as follows
Table 7-1 Plot details of Indiranagar site
Sr No Particulars Description Unit
1 Land Use Commercial Business
2 Road Width 18 Metre
3 Permissible FAR 325
4Permissible ground
coverage50
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Bangalore Development Authority
[18]
8 Indicative environmental amp social impacts
81 Environmental impacts
The proposed development is in line with the layout of BDA Due to the reasonably large site area the
development will be on the higher side A set back of 50 is found to be acceptable for the site
however an Environmental Impact Assessment studies have to be undertaken for the sites Since
already a commercial complex is existent redevelopment of the complex would need demolition of
the existent structures Hence a suitable disposal of construction and debris has to be undertaken by
the developer Also a Green building can be developed to ensure minimal effect on nature
82 Social impactsDuring the construction period the existing establishments have to be shifted or compensated
temporarily Hence a clear resettlement plan has to be decided before the implementation of the
project It is envisaged that if due care is taken about the existing tenants the development would go
smoothly
83 Mitigation measures
It is necessary that the impacts are identified early and action plans are prepared for their mitigation in
advance For instance for environmental impacts the BDA may insist on the developer to use clean
and green building technologies
It is also necessary that the project development plan is also accompanied by a Relocation and
Rehabilitation plan which will layout detailed action points with the requisite intervening entity
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Bangalore Development Authority
[19]
9 Operating framework
91 Risks amp mitigation
The risk framework for this project has been outlined below
Table 9-1 Risk mitigation measures
Risk Category Risk implication Mitigation measure
Sponsor risk BDA scraps the project Termination payments in case of BDA scrapping the
project
Environment
risk
Adverse impact on
surrounding environment
Penalty clauses in case of default on
Concessionairersquos part
Environmental Impact Assessment to identify all
risks in advance
Political riskChange in government may
put project in jeopardy
Termination payments in case of project being
scrapped
Force
majeure riskProject is abandoned
Force majeure clauses in the concession
agreement
Operating riskThe operations of the
facility are stalled
Performance security clause in case of default on
Concessionairersquos part
Design risk Overdesign of the projectProject design to be finalized in mutual agreement
of concessionaire and BDA
Completion
risk
Completion of project is
delayed inconvenience to
citizens and tenants
Penalty clauses for time overrun in the concession
agreement
Cost overrun
risk
Project cost increases
beyond reasonable limits
Project cost increment ceiling to be specified in the
concession agreement Increase beyond this ceiling
to be borne by the developer No change in revenue
sharing
92 Indicative project structure
The best approach for such a large ticket project would be for the BDA to become a key actor in the
entire process of development The BDA may ask the private sector partner to form a Special
Purpose Company where the equity will be brought in by the private sector developer The designs
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Bangalore Development Authority
[20]
should be left to the developer and BDArsquos role would be in approving the same in accordance with the
Development Control Regulations
The SPC will develop and maintain Complex throughout the concession period The tenants would
pay the developer a sub-lease premium or lease rentals which will be escrowed in a separate accountand can be withdrawn based on the revenue sharing structure adopted
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Bangalore Development Authorit
10 Way ahead
101 Project develo
The key task for BDA is to ap
feasibility of the project Once t
the bid process
Figure 10-1 Project developm
The transaction advisor shall stralso prepare the relevant bid
management on behalf of BDA
102 Procurement
The foremost step for BDA is
feasibility The detailed financial
parameter Also an optimum str
bid documents would be prepar
process be conducted as a 2 sta
983105983152983152983151983145983150983156983149983141983150983156 983151983142 983156983154983137
983108983141983156983137983145983148983141983140 983142983141983137983155983145983138
983155983156983154983157983139983156983157983154983145983150983143
983120983154983141983152983137983154983137983156983145983151
983123983141983148983141983139
y
pment framework
oint a Transaction Advisor in order to conduc
e financial numbers are acceptable BDA BDA
nt framework
ucture the project upon completion of the feasibidocuments The transaction advisor shall un
nd will assist in appointment of the private secto
lan
to appoint a Transaction Advisor for the co
feasibility would determine the tentative revenue
cture would be arrived at Post the approval of
d for the selection of the developer It is recom
ge process involving Technical qualification and
983155983137983139983156983145983151983150 983137983140983158983145983155983151983154
983148983145983156983161 983155983156983157983140983145983141983155 983137983150983140 983152983154983151983146983141983139983156
983150 983151983142 983138983145983140 983140983151983139983157983149983141983150983156983155
983145983151983150 983151983142 983152983154983145983158983137983156983141 983155983141983139983156983151983154 983152983137983154983156983150983141983154
[21]
a detailed financial
should proceed with
ility studies and shallertake bid process
partner
nducting the project
for BDA and the bid
easibility Report the
mended that the Bid
inancial proposal
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B a n g a l o r e D e v e l o p m e n t A u t h o r i t y
B D A s h o u l d i n i t i a t e t h e p r o c e s s o f a p p o
i n t i n g a t r a n s a c t i o n a d v i s o r a t t h e
e a r l i e s t T h i s p r o c e s s c a n b e c o m p l e t e d i n 2 m o n t h s
O n c e t h e T A
i s i n p l a c e
t h e B D
A s h o u l d a l l o w
a t l e a s t 4 m o n t h s f o r t h e p r e p a r a t i o n o f f e a s i b i l i t y p r o j e c t s t r u c t u r i n g a n d b i d d o c u m e n
t s
O n c e t
h e b i d d o c u m e n t s a r e i n p l a c e t h
e B D A
s h o u l d i n i t i a t e t h e p r o c e s s
o f s e l e c t i n g t h e p r i v a t e s e c t o r p a
r t n e r w h i c h c a n b e c o m p l e t e d o v e r a 4 m o n t h
p e r i o d
T h e c u
r r e n t p r o c u r e m e n t p l a n i s s p r e a d
o v e r 1 1 m o n t h s w h i c h c a n b e s
h o r t e n e d d e p e n d i n g o n t h e m a n n e r i n w h i c h B D A
m a k e s d e c i s i o n
s r e l a t i n g t o
a p p o i n
t m e n t o f T A a n d p r i v a t e d e v e l o p e r
A c t i v i t y
M 1
M 2
M 3
M 4
M 5
M 6
M 7
M 8 M
9
M 1 0
M 1 1
M 1 2
A p p o i n t m e t o f t r a n s a c t i o n a d v i s o r
D e t a i l e d t e c h n o - e c o n o m i c f e a s i b i l i t y a n d
b i d d o c u m e n t p r e p a r a t i o n
B i d p r
o c e s s m a n a g e m e n t
S e l e c t i o n o f p r e f e r r e d b i d d e r a n d f o r m a t i o n o f S P C
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B a n g a l o r e D e v e l o p m e n t A u t h o r i t y
1 1
A n n e x u r e 1 ndash C a s h - f l o w
s t a t e m e n t
R e v e n u e H e a d
S u b H e a d R a t e
U n i t
3 1 - M a r - 1 4
3 1 - M
a r - 1 7
3 1 - M a r - 2 2
3 1 - M a r - 2 7
3 1 - M a r - 3 2
3 1 - M a r - 3 7
3 1 - M a r - 4 2
3 1 - M a r - 4 7
3 1 - M
a r - 5 2
3 1 - M a r - 5 7
3 1 - M a r - 6 2
C o m m e
r c i a l S p a c e
O c c u p a
n c y
P e r c e n t a g
0
9 0
9 5
9 5
9 5
9 5
9 5
9 5
9 5
9 5
9 5
C o m m e
r c i a l s p a c e l e a s e d o u t
s q f t
-
7 2 0 6
9 0
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6
0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
D e p o s i t f o r L e a s e
( N o o f m o n t h s r e n t )
1 2
A v e r a g e
L e a s e R e n t a l s
7 0
R s p s f p e r m o n t h
E s c a l a t i o n
1 0
M a i n t e n
a n c e c h a r g e s
2 2 5
R s p s f p e r m o n t h
R e v e n u e f r o m
L e a s e R e n t a l
R s
L a k h s
-
8 8
6 3
1 5 0
6 8
2 4 2
6 6
3 9 0
8 1
6 2 9
4 1
1 0 1 3
6 7
1 6 3 2
5 3
2 6
2 9
2 0
4 2 3 4
3 5
6 8 1 9
4 7
R e v e n u e f r o m
M a i n t e n a n c e c h a r g e s
-
2 8 5
4 8 4
7 8 0
1 2
5 6
2 0
2 3
3 2
5 8
5 2
4 7
8 4
5 1
1 3 6
1 0
2 1 9
2 0
T o t a l R
e v e n u e
-
9 1 4 8
1 5 5 5 2
2 5 0 4 6
4 0 3 3 8
6 4 9 6 4
1 0 4 6 2 5
1 6 8 5 0 0
2 7
1 3 7 1
4 3 7 0 4 6
7 0 3 8 6 7
R e v e n
u e H e a d
S u b H e a d R a t e
U n i t
3 1 - M a r - 6
7
3 1 - M a r - 7 2
3 1 - M a r - 7 8
3 1 - M a r - 7 9
C o m m e r c i a l S p a c e
O c c u p a n c y
P e r c e n t a g
9 5
9 5
9 5
9 5
C o m m e r c i a l s p a c e l e a s e d o u t
s q f t
7 6 0 7 2
8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
D e p o s i t f o r L e a s e
( N o o f m o n t h s r e n t )
1 2
A v e r a g
e L e a s e R e n t a l s
7 0 R s p s f p e r m o n t h
E s c a l a
t i o n
1 0
M a i n t e
n a n c e c h a r g e s
2 2
5 R s p s f p e r m o n t h
R e v e n u
e f r o m
L e a s e R e n t a l
R s
L a k h s
1 0
9 8 2 8 2
1 7
6 8 7
9 4
3 1
3 3 5
2 7
3 4
4 6 8
8 0
R e v e n u
e f r o m
M a i n t e n a n c e c h a r g e s
3 5 3 0 2
5 6 8
5 4
1 0 0 7
2 1
1 1 0 7
9 3
T o t a l R e v e n u e
1 1 3 3 5 8 4
1 8 2 5 6 4 8
3 2 3 4 2 4 8
3 5 5 7 6 7 2
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
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[x]
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
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[y]
Disclaimer
CRISIL Risk and Infrastructure Solutions Limited (CRIS) has taken due care and caution in preparation of this Report for
Bangalore Development Authority which is under the purview of the Urban Development Department Government of
Karnataka This Report is based on the information documents provided by the Company andor information available publicly
andor obtained by CRIS from sources which it considers reliable CRIS does not guarantee the accuracy adequacy or
completeness of the information documents Report and is not responsible for any errors or omissions or for the results
obtained from the use of the same The Report and results stated therein are subject to change CRIS especially states that it
has no financial liability whatsoever to the Company users of this Report This Report is strictly confidential and should not be
reproduced or redistributed or communicated directly or indirectly in any form or published or copied in whole or in part
especially outside India for any purpose
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
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Registered Office ndash Mum
CRISIL House Central AvenueHiranandani Business ParkPowai Mumbai- 400 076Phone 91-22-3342 3000Fax 91-22-3342 3810
New Delhi
The Mira G-1 1st Floor Plot NoIshwar Nagar Mathura Road
New Delhi - 110 065 IndiaPhone 91-11-4250 510091-11-2693 0117 - 121Fax 91-11-2684 2213
Hyderabad
3rd Floor Uma ChambersPlot No 9amp10 Nagarjuna HillsNear Punjagutta Cross RoadHyderabad - 500 082Phone 91-40-40328200Fax 91-40-2335 7507
Bengaluru
W-101 Sunrise Chambers22 Ulsoor RoadBengaluru - 560 042Phone 91-80-2558 0899Fax 91-80-2559 4801
Ahmedabad
706 Venus AtlantisNear Reliance Petrol PumpPrahladnagarAhmedabad -Phone 91-79-4024 4500Fax 91-79-2755 9863
Visit us atwwwcrisilcom
ai
1 amp 2
About CRISIL Infrastructu
CRISIL Infrastructure Advisory
CRISIL Risk and Infrastructure
Limited a 100 subsidiary of
Indiarsquos leading Ratings Resear
Policy Advisory Company
CRISIL Infrastructure Advisory
premier advisor focusing on po
well as commercial and contra
the areas of transport energyinfrastructure We also provide
international firms planning inv
India Over a period of time C
Infrastructure Advisory has buil
position for itself in these doma
considered the preferred cons
governments multilateral agen
sector clients We have extend
operations beyond India and ar
other emerging markets in Afri
and South Asia
re Advisory
is a division of
Solutions
RISIL Limited ndash
ch Risk and
is Indiarsquos
licy issues as
tual issues in
nd urbansupport to
stments in
ISIL
t a unique
ins and is
ltant by
cies and private-
ed our
e present in
a Middle East
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
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[vi]
List of Tables
Table 7-1 Project Cost of the proposed development 15
Table 7-2 Viability assessment for BDA complex at Indiranagar 16
Table 8-1 Plot details of Indiranagar site 17
Table 10-1 Risk mitigation measures 19
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[vii]
List of Figures
Figure 2-1 Approach and Methodology 4
Figure 4-1 Development structure of the Commercial Complex 8
Figure 4-2 BDA Complex at Indiranagar 9
Figure 6-1 Population growth in Bangalore between 1901 and 2011 13
Figure 11-1 Project development framework 21
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Bangalore Development Authority
[1]
1 Executive summary
Infrastructure Development Department proposes to strengthen the project development process inthe Departments responsible for implementing Infrastructure Projects through Public Private
Partnership (PPP) The PPP concept is relatively new and the implementing officers require
necessary insight orientation and assistance into the project development for effective marketing and
implementation of the projects
CRISIL Infrastructure Advisory a division of CRISIL Risk and Infrastructure Solutions Limited (CRIS)
has been appointed by the Infrastructure Development Department Government of Karnataka to
work closely with the Bangalore Development Authority for the assignment ldquoInstitutional Strengthening
and Sector Specific Inventory for PPP Mainstreaming in Sectorsrdquo Under this BDA has identified a set
of nine projects for which pre-feasibility assessments are to be carried out Redevelopment of BDA
Complex at Indiranagar is one of the nine projects proposed by BDA
In line with the objectives of BDA the BDA Complexes were built at strategic locations and near
residential localities in order to provide a one stop solution for shopping Hence facilities like motor
training schools travel agents RTO etc started operating within the complexes The complexes are
now in dilapidated condition and in order to provide better facilities to the citizens BDA proposes to
redevelop the old BDA Complex at Indiranagar
This report examines the possibility of redeveloping the commercial complex on a PPP Basis In order
to bring in private sector participation in the redevelopment of the complex it is proposed that the land
is handed over to the developer on long term lease basis The selected developer would be
responsible for Finance Design Construction and Operation amp Maintenance of the project
throughout the lease period Ownership of the land will always be with BDA After the lease period
the land along with the BUP area will be transferred back to BDA free of cost One portion of the
proposed commercial development shall be reserved for BDA for rehabilitation of the existing
vendors
For the purpose of cost estimation we have studied the feasibility report developed by SREI
Infrastructure Finance Limited and have also consulted with the BDA The estimated cost of
development of the project is Rs 20810 lakhs
The revenues to the developer would accrue from the revenue earned from the lease rentals as well
as maintenance charges The total revenue from both the heads has been arrived at Rs 6720 Lakhs
for the base year Occupancy of 80 has been assumed for the base year which will stabilize at a
maximum of 95 towards the end of the concession period The average lease rentals have been
assumed at Rs 70 per square feet and maintenance charges have been assumed at Rs 225 per
square feet Appropriate escalation factors have been assumed for both revenue heads
The viability assessment has been carried out over three concession periods of 25 33 and 66 years
The debt to equity ratio has been assumed to be 121
The viability assessment has been worked out with determinants like the project level internal rate of
return (IRR) IRR of equity and the net present value of the equity The project is found to be viable for
all the 3 concession periods In case of the 25 year concession period it is estimated that the
developer would pay BDA an upfront premium of Rs 9650 Lakhs For the concession period of 33
and 66 years the upfront premium to be paid by the developer would be Rs 12300 Lakhs and Rs
6000 lakhs respectively
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Bangalore Development Authority
[2]
A key issue that the BDA will need to address is the relocation of the existing tenants of the
complexes The BDA needs to prepare a rehabilitation plan for the existing tenants and should also
clearly lay out the rehabilitation mechanism for these tenants As part of the project configuration we
have assumed that a certain proportion of the developed spaces would be handed over to the BDA
which can be utilized for the rehabilitation of the existing tenants However if the BDA chooses to
accommodate these tenants in the redeveloped facility the commercial terms may have to be in line
with the rentals being charged to the new tenants We are of the opinion that the BDA should make
an informed decision on this only after a detailed feasibility has been conducted for the site
We have examined the way forward for the project We propose that the BDA should appoint a
transaction advisor for the project who will conduct a detailed feasibility for the project and would also
facilitate the appointment of the developer through bid process management
The procurement plan for the project has been developed to be spread over 11 months which can be
shortened depending on the swiftness of decision making at BDA
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
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Bangalore Development Authority
[3]
2 Introduction
CRISIL Infrastructure Advisory a division of CRISIL Risk and Infrastructure Solutions Limited (CRIS)
has been appointed by the Infrastructure Development Department Government of Karnataka to
work closely with the Bangalore Development Authority for the assignment ldquoInstitutional Strengthening
and Sector Specific Inventory for PPP Mainstreaming in Sectorsrdquo Under this BDA has identified a set
of nine projects for which pre-feasibility assessments are to be carried out
In order to provide advanced recreational facilities and services to the citizens BDA has proposed the
redevelopment of its Complexes through Public Private Partnership model Redevelopment of BDA
Complex at Indiranagar is one of the nine projects proposed by BDA
21 Project idea
Bangalore Development Authority (BDA) is one of the premier urban planning and development
agencies that oversee the growth of the city The BDA came into being with effect from 6th January
1976 under a separate Act of the State Legislature viz the BDA Act 1976 This Authority combined in
itself the Planning functions of the City Planning Authority and the developmental functions of the
erstwhile City Improvement Trust Board (CITB)
The key objectives of the authority as per the BDA Act shall be to promote and secure the
development of the Bangalore Metropolitan Area (BMA) and for that purpose the Authority shall have
the power to acquire hold manage and dispose of moveable and immoveable property whether
within or outside the area under its jurisdiction to carry out building engineering and other operations
and generally to do all things necessary or expedient for the purposes of such development and for
purposes incidental thereto
In line with the objectives of BDA the BDA Complexes were built at strategic locations in near
residential localities in order to provide a one stop solution for shopping Hence convenient stores like
motor training schools travel agents RTO etc started operating within the complexes The complexes
are now in dilapidated condition and in order to provide better facilities to the citizens BDA proposed
to develop the old BDA Complex at Indiranagar The project is also an outcome of reducing
commercial spaces in key residential areas
22 Approach amp methodologyThe broad approach and methodology followed for study of these projects has been depicted
graphically below
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Bangalore Development Authorit
Figure 2-1 Approach and Met
23 Review of pre
Bangalore Development Authori
development works identified by
29102010 BDA retained Tand
identified projects namely ldquoDevel
TUSPL had submitted their Fe
estimations The report submitte
been presented as below
The project cost indicate
to reflect the market
contingencies prelimina
The financials indicated
Developer and BDA an
given the market conditi
The report does not cle
1062701 sq ft And an
2440023 square metre
officials
1 The cost incurred towards upfront pre
figure
Study of existingreports
y
odology
ious studies
ty had invited proposals for appointment of Co
BDA vide Tender Notification No BDAEMTA-
on Urban Solutions Pvt Ltd (TUSPL) as Cons
opment of Commercial Complex at Indiranagar
sibility Report for the Indiranagar site along
d by TUSPL was studied in detail and the CRISI
d in the report is Rs 39165 Lakhs The project c
rates The Revised project cost is Rs 239
ry and pre-operative expenses
in the Feasibility Report is assuming a revenu
an upfront premium which the developer woul
ns and rates this has been revised
arly mention the area of the plot It indicates a
open land development area of 131322 sq f
has been assumed for the pre-feasibility in c
ium and the interest during construction period is not includ
Discussions withBDA personnel
Be
a
Finalrecommendation
[4]
nsultants for various
3802010-11 dated
ultant for one of the
angalorerdquo
ith the designs and
Lrsquos observations has
ost has been revised
11 Lakhs including
share between the
ld provide However
construction area of
t Hence an area of
nsultation with BDA
d in the above mentioned
lock coststimation
inancialsessment
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
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Bangalore Development Authority
[5]
3 Sector profile
The city of Bangalore has witnessed very rapid growth The city today is home to over 84 million
people (2011 Census) The salubrious weather and the rapid concentration of economic activities in
Bangalore have fuelled the growth of Bangalore As one of the worldrsquos fastest growing cities
Bangalore is experiencing a steady growth in population
Bangalore has been substantially affected by globalization and rapid urbanization over the last
decade The demand for services and quality of life is not confined to the central core or the erstwhile
Bangalore Mahanagra Palike jurisdiction but spreads beyond into the peri-urban areas the
Metropolitan Area and outwards into Bangalore Metropolitan Region With the emergence of the
Bangalore-Mysore Infrastructure Corridor the Bangalore International Airport and the planned ring
roads urbanization has sprawled out
Banaglore has incontestable advantages to develop into an international metropolis but at the same
time faces significant constraints The city is embedded in its history and depicts the greatness of a
truly Indian city established before the invasions and colonization It has a diverse set of activities
from silk to aeronautics from clothing to information technology and is a gauge of dynamism and
solidity of the city Natural drainage climatic advantage and the availability of water in the Cauvery
baisn are factors assisting in improving the quality of life
31 Industry overview
Bengaluru is countryrsquos third leading realty market With the IT boom and corresponding growth of the
economy saw large-scale increase in the cityrsquos population mostly due to migration from across India
Bengalurursquos population grew about 35 percent in the last six years
This increase in population along with steady demand and restricted supply led to saturation in central
Bengaluru region and pushed development to peripheral areas like Whitefield Sarjapur road Outer
Ring Road (ORR) Bannerghatta Road Hosur Road
With the opening of International Airport Real estate in North Bangalore (Bellary Road to Yelahanka)
has also witnessed the launch of numerous projects with apartments and villas Given the improved
infrastructure accessibility and the future potential for this area the area has been attracting both the
segments of investors and end-users alike
The city leads the country in office space with 738 million square feet of commercial capacityavailable However Bengaluru also has 22 per cent of the available space vacant with a large number
of projects under development and reduced demand
32 Regional profile
Bengaluru (formerly Bangalore) also known as Garden City for its beautiful gardens is the
administrative industrial commercial educational and cultural capital of Karnataka and located on
the Deccan Plateau in the South-Western part of India Bengaluru is Indias third most populous city
fastest growing and fifth largest metropolitan area with population of about 57 million (as per 2001
census) The population is expected to reach around 11 million and 22 million in 2021 and 2041respectively
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Bangalore Development Authority
[6]
With ever increasing boundaries and gross domestic product of 59123 billion in FY 06-07 Bengaluru
has some well-recognized IT companies and numerous public sector heavy industries aerospace
telecommunications and defence organisations located within Bengaluru also has some well known
colleges and research institutes
Geography
With an average elevation from the sea level of 920 m and total area of 741 km2 Bengaluru is located
in the south-eastern part of Karnataka in the Mysore Plateau - a region of Deccan Plateau The city
has an uneven landscape of hills and valleys to the south and relatively more level plateau towards
the north
Because of its elevation the city enjoys a pleasant and equable climate throughout the year The city
is situated in the Bengaluru Urban district which is divided into four taluks - Bangalore North
Bangalore East Bangalore South and Anekal and covers a total geographical area of 2190 sq km
Bangalore District is surrounded by Kolar District to the northeast Tumkur District on the northwest
Mandya District on the southwest Chamarajanagar District on the south and neighbouring state of
Tamil Nadu on the southeast
Connectivity
Bangalore is well connected to other Indian cities by road rail and air transport The connectivity by
rail road and air is detailed in the sections below
Road
Bengaluru is located at the junction of National Highways 4 7 and 48 connecting to various important
cities in India including Chennai Hyderabad Kanyakumari Madurai Mangalore Mumbai Nagpur
Pune and Varanasi
Railways
Bengaluru has two major railway stations Bengaluru City railway station and Yeswantpur Junction
The city has a well maintained railway network connecting major cities of the country and is
connected to the rest of the country both by metre gauge and broad gauge rail services
Air
Bengaluru has an International Airport at Devanahalli and is well connected to all cities in India
Internationally Bengaluru is connected to European and Asian cities like Frankfurt Singapore Kuala
Lumpur London Dubai Paris Bangkok and Hong Kong
Major commercial areas
The following are the major commercial areas in and around Bangalore
Central Business District Seshadripuram Jayanagar JP Nagar Yeshwantapura
Eastern Suburb Marathalli-sarjapur ORR Sarjapur Road Whitefield and Brookfield
Secondary Business District Indiranagar JP Nagar RT Nagar Vijayanagar
Northern Suburb HRBR Layout Bellary Road Jakkur
Southern Suburb Mysore Road Hosur Road
West Suburb BEL Factory HMT Layout
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Bangalore Development Authority
[7]
33 Key issues
The recessionary trends in 2007 across the world had also adversely affected the entire real estate
market in Bengaluru All the three categories of residential commercial (office space) and retail had
experienced slump in market and the real estate market in several erstwhile prime locations of the citywere facing oversupply situation and a drastic fall in the capital as well as rental values
With the revival of the industry and economy the residential market is expected to witness a jump
across all the areas in Bengaluru as per CRISILrsquos analysis The eastern and southern areas are
estimated to emerge as up-scaled developments as these areas are expected to see maximum
supply in the next three years
Good quality developments have been the key feature of Bangalorersquos commercial developments The
boom in IT sector especially in South India has enabled the city to have a metropolitan culture which
brings along the urban demands like malls and multiplexes
Recently the market in Bangalore has stabilized to a large extent after the sudden jump in prices post
recession However this is cyclical in nature and the saturation of IT services has led to a scenario
where there would not be much increase in the lease rentals
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Bangalore Development Authorit
4 Project
41 Description of
It is proposed that for the redev
over to the developer on long
Finance Design Construction
period Ownership of the land wi
BUP area will be transferred b
proposed commercial develop
vendors
42 Components o
The project would be develope
basis The structure of the mode
Figure 4-1 Development struc
43 Description of
The site is located at Indiranaga
the main commercial centres in
Road in the North Old Airport
the East Indiranagar is located
famous for housing the Somes
and educational institutions like
y
the project
lopment of BDA Complex at Indiranagar the la
erm lease basis The selected developer woul
and Operation amp Maintenance of the project t
ll always be with BDA After the lease period th
ack to BDA free of cost We have assumed
ent shall be reserved for BDA for rehabilit
f the project
on a Design Build Finance Operate and Tra
l has been illustrated below
ture of the Commercial Complex
the site
r a suburb of Bangalore located about 4 km ea
the city This medium sized suburb is enclose
oad in the South Halasura in the West and Je
within a diameter of few kilometre radii from the
ara Temple several reputed hospitals like Amrj
r Ambedkar College KH Patel College etc
[8]
nd would be handed
d be responsible for
hroughout the lease
e land along with the
hat a portion of the
tion of the existing
sfer model on PPP
t of MG road one of
by the Old Madras
vanbheemanagar in
airport The place is
yoti Vijaya and ESI
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Bangalore Development Authority
[9]
The site is situated at a junction near a residential area and is frequented by elders and youngsters
alike The present building consists of Motor driving schools RTO office computer vendors and travel
agents There is a water tank situated in the site
Figure 4-2 BDA Complex at Indiranagar
44 Interaction with stakeholders
CRISIL conducted a series of interactions with the stakeholders namely the BDA officials Citizens
and the establishment owners The interactions revealed that the building has to undergo
redevelopment The condition of the BDA office is not up to the standards expected and the officials
complained about leaks and short circuits The establishment owners suggested that the building was
planned with less road facing establishments due to which they are not able to attract footfalls
45 Case studies
In order to generate revenues from the real estate value of the land in the ownership of the ULBrsquos
commercial projects have been developed on a PPP basis on these lands Typically under such
arrangements the ULB would have identified a site under its ownership where a property for
commercial use can be developed Commercial development would include the development of
shopping complexes markets bus terminals multi-level car parking townships etc
Under such an arrangement the ULB would require of the private developer to undertake
construction of a commercial complex on the land The land would be provided by the ULB to the
private operator on a lease basis The ULB would provide specifications on the nature and type of
commercial development required The private developer would need to bear all the capital costs
associated with the construction of the commercial complex Post construction of the commercial
complex as per the arrangement the private developer would either hand over the constructed
facility to the ULB or would sub-lease the property The private developer would be required to make
to the ULB an upfront payment or provide a share in the ULB revenues earned from sub-leasing the
properties
The following case study compiled by the Ministry of Urban Development Government of India
highlights the development of municipalurban lands on a PPP basis
Category Details
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Bangalore Development Authority
[10]
Category Details
Project Construction of Commercial Complex at Ranipura Market
Cost of
ProjectRs 1500 lakhs
Description
The land was allotted to the concessionaire to construct the Commercial Complex by
the Corporation
Corporation continues to own the land
After the concession period the built-up structure (Commercial Complex) will be
transferred to the Corporation by the concessionaire
The concessionaire was given the right to recover its investment from the premium
received for ldquoRight of Occupationrdquo of the constructed shops
At the time of award of concession it was estimated that a profit of Rs 200 lakh will
be accrued from the venture which will be shared by the concessionaire with the
Corporation
The Corporation is expected to receive a profit share of Rs 100 lakh from the
concessionaire
Source Compendium on Public Private Partnership in Urban Infrastructure Case Studies Ministry of Urban
Development Government of India in association with Confederation of Indian Industry (CII)
We have also studied another case wherein the development affordable housing units was structure
on a PPP basis by the Pimpri Chinchwad New Township Development Authority (PCNTDA)
451 Public private partnership in affordable housing under Jawaharlal
Nehru National Urban Renewal Mission (JNNURM)
The Pune metropolitan region comprising Pune and Pimpri Chinchwad cities is one of the fastest
growing urban agglomerations in India A major automobile and auto-ancillary hub and a well-known
international education destination it also ranks among the top IT destinations of India Besides the
region has many industrial clusters housing industries focused on FMCG engineering agro-based
technology
The Pimpri-Chinchwad New Town Develompent Authority (PCNTDA) a key development authority of
the PMR is responsible for development of peri-urban especially in its north In line with the
phenomenal growth of the region and its strident aspirations PCNTDA has envisioned the
development of an integrated township at Sector 12 spanning 53 hectares Given the success of the
Public Private Partnership (PPP) model in involving private sector participation for development based
projects PCNTDS proposed to develop the integrated township on PPP basis
With this objective PCNTDA appointed the consortium of CRISIL Risk and Infrastructure Solutions
Limited (CRIS) Omkar Associates and Creations as project development consultants for the
development of an eco-friendly affordable township at Bhosari Sector 12 CRISILrsquos role was to
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Bangalore Development Authority
[11]
undertake a detailed demand assessment financial feasibility project structuring and management of
the bid process
The concept
Keep in mind the PCNTDArsquos vision CRIS designed integrated township such that it compriseshousing untis for the poor affordable housing units for the general public a primary health care
centre a hospital and a school
As per the structure the Developer shall construct 5040 housing units under the Basic Services for
Urban Poor (BSUP) scheme of JNNURM PCNTDA shall transfer the amount of grant sanctioned for
developing these units under the JNNURM scheme to the developer The remaining project cost of
the BUSP units was to be financed by the developer
In addition to this the Developer shall also construct affordable housing units as per pre-specified
specifications and hand over to PCNTDA free of cost The developer shall also construction the
physical and social infrastructure for the integrated township thereby ensuring good road adequate
water supply an efficient sewerage system as well as schools and hospitals The project shall bedeveloped in a manner such that it has minimum possible impact on the surrounding environment and
is in harmony with nature To this end the developer shall undertake eco-friendly initiatives including
rain water harvesting use of solar power environment-friendly materials and vermin-composting
The project
The developer has to complete the BSUP housing units within 2 years and hand over to the PCNTDA
For the remaining portion of the land PCNTDA shall execute a lease deed for 99 years with the
developer The lease rights shall be granted to the developer in phases upon completion of
milestones as defined in the project agreement The main scope of work for the developer shall
include
Master planning for the entire 53 hectares of land and construction of common physical and
social infrastructure for the entire area
Development construction and marketing of 795 lakhs square meters of integrated real
estate space
Construction and handing over of 5040 housing units under the BSUP scheme of JNNURM
on a separate layout carved out of the said land PCNTDA will provide the developer the grant
sanctioned by the Government of India for these housing units
Successful selection of private developer
With the objective of undertaking this project on a PPP basis in a transparent and objective manner
PCNTDA launched a three-cover Request for Proposal in June 2009 The bidding parameter was theconstructed ldquoCarpet Areardquo in ldquosquare metersrdquo of affordable housing units that the bidder shall
construct and hand over free of cost to PCNTDA
The tender received good response from four interested bidders Of the four bidders two bidders
were adjudged technically and financially capable and short-listed for the final stage The bidder with
the highest construction carpet area offered to PCNTDA was selected The successful bidder quoted
a carpet area of 130599 square meters of affordable housing units
Thereby the PCNTDA derived a value of 7369 housing units (including 5040 BSUP units) a school
and a hospital for the BSUP units a school and hospital for the general public and development of
public amenities
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Bangalore Development Authority
[12]
Value addition to PCNTDA
In commercial terms PCNTDA saved (i) Rs 190 crores as the gap amount required to fund the BSUP
scheme (ii) Rs 210 crores of construction cost of affordable housing units and (iii) Rs 100 crores on
the development of physical and social infrastructure In addition to this PCNTDA shall receive anupfront payment of Rs 50 crores from the successful bidder The project structure also protects
PCNTDA from cost escalation risks valuation risks and engineering risks
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
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Bangalore Development Authorit
5 Market asse
51 Bangalore gro
The growth of Bangalore has be
from the growth in population in
to the economic opportunities it
Bangalore an obvious choice for
Bangalore has grown at averag
decades It is projected that B
explosive growth has meant th
pressure
Figure 5-1 Population growth
Source City Development Plan Ba
The city leads the country in
available However Bengaluru a
of projects under development a
983089983086983094983091 983089983086983096983097 983090983086983092
983088
983089983088
983090983088
983091983088
983092983088
983093983088
983094983088
983095983088
983096983088
983097983088
983089983097983088983089 983089983097983089983089 983089983097983090983089
983120 983151 983152 983157 983148 983137 983156 983145 983151 983150 983145 983150 983116
983137 983147 983144 983155
y
sment
th overview
en unprecedented in the past couple of decades
the last century Bangalore continues to attract t
offers This is also supported by a salubrious
not only businesses but also for people
compounded annual growth rate (CAGR) of 3
ngalorersquos population will cross the 10 million
at the infrastructure in Bangalore has been p
in Bangalore between 1901 and 2011
galore Development Authority and Census of India
ffice space with 738 million square feet of
lso has 22 per cent of the available space vacan
nd reduced demand
983091983086983089 983092983086983089983089983095983086983096983094
983089983090983086983088983094
983089983094983086983094983092
983090983097983086983090983090
983092
983089983097983091983089 983089983097983092983089 983089983097983093983089 983089983097983094983089 983089983097983095983089 983089983097983096983089 983089983097
[13]
This fact is laid bare
rongs of people due
eather which makes
58 in the last three
mark by 2021 This
t under tremendous
commercial capacity
with a large number
983086983091
983093983094983086983096983094
983096983092
983097983089 983090983088983088983089 983090983088983089983089
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Bangalore Development Authority
[14]
52 Demand projections
Bangalore is the largest commercial market and third largest residential market in India The city has
typically been preferred by home buyers because of its favorable socio-economic conditions and a
salubrious climate In recent years Bangalore has attracted a large influx of population engaged inthe thriving IT sector City residential demand is more end-user driven with moderate price
appreciation The average residential real estate price in the city is 20-25 lesser than in Delhi and
Mumbai In the recent National Housing Bank Residex the index indicating property prices across key
cities in India Bangalore witnessed a mere 1 YoY fall in residential prices in 2011-12 Mumbai saw
an 116 YoY jump in home prices while Delhi witnessed 358 YoY increase during 2011-12 The
city witnessed tremendous growth in terms of population and the number of companies setting up
offices there Thus the ongoing projects such as Bengaluru metro rail project various flyovers and
the under-pass construction activities in Outer Ring Road (ORR) CNR and BHEL circles would ease
the congestion and provide better connectivity for all commuters This will boost real estate demand in
and around Bangalore city
In 2011-12 Bangalorersquos commercial market exhibited resiliency with comparatively high demand
levels despite the discomfort in the market on account of global uncertainty Though commercial
property demand in Bangalore is largely dependent on ITITES sectors the share of manufacturing is
increasing at a faster pace and thereby giving further boost to office space demand According to real
estate consultancy firm Knight Frank the manufacturing sector witnessed a quantum leap as its share
of absorption increased from 3 in 4QCY10 to 23 in 4QCY11 The absorption of commercial space
has gone up from 5mn sq ftquarter in CY09 to 7mn sq ftquarter in CY11 thanks to sustained
demand for Bangalore commercial space which witnessed 43 CAGR in absorption level over CY09-
11 Subdued supply during the first two quarters of 2011 coupled with high absorption level has
substantially lowered the vacancy level in the city (bringing it down from 17 in CY10 to 12 in
CY11) With the expansion of existing operations in the IT sector and the entry of newer sectors dueto renewed optimism in the market we expect the level of absorption of office space to remain stable
Revised Master Plan-2015 for the BMA has been published This document gives the likely growth to
take place in various areas of the BMA The population of the BMA is expected to grow from 61 lakh
in 2001 to 122 lakh in 2025
The proposed growth rate and the ever changing urban scenario is bound to increase the commercial
space demand in the region The site at Indiranagar is situated at a junction and has two road facing
sides which makes it very attractive for commercial development The site is also huge in size and
can easily accommodate a mall
Hence in view of the above it can be safely recommended that the site would generate huge interest
within the developers
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Bangalore Development Authority
[15]
6 Project financials
The project costs have been largely derived from the costs indicated by the Bangalore Development
Authority (BDA)
61 Cost estimation
The estimated cost of development of the project is Rs 23931 lakhs The costs have been outlined
below
Table 6-1 Project Cost of the proposed development
Particular Amount inRs Lakhs
Construction Cost 19967
Land Development 793
Other Infrastructure 50
Total Hard Costs 20810
Contingencies 3121
Total Project Development Cost 23931
Apart from the above mentioned project development cost the Concessionaire would incur the
development premium and Interest during construction (IDC) cost
Particulars 25 years 33 Years 66 years
Upfront Premium (Rs Lakh) 965000 1230000 600000
IDC Cost (Rs Lakh) 315600 361500 259100
Revenue Share every year 15 15 15
Total Project Cost (Rs Lakhs) 36737 39846 33022
62 Revenue stream
The Revenues to the Developer would accrue from the revenue earned from the lease rentals and the
maintenance charges which the developer earns from the tenants The total revenue from both the
heads has been arrived at Rs 6720 Lakhs for the base year It has been assumed that the
occupancy of the commercial complex 80 in the base year and stabilizes to a maximum of 95towards the end of the concession period The average lease rentals have been assumed at Rs 70
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Bangalore Development Authority
[16]
per square feet and the maintenance charges have been assumed at Rs 225 per square feet Both
the revenues are escalating at the rate of 10 per annum The income statement for the developer
has been provided in Annexure 1
63 Viability assessment
The viability assessment has been carried out over two concession period ie 25 33 and 66 years
The debt to equity ratio has been assumed to be 121
The project level internal rate of return (IRR) IRR of equity and the net present value of the equity
have been worked out
Table 6-2 Viability assessment for BDA complex at Indiranagar
Concession Period Project IRR Equity IRR NPV of Equity
Upfront Premium
(Rs in Lakhs)
25 years 1777 2007 96 9650
33 years 1818 2006 108 12300
66 years 2101 2333 5285 6000
It is evident that the project is viable for the developer for all the 3 concession periods In case of the
25 year concession period it is estimated that the developer would pay BDA an estimated upfront
premium of Rs 9650 lakhs Similarly the developer would pay BDA an amount of Rs 12300 lakhsand Rs 6000 lakhs for the concession periods of 33 years and 66 years respectively
64 Ranking of options based on commercial viability
Having assessed the project for two concession periods of 25 33 and 66 years we are of the view
that the 25 year concession option will be more suitable since it allows the developer to make
reasonable returns on the projects and his own investments along with a sizeable upfront premium for
BDA BDA would be in a position to renew the contract or retender the project after 25 years which
may enable BDA to earn as per the prevailing market rates
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Bangalore Development Authority
[17]
7 Statutory amp legal framework
71 Legal amp regulatory framework
Development Control Regulations (DCR)
As per RMP ndash 2015 published by BDA the project site has been classified as ldquoCommercial Businessrdquo
As per the definitions of RMP-2015 Commercial Business Zone allows development of Commercial
and Corporate offices Retail Shopping Complexes Restaurants and Hotels Convention centres and
banquet halls financial institutions Cinema and multiplexes places of assembly exhibition centres
Entertainment and amusement centres and stores
Permissible land uses under Commercial (Business) Zone as per RMP-2015 of BDA
Main land use category C3
Other land uses permissible (as main land use) R I-3 T3 amp U4
If the road width is less than 120 m and plot area is less than 240 square metre then C2 I-2
R and U4 only are allowed
The plot size is 24000 square metre Presently it has 18m wide access road The applicable DCR for
the plot as per proposed road width is as follows
Table 7-1 Plot details of Indiranagar site
Sr No Particulars Description Unit
1 Land Use Commercial Business
2 Road Width 18 Metre
3 Permissible FAR 325
4Permissible ground
coverage50
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Bangalore Development Authority
[18]
8 Indicative environmental amp social impacts
81 Environmental impacts
The proposed development is in line with the layout of BDA Due to the reasonably large site area the
development will be on the higher side A set back of 50 is found to be acceptable for the site
however an Environmental Impact Assessment studies have to be undertaken for the sites Since
already a commercial complex is existent redevelopment of the complex would need demolition of
the existent structures Hence a suitable disposal of construction and debris has to be undertaken by
the developer Also a Green building can be developed to ensure minimal effect on nature
82 Social impactsDuring the construction period the existing establishments have to be shifted or compensated
temporarily Hence a clear resettlement plan has to be decided before the implementation of the
project It is envisaged that if due care is taken about the existing tenants the development would go
smoothly
83 Mitigation measures
It is necessary that the impacts are identified early and action plans are prepared for their mitigation in
advance For instance for environmental impacts the BDA may insist on the developer to use clean
and green building technologies
It is also necessary that the project development plan is also accompanied by a Relocation and
Rehabilitation plan which will layout detailed action points with the requisite intervening entity
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Bangalore Development Authority
[19]
9 Operating framework
91 Risks amp mitigation
The risk framework for this project has been outlined below
Table 9-1 Risk mitigation measures
Risk Category Risk implication Mitigation measure
Sponsor risk BDA scraps the project Termination payments in case of BDA scrapping the
project
Environment
risk
Adverse impact on
surrounding environment
Penalty clauses in case of default on
Concessionairersquos part
Environmental Impact Assessment to identify all
risks in advance
Political riskChange in government may
put project in jeopardy
Termination payments in case of project being
scrapped
Force
majeure riskProject is abandoned
Force majeure clauses in the concession
agreement
Operating riskThe operations of the
facility are stalled
Performance security clause in case of default on
Concessionairersquos part
Design risk Overdesign of the projectProject design to be finalized in mutual agreement
of concessionaire and BDA
Completion
risk
Completion of project is
delayed inconvenience to
citizens and tenants
Penalty clauses for time overrun in the concession
agreement
Cost overrun
risk
Project cost increases
beyond reasonable limits
Project cost increment ceiling to be specified in the
concession agreement Increase beyond this ceiling
to be borne by the developer No change in revenue
sharing
92 Indicative project structure
The best approach for such a large ticket project would be for the BDA to become a key actor in the
entire process of development The BDA may ask the private sector partner to form a Special
Purpose Company where the equity will be brought in by the private sector developer The designs
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Bangalore Development Authority
[20]
should be left to the developer and BDArsquos role would be in approving the same in accordance with the
Development Control Regulations
The SPC will develop and maintain Complex throughout the concession period The tenants would
pay the developer a sub-lease premium or lease rentals which will be escrowed in a separate accountand can be withdrawn based on the revenue sharing structure adopted
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Bangalore Development Authorit
10 Way ahead
101 Project develo
The key task for BDA is to ap
feasibility of the project Once t
the bid process
Figure 10-1 Project developm
The transaction advisor shall stralso prepare the relevant bid
management on behalf of BDA
102 Procurement
The foremost step for BDA is
feasibility The detailed financial
parameter Also an optimum str
bid documents would be prepar
process be conducted as a 2 sta
983105983152983152983151983145983150983156983149983141983150983156 983151983142 983156983154983137
983108983141983156983137983145983148983141983140 983142983141983137983155983145983138
983155983156983154983157983139983156983157983154983145983150983143
983120983154983141983152983137983154983137983156983145983151
983123983141983148983141983139
y
pment framework
oint a Transaction Advisor in order to conduc
e financial numbers are acceptable BDA BDA
nt framework
ucture the project upon completion of the feasibidocuments The transaction advisor shall un
nd will assist in appointment of the private secto
lan
to appoint a Transaction Advisor for the co
feasibility would determine the tentative revenue
cture would be arrived at Post the approval of
d for the selection of the developer It is recom
ge process involving Technical qualification and
983155983137983139983156983145983151983150 983137983140983158983145983155983151983154
983148983145983156983161 983155983156983157983140983145983141983155 983137983150983140 983152983154983151983146983141983139983156
983150 983151983142 983138983145983140 983140983151983139983157983149983141983150983156983155
983145983151983150 983151983142 983152983154983145983158983137983156983141 983155983141983139983156983151983154 983152983137983154983156983150983141983154
[21]
a detailed financial
should proceed with
ility studies and shallertake bid process
partner
nducting the project
for BDA and the bid
easibility Report the
mended that the Bid
inancial proposal
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B a n g a l o r e D e v e l o p m e n t A u t h o r i t y
B D A s h o u l d i n i t i a t e t h e p r o c e s s o f a p p o
i n t i n g a t r a n s a c t i o n a d v i s o r a t t h e
e a r l i e s t T h i s p r o c e s s c a n b e c o m p l e t e d i n 2 m o n t h s
O n c e t h e T A
i s i n p l a c e
t h e B D
A s h o u l d a l l o w
a t l e a s t 4 m o n t h s f o r t h e p r e p a r a t i o n o f f e a s i b i l i t y p r o j e c t s t r u c t u r i n g a n d b i d d o c u m e n
t s
O n c e t
h e b i d d o c u m e n t s a r e i n p l a c e t h
e B D A
s h o u l d i n i t i a t e t h e p r o c e s s
o f s e l e c t i n g t h e p r i v a t e s e c t o r p a
r t n e r w h i c h c a n b e c o m p l e t e d o v e r a 4 m o n t h
p e r i o d
T h e c u
r r e n t p r o c u r e m e n t p l a n i s s p r e a d
o v e r 1 1 m o n t h s w h i c h c a n b e s
h o r t e n e d d e p e n d i n g o n t h e m a n n e r i n w h i c h B D A
m a k e s d e c i s i o n
s r e l a t i n g t o
a p p o i n
t m e n t o f T A a n d p r i v a t e d e v e l o p e r
A c t i v i t y
M 1
M 2
M 3
M 4
M 5
M 6
M 7
M 8 M
9
M 1 0
M 1 1
M 1 2
A p p o i n t m e t o f t r a n s a c t i o n a d v i s o r
D e t a i l e d t e c h n o - e c o n o m i c f e a s i b i l i t y a n d
b i d d o c u m e n t p r e p a r a t i o n
B i d p r
o c e s s m a n a g e m e n t
S e l e c t i o n o f p r e f e r r e d b i d d e r a n d f o r m a t i o n o f S P C
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B a n g a l o r e D e v e l o p m e n t A u t h o r i t y
1 1
A n n e x u r e 1 ndash C a s h - f l o w
s t a t e m e n t
R e v e n u e H e a d
S u b H e a d R a t e
U n i t
3 1 - M a r - 1 4
3 1 - M
a r - 1 7
3 1 - M a r - 2 2
3 1 - M a r - 2 7
3 1 - M a r - 3 2
3 1 - M a r - 3 7
3 1 - M a r - 4 2
3 1 - M a r - 4 7
3 1 - M
a r - 5 2
3 1 - M a r - 5 7
3 1 - M a r - 6 2
C o m m e
r c i a l S p a c e
O c c u p a
n c y
P e r c e n t a g
0
9 0
9 5
9 5
9 5
9 5
9 5
9 5
9 5
9 5
9 5
C o m m e
r c i a l s p a c e l e a s e d o u t
s q f t
-
7 2 0 6
9 0
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6
0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
D e p o s i t f o r L e a s e
( N o o f m o n t h s r e n t )
1 2
A v e r a g e
L e a s e R e n t a l s
7 0
R s p s f p e r m o n t h
E s c a l a t i o n
1 0
M a i n t e n
a n c e c h a r g e s
2 2 5
R s p s f p e r m o n t h
R e v e n u e f r o m
L e a s e R e n t a l
R s
L a k h s
-
8 8
6 3
1 5 0
6 8
2 4 2
6 6
3 9 0
8 1
6 2 9
4 1
1 0 1 3
6 7
1 6 3 2
5 3
2 6
2 9
2 0
4 2 3 4
3 5
6 8 1 9
4 7
R e v e n u e f r o m
M a i n t e n a n c e c h a r g e s
-
2 8 5
4 8 4
7 8 0
1 2
5 6
2 0
2 3
3 2
5 8
5 2
4 7
8 4
5 1
1 3 6
1 0
2 1 9
2 0
T o t a l R
e v e n u e
-
9 1 4 8
1 5 5 5 2
2 5 0 4 6
4 0 3 3 8
6 4 9 6 4
1 0 4 6 2 5
1 6 8 5 0 0
2 7
1 3 7 1
4 3 7 0 4 6
7 0 3 8 6 7
R e v e n
u e H e a d
S u b H e a d R a t e
U n i t
3 1 - M a r - 6
7
3 1 - M a r - 7 2
3 1 - M a r - 7 8
3 1 - M a r - 7 9
C o m m e r c i a l S p a c e
O c c u p a n c y
P e r c e n t a g
9 5
9 5
9 5
9 5
C o m m e r c i a l s p a c e l e a s e d o u t
s q f t
7 6 0 7 2
8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
D e p o s i t f o r L e a s e
( N o o f m o n t h s r e n t )
1 2
A v e r a g
e L e a s e R e n t a l s
7 0 R s p s f p e r m o n t h
E s c a l a
t i o n
1 0
M a i n t e
n a n c e c h a r g e s
2 2
5 R s p s f p e r m o n t h
R e v e n u
e f r o m
L e a s e R e n t a l
R s
L a k h s
1 0
9 8 2 8 2
1 7
6 8 7
9 4
3 1
3 3 5
2 7
3 4
4 6 8
8 0
R e v e n u
e f r o m
M a i n t e n a n c e c h a r g e s
3 5 3 0 2
5 6 8
5 4
1 0 0 7
2 1
1 1 0 7
9 3
T o t a l R e v e n u e
1 1 3 3 5 8 4
1 8 2 5 6 4 8
3 2 3 4 2 4 8
3 5 5 7 6 7 2
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[x]
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[y]
Disclaimer
CRISIL Risk and Infrastructure Solutions Limited (CRIS) has taken due care and caution in preparation of this Report for
Bangalore Development Authority which is under the purview of the Urban Development Department Government of
Karnataka This Report is based on the information documents provided by the Company andor information available publicly
andor obtained by CRIS from sources which it considers reliable CRIS does not guarantee the accuracy adequacy or
completeness of the information documents Report and is not responsible for any errors or omissions or for the results
obtained from the use of the same The Report and results stated therein are subject to change CRIS especially states that it
has no financial liability whatsoever to the Company users of this Report This Report is strictly confidential and should not be
reproduced or redistributed or communicated directly or indirectly in any form or published or copied in whole or in part
especially outside India for any purpose
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ai
1 amp 2
About CRISIL Infrastructu
CRISIL Infrastructure Advisory
CRISIL Risk and Infrastructure
Limited a 100 subsidiary of
Indiarsquos leading Ratings Resear
Policy Advisory Company
CRISIL Infrastructure Advisory
premier advisor focusing on po
well as commercial and contra
the areas of transport energyinfrastructure We also provide
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India Over a period of time C
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re Advisory
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ltant by
cies and private-
ed our
e present in
a Middle East
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[vii]
List of Figures
Figure 2-1 Approach and Methodology 4
Figure 4-1 Development structure of the Commercial Complex 8
Figure 4-2 BDA Complex at Indiranagar 9
Figure 6-1 Population growth in Bangalore between 1901 and 2011 13
Figure 11-1 Project development framework 21
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Bangalore Development Authority
[1]
1 Executive summary
Infrastructure Development Department proposes to strengthen the project development process inthe Departments responsible for implementing Infrastructure Projects through Public Private
Partnership (PPP) The PPP concept is relatively new and the implementing officers require
necessary insight orientation and assistance into the project development for effective marketing and
implementation of the projects
CRISIL Infrastructure Advisory a division of CRISIL Risk and Infrastructure Solutions Limited (CRIS)
has been appointed by the Infrastructure Development Department Government of Karnataka to
work closely with the Bangalore Development Authority for the assignment ldquoInstitutional Strengthening
and Sector Specific Inventory for PPP Mainstreaming in Sectorsrdquo Under this BDA has identified a set
of nine projects for which pre-feasibility assessments are to be carried out Redevelopment of BDA
Complex at Indiranagar is one of the nine projects proposed by BDA
In line with the objectives of BDA the BDA Complexes were built at strategic locations and near
residential localities in order to provide a one stop solution for shopping Hence facilities like motor
training schools travel agents RTO etc started operating within the complexes The complexes are
now in dilapidated condition and in order to provide better facilities to the citizens BDA proposes to
redevelop the old BDA Complex at Indiranagar
This report examines the possibility of redeveloping the commercial complex on a PPP Basis In order
to bring in private sector participation in the redevelopment of the complex it is proposed that the land
is handed over to the developer on long term lease basis The selected developer would be
responsible for Finance Design Construction and Operation amp Maintenance of the project
throughout the lease period Ownership of the land will always be with BDA After the lease period
the land along with the BUP area will be transferred back to BDA free of cost One portion of the
proposed commercial development shall be reserved for BDA for rehabilitation of the existing
vendors
For the purpose of cost estimation we have studied the feasibility report developed by SREI
Infrastructure Finance Limited and have also consulted with the BDA The estimated cost of
development of the project is Rs 20810 lakhs
The revenues to the developer would accrue from the revenue earned from the lease rentals as well
as maintenance charges The total revenue from both the heads has been arrived at Rs 6720 Lakhs
for the base year Occupancy of 80 has been assumed for the base year which will stabilize at a
maximum of 95 towards the end of the concession period The average lease rentals have been
assumed at Rs 70 per square feet and maintenance charges have been assumed at Rs 225 per
square feet Appropriate escalation factors have been assumed for both revenue heads
The viability assessment has been carried out over three concession periods of 25 33 and 66 years
The debt to equity ratio has been assumed to be 121
The viability assessment has been worked out with determinants like the project level internal rate of
return (IRR) IRR of equity and the net present value of the equity The project is found to be viable for
all the 3 concession periods In case of the 25 year concession period it is estimated that the
developer would pay BDA an upfront premium of Rs 9650 Lakhs For the concession period of 33
and 66 years the upfront premium to be paid by the developer would be Rs 12300 Lakhs and Rs
6000 lakhs respectively
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Bangalore Development Authority
[2]
A key issue that the BDA will need to address is the relocation of the existing tenants of the
complexes The BDA needs to prepare a rehabilitation plan for the existing tenants and should also
clearly lay out the rehabilitation mechanism for these tenants As part of the project configuration we
have assumed that a certain proportion of the developed spaces would be handed over to the BDA
which can be utilized for the rehabilitation of the existing tenants However if the BDA chooses to
accommodate these tenants in the redeveloped facility the commercial terms may have to be in line
with the rentals being charged to the new tenants We are of the opinion that the BDA should make
an informed decision on this only after a detailed feasibility has been conducted for the site
We have examined the way forward for the project We propose that the BDA should appoint a
transaction advisor for the project who will conduct a detailed feasibility for the project and would also
facilitate the appointment of the developer through bid process management
The procurement plan for the project has been developed to be spread over 11 months which can be
shortened depending on the swiftness of decision making at BDA
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Bangalore Development Authority
[3]
2 Introduction
CRISIL Infrastructure Advisory a division of CRISIL Risk and Infrastructure Solutions Limited (CRIS)
has been appointed by the Infrastructure Development Department Government of Karnataka to
work closely with the Bangalore Development Authority for the assignment ldquoInstitutional Strengthening
and Sector Specific Inventory for PPP Mainstreaming in Sectorsrdquo Under this BDA has identified a set
of nine projects for which pre-feasibility assessments are to be carried out
In order to provide advanced recreational facilities and services to the citizens BDA has proposed the
redevelopment of its Complexes through Public Private Partnership model Redevelopment of BDA
Complex at Indiranagar is one of the nine projects proposed by BDA
21 Project idea
Bangalore Development Authority (BDA) is one of the premier urban planning and development
agencies that oversee the growth of the city The BDA came into being with effect from 6th January
1976 under a separate Act of the State Legislature viz the BDA Act 1976 This Authority combined in
itself the Planning functions of the City Planning Authority and the developmental functions of the
erstwhile City Improvement Trust Board (CITB)
The key objectives of the authority as per the BDA Act shall be to promote and secure the
development of the Bangalore Metropolitan Area (BMA) and for that purpose the Authority shall have
the power to acquire hold manage and dispose of moveable and immoveable property whether
within or outside the area under its jurisdiction to carry out building engineering and other operations
and generally to do all things necessary or expedient for the purposes of such development and for
purposes incidental thereto
In line with the objectives of BDA the BDA Complexes were built at strategic locations in near
residential localities in order to provide a one stop solution for shopping Hence convenient stores like
motor training schools travel agents RTO etc started operating within the complexes The complexes
are now in dilapidated condition and in order to provide better facilities to the citizens BDA proposed
to develop the old BDA Complex at Indiranagar The project is also an outcome of reducing
commercial spaces in key residential areas
22 Approach amp methodologyThe broad approach and methodology followed for study of these projects has been depicted
graphically below
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Bangalore Development Authorit
Figure 2-1 Approach and Met
23 Review of pre
Bangalore Development Authori
development works identified by
29102010 BDA retained Tand
identified projects namely ldquoDevel
TUSPL had submitted their Fe
estimations The report submitte
been presented as below
The project cost indicate
to reflect the market
contingencies prelimina
The financials indicated
Developer and BDA an
given the market conditi
The report does not cle
1062701 sq ft And an
2440023 square metre
officials
1 The cost incurred towards upfront pre
figure
Study of existingreports
y
odology
ious studies
ty had invited proposals for appointment of Co
BDA vide Tender Notification No BDAEMTA-
on Urban Solutions Pvt Ltd (TUSPL) as Cons
opment of Commercial Complex at Indiranagar
sibility Report for the Indiranagar site along
d by TUSPL was studied in detail and the CRISI
d in the report is Rs 39165 Lakhs The project c
rates The Revised project cost is Rs 239
ry and pre-operative expenses
in the Feasibility Report is assuming a revenu
an upfront premium which the developer woul
ns and rates this has been revised
arly mention the area of the plot It indicates a
open land development area of 131322 sq f
has been assumed for the pre-feasibility in c
ium and the interest during construction period is not includ
Discussions withBDA personnel
Be
a
Finalrecommendation
[4]
nsultants for various
3802010-11 dated
ultant for one of the
angalorerdquo
ith the designs and
Lrsquos observations has
ost has been revised
11 Lakhs including
share between the
ld provide However
construction area of
t Hence an area of
nsultation with BDA
d in the above mentioned
lock coststimation
inancialsessment
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
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Bangalore Development Authority
[5]
3 Sector profile
The city of Bangalore has witnessed very rapid growth The city today is home to over 84 million
people (2011 Census) The salubrious weather and the rapid concentration of economic activities in
Bangalore have fuelled the growth of Bangalore As one of the worldrsquos fastest growing cities
Bangalore is experiencing a steady growth in population
Bangalore has been substantially affected by globalization and rapid urbanization over the last
decade The demand for services and quality of life is not confined to the central core or the erstwhile
Bangalore Mahanagra Palike jurisdiction but spreads beyond into the peri-urban areas the
Metropolitan Area and outwards into Bangalore Metropolitan Region With the emergence of the
Bangalore-Mysore Infrastructure Corridor the Bangalore International Airport and the planned ring
roads urbanization has sprawled out
Banaglore has incontestable advantages to develop into an international metropolis but at the same
time faces significant constraints The city is embedded in its history and depicts the greatness of a
truly Indian city established before the invasions and colonization It has a diverse set of activities
from silk to aeronautics from clothing to information technology and is a gauge of dynamism and
solidity of the city Natural drainage climatic advantage and the availability of water in the Cauvery
baisn are factors assisting in improving the quality of life
31 Industry overview
Bengaluru is countryrsquos third leading realty market With the IT boom and corresponding growth of the
economy saw large-scale increase in the cityrsquos population mostly due to migration from across India
Bengalurursquos population grew about 35 percent in the last six years
This increase in population along with steady demand and restricted supply led to saturation in central
Bengaluru region and pushed development to peripheral areas like Whitefield Sarjapur road Outer
Ring Road (ORR) Bannerghatta Road Hosur Road
With the opening of International Airport Real estate in North Bangalore (Bellary Road to Yelahanka)
has also witnessed the launch of numerous projects with apartments and villas Given the improved
infrastructure accessibility and the future potential for this area the area has been attracting both the
segments of investors and end-users alike
The city leads the country in office space with 738 million square feet of commercial capacityavailable However Bengaluru also has 22 per cent of the available space vacant with a large number
of projects under development and reduced demand
32 Regional profile
Bengaluru (formerly Bangalore) also known as Garden City for its beautiful gardens is the
administrative industrial commercial educational and cultural capital of Karnataka and located on
the Deccan Plateau in the South-Western part of India Bengaluru is Indias third most populous city
fastest growing and fifth largest metropolitan area with population of about 57 million (as per 2001
census) The population is expected to reach around 11 million and 22 million in 2021 and 2041respectively
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Bangalore Development Authority
[6]
With ever increasing boundaries and gross domestic product of 59123 billion in FY 06-07 Bengaluru
has some well-recognized IT companies and numerous public sector heavy industries aerospace
telecommunications and defence organisations located within Bengaluru also has some well known
colleges and research institutes
Geography
With an average elevation from the sea level of 920 m and total area of 741 km2 Bengaluru is located
in the south-eastern part of Karnataka in the Mysore Plateau - a region of Deccan Plateau The city
has an uneven landscape of hills and valleys to the south and relatively more level plateau towards
the north
Because of its elevation the city enjoys a pleasant and equable climate throughout the year The city
is situated in the Bengaluru Urban district which is divided into four taluks - Bangalore North
Bangalore East Bangalore South and Anekal and covers a total geographical area of 2190 sq km
Bangalore District is surrounded by Kolar District to the northeast Tumkur District on the northwest
Mandya District on the southwest Chamarajanagar District on the south and neighbouring state of
Tamil Nadu on the southeast
Connectivity
Bangalore is well connected to other Indian cities by road rail and air transport The connectivity by
rail road and air is detailed in the sections below
Road
Bengaluru is located at the junction of National Highways 4 7 and 48 connecting to various important
cities in India including Chennai Hyderabad Kanyakumari Madurai Mangalore Mumbai Nagpur
Pune and Varanasi
Railways
Bengaluru has two major railway stations Bengaluru City railway station and Yeswantpur Junction
The city has a well maintained railway network connecting major cities of the country and is
connected to the rest of the country both by metre gauge and broad gauge rail services
Air
Bengaluru has an International Airport at Devanahalli and is well connected to all cities in India
Internationally Bengaluru is connected to European and Asian cities like Frankfurt Singapore Kuala
Lumpur London Dubai Paris Bangkok and Hong Kong
Major commercial areas
The following are the major commercial areas in and around Bangalore
Central Business District Seshadripuram Jayanagar JP Nagar Yeshwantapura
Eastern Suburb Marathalli-sarjapur ORR Sarjapur Road Whitefield and Brookfield
Secondary Business District Indiranagar JP Nagar RT Nagar Vijayanagar
Northern Suburb HRBR Layout Bellary Road Jakkur
Southern Suburb Mysore Road Hosur Road
West Suburb BEL Factory HMT Layout
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Bangalore Development Authority
[7]
33 Key issues
The recessionary trends in 2007 across the world had also adversely affected the entire real estate
market in Bengaluru All the three categories of residential commercial (office space) and retail had
experienced slump in market and the real estate market in several erstwhile prime locations of the citywere facing oversupply situation and a drastic fall in the capital as well as rental values
With the revival of the industry and economy the residential market is expected to witness a jump
across all the areas in Bengaluru as per CRISILrsquos analysis The eastern and southern areas are
estimated to emerge as up-scaled developments as these areas are expected to see maximum
supply in the next three years
Good quality developments have been the key feature of Bangalorersquos commercial developments The
boom in IT sector especially in South India has enabled the city to have a metropolitan culture which
brings along the urban demands like malls and multiplexes
Recently the market in Bangalore has stabilized to a large extent after the sudden jump in prices post
recession However this is cyclical in nature and the saturation of IT services has led to a scenario
where there would not be much increase in the lease rentals
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Bangalore Development Authorit
4 Project
41 Description of
It is proposed that for the redev
over to the developer on long
Finance Design Construction
period Ownership of the land wi
BUP area will be transferred b
proposed commercial develop
vendors
42 Components o
The project would be develope
basis The structure of the mode
Figure 4-1 Development struc
43 Description of
The site is located at Indiranaga
the main commercial centres in
Road in the North Old Airport
the East Indiranagar is located
famous for housing the Somes
and educational institutions like
y
the project
lopment of BDA Complex at Indiranagar the la
erm lease basis The selected developer woul
and Operation amp Maintenance of the project t
ll always be with BDA After the lease period th
ack to BDA free of cost We have assumed
ent shall be reserved for BDA for rehabilit
f the project
on a Design Build Finance Operate and Tra
l has been illustrated below
ture of the Commercial Complex
the site
r a suburb of Bangalore located about 4 km ea
the city This medium sized suburb is enclose
oad in the South Halasura in the West and Je
within a diameter of few kilometre radii from the
ara Temple several reputed hospitals like Amrj
r Ambedkar College KH Patel College etc
[8]
nd would be handed
d be responsible for
hroughout the lease
e land along with the
hat a portion of the
tion of the existing
sfer model on PPP
t of MG road one of
by the Old Madras
vanbheemanagar in
airport The place is
yoti Vijaya and ESI
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Bangalore Development Authority
[9]
The site is situated at a junction near a residential area and is frequented by elders and youngsters
alike The present building consists of Motor driving schools RTO office computer vendors and travel
agents There is a water tank situated in the site
Figure 4-2 BDA Complex at Indiranagar
44 Interaction with stakeholders
CRISIL conducted a series of interactions with the stakeholders namely the BDA officials Citizens
and the establishment owners The interactions revealed that the building has to undergo
redevelopment The condition of the BDA office is not up to the standards expected and the officials
complained about leaks and short circuits The establishment owners suggested that the building was
planned with less road facing establishments due to which they are not able to attract footfalls
45 Case studies
In order to generate revenues from the real estate value of the land in the ownership of the ULBrsquos
commercial projects have been developed on a PPP basis on these lands Typically under such
arrangements the ULB would have identified a site under its ownership where a property for
commercial use can be developed Commercial development would include the development of
shopping complexes markets bus terminals multi-level car parking townships etc
Under such an arrangement the ULB would require of the private developer to undertake
construction of a commercial complex on the land The land would be provided by the ULB to the
private operator on a lease basis The ULB would provide specifications on the nature and type of
commercial development required The private developer would need to bear all the capital costs
associated with the construction of the commercial complex Post construction of the commercial
complex as per the arrangement the private developer would either hand over the constructed
facility to the ULB or would sub-lease the property The private developer would be required to make
to the ULB an upfront payment or provide a share in the ULB revenues earned from sub-leasing the
properties
The following case study compiled by the Ministry of Urban Development Government of India
highlights the development of municipalurban lands on a PPP basis
Category Details
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Bangalore Development Authority
[10]
Category Details
Project Construction of Commercial Complex at Ranipura Market
Cost of
ProjectRs 1500 lakhs
Description
The land was allotted to the concessionaire to construct the Commercial Complex by
the Corporation
Corporation continues to own the land
After the concession period the built-up structure (Commercial Complex) will be
transferred to the Corporation by the concessionaire
The concessionaire was given the right to recover its investment from the premium
received for ldquoRight of Occupationrdquo of the constructed shops
At the time of award of concession it was estimated that a profit of Rs 200 lakh will
be accrued from the venture which will be shared by the concessionaire with the
Corporation
The Corporation is expected to receive a profit share of Rs 100 lakh from the
concessionaire
Source Compendium on Public Private Partnership in Urban Infrastructure Case Studies Ministry of Urban
Development Government of India in association with Confederation of Indian Industry (CII)
We have also studied another case wherein the development affordable housing units was structure
on a PPP basis by the Pimpri Chinchwad New Township Development Authority (PCNTDA)
451 Public private partnership in affordable housing under Jawaharlal
Nehru National Urban Renewal Mission (JNNURM)
The Pune metropolitan region comprising Pune and Pimpri Chinchwad cities is one of the fastest
growing urban agglomerations in India A major automobile and auto-ancillary hub and a well-known
international education destination it also ranks among the top IT destinations of India Besides the
region has many industrial clusters housing industries focused on FMCG engineering agro-based
technology
The Pimpri-Chinchwad New Town Develompent Authority (PCNTDA) a key development authority of
the PMR is responsible for development of peri-urban especially in its north In line with the
phenomenal growth of the region and its strident aspirations PCNTDA has envisioned the
development of an integrated township at Sector 12 spanning 53 hectares Given the success of the
Public Private Partnership (PPP) model in involving private sector participation for development based
projects PCNTDS proposed to develop the integrated township on PPP basis
With this objective PCNTDA appointed the consortium of CRISIL Risk and Infrastructure Solutions
Limited (CRIS) Omkar Associates and Creations as project development consultants for the
development of an eco-friendly affordable township at Bhosari Sector 12 CRISILrsquos role was to
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Bangalore Development Authority
[11]
undertake a detailed demand assessment financial feasibility project structuring and management of
the bid process
The concept
Keep in mind the PCNTDArsquos vision CRIS designed integrated township such that it compriseshousing untis for the poor affordable housing units for the general public a primary health care
centre a hospital and a school
As per the structure the Developer shall construct 5040 housing units under the Basic Services for
Urban Poor (BSUP) scheme of JNNURM PCNTDA shall transfer the amount of grant sanctioned for
developing these units under the JNNURM scheme to the developer The remaining project cost of
the BUSP units was to be financed by the developer
In addition to this the Developer shall also construct affordable housing units as per pre-specified
specifications and hand over to PCNTDA free of cost The developer shall also construction the
physical and social infrastructure for the integrated township thereby ensuring good road adequate
water supply an efficient sewerage system as well as schools and hospitals The project shall bedeveloped in a manner such that it has minimum possible impact on the surrounding environment and
is in harmony with nature To this end the developer shall undertake eco-friendly initiatives including
rain water harvesting use of solar power environment-friendly materials and vermin-composting
The project
The developer has to complete the BSUP housing units within 2 years and hand over to the PCNTDA
For the remaining portion of the land PCNTDA shall execute a lease deed for 99 years with the
developer The lease rights shall be granted to the developer in phases upon completion of
milestones as defined in the project agreement The main scope of work for the developer shall
include
Master planning for the entire 53 hectares of land and construction of common physical and
social infrastructure for the entire area
Development construction and marketing of 795 lakhs square meters of integrated real
estate space
Construction and handing over of 5040 housing units under the BSUP scheme of JNNURM
on a separate layout carved out of the said land PCNTDA will provide the developer the grant
sanctioned by the Government of India for these housing units
Successful selection of private developer
With the objective of undertaking this project on a PPP basis in a transparent and objective manner
PCNTDA launched a three-cover Request for Proposal in June 2009 The bidding parameter was theconstructed ldquoCarpet Areardquo in ldquosquare metersrdquo of affordable housing units that the bidder shall
construct and hand over free of cost to PCNTDA
The tender received good response from four interested bidders Of the four bidders two bidders
were adjudged technically and financially capable and short-listed for the final stage The bidder with
the highest construction carpet area offered to PCNTDA was selected The successful bidder quoted
a carpet area of 130599 square meters of affordable housing units
Thereby the PCNTDA derived a value of 7369 housing units (including 5040 BSUP units) a school
and a hospital for the BSUP units a school and hospital for the general public and development of
public amenities
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Bangalore Development Authority
[12]
Value addition to PCNTDA
In commercial terms PCNTDA saved (i) Rs 190 crores as the gap amount required to fund the BSUP
scheme (ii) Rs 210 crores of construction cost of affordable housing units and (iii) Rs 100 crores on
the development of physical and social infrastructure In addition to this PCNTDA shall receive anupfront payment of Rs 50 crores from the successful bidder The project structure also protects
PCNTDA from cost escalation risks valuation risks and engineering risks
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Bangalore Development Authorit
5 Market asse
51 Bangalore gro
The growth of Bangalore has be
from the growth in population in
to the economic opportunities it
Bangalore an obvious choice for
Bangalore has grown at averag
decades It is projected that B
explosive growth has meant th
pressure
Figure 5-1 Population growth
Source City Development Plan Ba
The city leads the country in
available However Bengaluru a
of projects under development a
983089983086983094983091 983089983086983096983097 983090983086983092
983088
983089983088
983090983088
983091983088
983092983088
983093983088
983094983088
983095983088
983096983088
983097983088
983089983097983088983089 983089983097983089983089 983089983097983090983089
983120 983151 983152 983157 983148 983137 983156 983145 983151 983150 983145 983150 983116
983137 983147 983144 983155
y
sment
th overview
en unprecedented in the past couple of decades
the last century Bangalore continues to attract t
offers This is also supported by a salubrious
not only businesses but also for people
compounded annual growth rate (CAGR) of 3
ngalorersquos population will cross the 10 million
at the infrastructure in Bangalore has been p
in Bangalore between 1901 and 2011
galore Development Authority and Census of India
ffice space with 738 million square feet of
lso has 22 per cent of the available space vacan
nd reduced demand
983091983086983089 983092983086983089983089983095983086983096983094
983089983090983086983088983094
983089983094983086983094983092
983090983097983086983090983090
983092
983089983097983091983089 983089983097983092983089 983089983097983093983089 983089983097983094983089 983089983097983095983089 983089983097983096983089 983089983097
[13]
This fact is laid bare
rongs of people due
eather which makes
58 in the last three
mark by 2021 This
t under tremendous
commercial capacity
with a large number
983086983091
983093983094983086983096983094
983096983092
983097983089 983090983088983088983089 983090983088983089983089
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Bangalore Development Authority
[14]
52 Demand projections
Bangalore is the largest commercial market and third largest residential market in India The city has
typically been preferred by home buyers because of its favorable socio-economic conditions and a
salubrious climate In recent years Bangalore has attracted a large influx of population engaged inthe thriving IT sector City residential demand is more end-user driven with moderate price
appreciation The average residential real estate price in the city is 20-25 lesser than in Delhi and
Mumbai In the recent National Housing Bank Residex the index indicating property prices across key
cities in India Bangalore witnessed a mere 1 YoY fall in residential prices in 2011-12 Mumbai saw
an 116 YoY jump in home prices while Delhi witnessed 358 YoY increase during 2011-12 The
city witnessed tremendous growth in terms of population and the number of companies setting up
offices there Thus the ongoing projects such as Bengaluru metro rail project various flyovers and
the under-pass construction activities in Outer Ring Road (ORR) CNR and BHEL circles would ease
the congestion and provide better connectivity for all commuters This will boost real estate demand in
and around Bangalore city
In 2011-12 Bangalorersquos commercial market exhibited resiliency with comparatively high demand
levels despite the discomfort in the market on account of global uncertainty Though commercial
property demand in Bangalore is largely dependent on ITITES sectors the share of manufacturing is
increasing at a faster pace and thereby giving further boost to office space demand According to real
estate consultancy firm Knight Frank the manufacturing sector witnessed a quantum leap as its share
of absorption increased from 3 in 4QCY10 to 23 in 4QCY11 The absorption of commercial space
has gone up from 5mn sq ftquarter in CY09 to 7mn sq ftquarter in CY11 thanks to sustained
demand for Bangalore commercial space which witnessed 43 CAGR in absorption level over CY09-
11 Subdued supply during the first two quarters of 2011 coupled with high absorption level has
substantially lowered the vacancy level in the city (bringing it down from 17 in CY10 to 12 in
CY11) With the expansion of existing operations in the IT sector and the entry of newer sectors dueto renewed optimism in the market we expect the level of absorption of office space to remain stable
Revised Master Plan-2015 for the BMA has been published This document gives the likely growth to
take place in various areas of the BMA The population of the BMA is expected to grow from 61 lakh
in 2001 to 122 lakh in 2025
The proposed growth rate and the ever changing urban scenario is bound to increase the commercial
space demand in the region The site at Indiranagar is situated at a junction and has two road facing
sides which makes it very attractive for commercial development The site is also huge in size and
can easily accommodate a mall
Hence in view of the above it can be safely recommended that the site would generate huge interest
within the developers
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Bangalore Development Authority
[15]
6 Project financials
The project costs have been largely derived from the costs indicated by the Bangalore Development
Authority (BDA)
61 Cost estimation
The estimated cost of development of the project is Rs 23931 lakhs The costs have been outlined
below
Table 6-1 Project Cost of the proposed development
Particular Amount inRs Lakhs
Construction Cost 19967
Land Development 793
Other Infrastructure 50
Total Hard Costs 20810
Contingencies 3121
Total Project Development Cost 23931
Apart from the above mentioned project development cost the Concessionaire would incur the
development premium and Interest during construction (IDC) cost
Particulars 25 years 33 Years 66 years
Upfront Premium (Rs Lakh) 965000 1230000 600000
IDC Cost (Rs Lakh) 315600 361500 259100
Revenue Share every year 15 15 15
Total Project Cost (Rs Lakhs) 36737 39846 33022
62 Revenue stream
The Revenues to the Developer would accrue from the revenue earned from the lease rentals and the
maintenance charges which the developer earns from the tenants The total revenue from both the
heads has been arrived at Rs 6720 Lakhs for the base year It has been assumed that the
occupancy of the commercial complex 80 in the base year and stabilizes to a maximum of 95towards the end of the concession period The average lease rentals have been assumed at Rs 70
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Bangalore Development Authority
[16]
per square feet and the maintenance charges have been assumed at Rs 225 per square feet Both
the revenues are escalating at the rate of 10 per annum The income statement for the developer
has been provided in Annexure 1
63 Viability assessment
The viability assessment has been carried out over two concession period ie 25 33 and 66 years
The debt to equity ratio has been assumed to be 121
The project level internal rate of return (IRR) IRR of equity and the net present value of the equity
have been worked out
Table 6-2 Viability assessment for BDA complex at Indiranagar
Concession Period Project IRR Equity IRR NPV of Equity
Upfront Premium
(Rs in Lakhs)
25 years 1777 2007 96 9650
33 years 1818 2006 108 12300
66 years 2101 2333 5285 6000
It is evident that the project is viable for the developer for all the 3 concession periods In case of the
25 year concession period it is estimated that the developer would pay BDA an estimated upfront
premium of Rs 9650 lakhs Similarly the developer would pay BDA an amount of Rs 12300 lakhsand Rs 6000 lakhs for the concession periods of 33 years and 66 years respectively
64 Ranking of options based on commercial viability
Having assessed the project for two concession periods of 25 33 and 66 years we are of the view
that the 25 year concession option will be more suitable since it allows the developer to make
reasonable returns on the projects and his own investments along with a sizeable upfront premium for
BDA BDA would be in a position to renew the contract or retender the project after 25 years which
may enable BDA to earn as per the prevailing market rates
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
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Bangalore Development Authority
[17]
7 Statutory amp legal framework
71 Legal amp regulatory framework
Development Control Regulations (DCR)
As per RMP ndash 2015 published by BDA the project site has been classified as ldquoCommercial Businessrdquo
As per the definitions of RMP-2015 Commercial Business Zone allows development of Commercial
and Corporate offices Retail Shopping Complexes Restaurants and Hotels Convention centres and
banquet halls financial institutions Cinema and multiplexes places of assembly exhibition centres
Entertainment and amusement centres and stores
Permissible land uses under Commercial (Business) Zone as per RMP-2015 of BDA
Main land use category C3
Other land uses permissible (as main land use) R I-3 T3 amp U4
If the road width is less than 120 m and plot area is less than 240 square metre then C2 I-2
R and U4 only are allowed
The plot size is 24000 square metre Presently it has 18m wide access road The applicable DCR for
the plot as per proposed road width is as follows
Table 7-1 Plot details of Indiranagar site
Sr No Particulars Description Unit
1 Land Use Commercial Business
2 Road Width 18 Metre
3 Permissible FAR 325
4Permissible ground
coverage50
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
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Bangalore Development Authority
[18]
8 Indicative environmental amp social impacts
81 Environmental impacts
The proposed development is in line with the layout of BDA Due to the reasonably large site area the
development will be on the higher side A set back of 50 is found to be acceptable for the site
however an Environmental Impact Assessment studies have to be undertaken for the sites Since
already a commercial complex is existent redevelopment of the complex would need demolition of
the existent structures Hence a suitable disposal of construction and debris has to be undertaken by
the developer Also a Green building can be developed to ensure minimal effect on nature
82 Social impactsDuring the construction period the existing establishments have to be shifted or compensated
temporarily Hence a clear resettlement plan has to be decided before the implementation of the
project It is envisaged that if due care is taken about the existing tenants the development would go
smoothly
83 Mitigation measures
It is necessary that the impacts are identified early and action plans are prepared for their mitigation in
advance For instance for environmental impacts the BDA may insist on the developer to use clean
and green building technologies
It is also necessary that the project development plan is also accompanied by a Relocation and
Rehabilitation plan which will layout detailed action points with the requisite intervening entity
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
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Bangalore Development Authority
[19]
9 Operating framework
91 Risks amp mitigation
The risk framework for this project has been outlined below
Table 9-1 Risk mitigation measures
Risk Category Risk implication Mitigation measure
Sponsor risk BDA scraps the project Termination payments in case of BDA scrapping the
project
Environment
risk
Adverse impact on
surrounding environment
Penalty clauses in case of default on
Concessionairersquos part
Environmental Impact Assessment to identify all
risks in advance
Political riskChange in government may
put project in jeopardy
Termination payments in case of project being
scrapped
Force
majeure riskProject is abandoned
Force majeure clauses in the concession
agreement
Operating riskThe operations of the
facility are stalled
Performance security clause in case of default on
Concessionairersquos part
Design risk Overdesign of the projectProject design to be finalized in mutual agreement
of concessionaire and BDA
Completion
risk
Completion of project is
delayed inconvenience to
citizens and tenants
Penalty clauses for time overrun in the concession
agreement
Cost overrun
risk
Project cost increases
beyond reasonable limits
Project cost increment ceiling to be specified in the
concession agreement Increase beyond this ceiling
to be borne by the developer No change in revenue
sharing
92 Indicative project structure
The best approach for such a large ticket project would be for the BDA to become a key actor in the
entire process of development The BDA may ask the private sector partner to form a Special
Purpose Company where the equity will be brought in by the private sector developer The designs
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
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Bangalore Development Authority
[20]
should be left to the developer and BDArsquos role would be in approving the same in accordance with the
Development Control Regulations
The SPC will develop and maintain Complex throughout the concession period The tenants would
pay the developer a sub-lease premium or lease rentals which will be escrowed in a separate accountand can be withdrawn based on the revenue sharing structure adopted
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Bangalore Development Authorit
10 Way ahead
101 Project develo
The key task for BDA is to ap
feasibility of the project Once t
the bid process
Figure 10-1 Project developm
The transaction advisor shall stralso prepare the relevant bid
management on behalf of BDA
102 Procurement
The foremost step for BDA is
feasibility The detailed financial
parameter Also an optimum str
bid documents would be prepar
process be conducted as a 2 sta
983105983152983152983151983145983150983156983149983141983150983156 983151983142 983156983154983137
983108983141983156983137983145983148983141983140 983142983141983137983155983145983138
983155983156983154983157983139983156983157983154983145983150983143
983120983154983141983152983137983154983137983156983145983151
983123983141983148983141983139
y
pment framework
oint a Transaction Advisor in order to conduc
e financial numbers are acceptable BDA BDA
nt framework
ucture the project upon completion of the feasibidocuments The transaction advisor shall un
nd will assist in appointment of the private secto
lan
to appoint a Transaction Advisor for the co
feasibility would determine the tentative revenue
cture would be arrived at Post the approval of
d for the selection of the developer It is recom
ge process involving Technical qualification and
983155983137983139983156983145983151983150 983137983140983158983145983155983151983154
983148983145983156983161 983155983156983157983140983145983141983155 983137983150983140 983152983154983151983146983141983139983156
983150 983151983142 983138983145983140 983140983151983139983157983149983141983150983156983155
983145983151983150 983151983142 983152983154983145983158983137983156983141 983155983141983139983156983151983154 983152983137983154983156983150983141983154
[21]
a detailed financial
should proceed with
ility studies and shallertake bid process
partner
nducting the project
for BDA and the bid
easibility Report the
mended that the Bid
inancial proposal
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
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B a n g a l o r e D e v e l o p m e n t A u t h o r i t y
B D A s h o u l d i n i t i a t e t h e p r o c e s s o f a p p o
i n t i n g a t r a n s a c t i o n a d v i s o r a t t h e
e a r l i e s t T h i s p r o c e s s c a n b e c o m p l e t e d i n 2 m o n t h s
O n c e t h e T A
i s i n p l a c e
t h e B D
A s h o u l d a l l o w
a t l e a s t 4 m o n t h s f o r t h e p r e p a r a t i o n o f f e a s i b i l i t y p r o j e c t s t r u c t u r i n g a n d b i d d o c u m e n
t s
O n c e t
h e b i d d o c u m e n t s a r e i n p l a c e t h
e B D A
s h o u l d i n i t i a t e t h e p r o c e s s
o f s e l e c t i n g t h e p r i v a t e s e c t o r p a
r t n e r w h i c h c a n b e c o m p l e t e d o v e r a 4 m o n t h
p e r i o d
T h e c u
r r e n t p r o c u r e m e n t p l a n i s s p r e a d
o v e r 1 1 m o n t h s w h i c h c a n b e s
h o r t e n e d d e p e n d i n g o n t h e m a n n e r i n w h i c h B D A
m a k e s d e c i s i o n
s r e l a t i n g t o
a p p o i n
t m e n t o f T A a n d p r i v a t e d e v e l o p e r
A c t i v i t y
M 1
M 2
M 3
M 4
M 5
M 6
M 7
M 8 M
9
M 1 0
M 1 1
M 1 2
A p p o i n t m e t o f t r a n s a c t i o n a d v i s o r
D e t a i l e d t e c h n o - e c o n o m i c f e a s i b i l i t y a n d
b i d d o c u m e n t p r e p a r a t i o n
B i d p r
o c e s s m a n a g e m e n t
S e l e c t i o n o f p r e f e r r e d b i d d e r a n d f o r m a t i o n o f S P C
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
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B a n g a l o r e D e v e l o p m e n t A u t h o r i t y
1 1
A n n e x u r e 1 ndash C a s h - f l o w
s t a t e m e n t
R e v e n u e H e a d
S u b H e a d R a t e
U n i t
3 1 - M a r - 1 4
3 1 - M
a r - 1 7
3 1 - M a r - 2 2
3 1 - M a r - 2 7
3 1 - M a r - 3 2
3 1 - M a r - 3 7
3 1 - M a r - 4 2
3 1 - M a r - 4 7
3 1 - M
a r - 5 2
3 1 - M a r - 5 7
3 1 - M a r - 6 2
C o m m e
r c i a l S p a c e
O c c u p a
n c y
P e r c e n t a g
0
9 0
9 5
9 5
9 5
9 5
9 5
9 5
9 5
9 5
9 5
C o m m e
r c i a l s p a c e l e a s e d o u t
s q f t
-
7 2 0 6
9 0
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6
0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
D e p o s i t f o r L e a s e
( N o o f m o n t h s r e n t )
1 2
A v e r a g e
L e a s e R e n t a l s
7 0
R s p s f p e r m o n t h
E s c a l a t i o n
1 0
M a i n t e n
a n c e c h a r g e s
2 2 5
R s p s f p e r m o n t h
R e v e n u e f r o m
L e a s e R e n t a l
R s
L a k h s
-
8 8
6 3
1 5 0
6 8
2 4 2
6 6
3 9 0
8 1
6 2 9
4 1
1 0 1 3
6 7
1 6 3 2
5 3
2 6
2 9
2 0
4 2 3 4
3 5
6 8 1 9
4 7
R e v e n u e f r o m
M a i n t e n a n c e c h a r g e s
-
2 8 5
4 8 4
7 8 0
1 2
5 6
2 0
2 3
3 2
5 8
5 2
4 7
8 4
5 1
1 3 6
1 0
2 1 9
2 0
T o t a l R
e v e n u e
-
9 1 4 8
1 5 5 5 2
2 5 0 4 6
4 0 3 3 8
6 4 9 6 4
1 0 4 6 2 5
1 6 8 5 0 0
2 7
1 3 7 1
4 3 7 0 4 6
7 0 3 8 6 7
R e v e n
u e H e a d
S u b H e a d R a t e
U n i t
3 1 - M a r - 6
7
3 1 - M a r - 7 2
3 1 - M a r - 7 8
3 1 - M a r - 7 9
C o m m e r c i a l S p a c e
O c c u p a n c y
P e r c e n t a g
9 5
9 5
9 5
9 5
C o m m e r c i a l s p a c e l e a s e d o u t
s q f t
7 6 0 7 2
8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
D e p o s i t f o r L e a s e
( N o o f m o n t h s r e n t )
1 2
A v e r a g
e L e a s e R e n t a l s
7 0 R s p s f p e r m o n t h
E s c a l a
t i o n
1 0
M a i n t e
n a n c e c h a r g e s
2 2
5 R s p s f p e r m o n t h
R e v e n u
e f r o m
L e a s e R e n t a l
R s
L a k h s
1 0
9 8 2 8 2
1 7
6 8 7
9 4
3 1
3 3 5
2 7
3 4
4 6 8
8 0
R e v e n u
e f r o m
M a i n t e n a n c e c h a r g e s
3 5 3 0 2
5 6 8
5 4
1 0 0 7
2 1
1 1 0 7
9 3
T o t a l R e v e n u e
1 1 3 3 5 8 4
1 8 2 5 6 4 8
3 2 3 4 2 4 8
3 5 5 7 6 7 2
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[x]
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[y]
Disclaimer
CRISIL Risk and Infrastructure Solutions Limited (CRIS) has taken due care and caution in preparation of this Report for
Bangalore Development Authority which is under the purview of the Urban Development Department Government of
Karnataka This Report is based on the information documents provided by the Company andor information available publicly
andor obtained by CRIS from sources which it considers reliable CRIS does not guarantee the accuracy adequacy or
completeness of the information documents Report and is not responsible for any errors or omissions or for the results
obtained from the use of the same The Report and results stated therein are subject to change CRIS especially states that it
has no financial liability whatsoever to the Company users of this Report This Report is strictly confidential and should not be
reproduced or redistributed or communicated directly or indirectly in any form or published or copied in whole or in part
especially outside India for any purpose
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Registered Office ndash Mum
CRISIL House Central AvenueHiranandani Business ParkPowai Mumbai- 400 076Phone 91-22-3342 3000Fax 91-22-3342 3810
New Delhi
The Mira G-1 1st Floor Plot NoIshwar Nagar Mathura Road
New Delhi - 110 065 IndiaPhone 91-11-4250 510091-11-2693 0117 - 121Fax 91-11-2684 2213
Hyderabad
3rd Floor Uma ChambersPlot No 9amp10 Nagarjuna HillsNear Punjagutta Cross RoadHyderabad - 500 082Phone 91-40-40328200Fax 91-40-2335 7507
Bengaluru
W-101 Sunrise Chambers22 Ulsoor RoadBengaluru - 560 042Phone 91-80-2558 0899Fax 91-80-2559 4801
Ahmedabad
706 Venus AtlantisNear Reliance Petrol PumpPrahladnagarAhmedabad -Phone 91-79-4024 4500Fax 91-79-2755 9863
Visit us atwwwcrisilcom
ai
1 amp 2
About CRISIL Infrastructu
CRISIL Infrastructure Advisory
CRISIL Risk and Infrastructure
Limited a 100 subsidiary of
Indiarsquos leading Ratings Resear
Policy Advisory Company
CRISIL Infrastructure Advisory
premier advisor focusing on po
well as commercial and contra
the areas of transport energyinfrastructure We also provide
international firms planning inv
India Over a period of time C
Infrastructure Advisory has buil
position for itself in these doma
considered the preferred cons
governments multilateral agen
sector clients We have extend
operations beyond India and ar
other emerging markets in Afri
and South Asia
re Advisory
is a division of
Solutions
RISIL Limited ndash
ch Risk and
is Indiarsquos
licy issues as
tual issues in
nd urbansupport to
stments in
ISIL
t a unique
ins and is
ltant by
cies and private-
ed our
e present in
a Middle East
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
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Bangalore Development Authority
[1]
1 Executive summary
Infrastructure Development Department proposes to strengthen the project development process inthe Departments responsible for implementing Infrastructure Projects through Public Private
Partnership (PPP) The PPP concept is relatively new and the implementing officers require
necessary insight orientation and assistance into the project development for effective marketing and
implementation of the projects
CRISIL Infrastructure Advisory a division of CRISIL Risk and Infrastructure Solutions Limited (CRIS)
has been appointed by the Infrastructure Development Department Government of Karnataka to
work closely with the Bangalore Development Authority for the assignment ldquoInstitutional Strengthening
and Sector Specific Inventory for PPP Mainstreaming in Sectorsrdquo Under this BDA has identified a set
of nine projects for which pre-feasibility assessments are to be carried out Redevelopment of BDA
Complex at Indiranagar is one of the nine projects proposed by BDA
In line with the objectives of BDA the BDA Complexes were built at strategic locations and near
residential localities in order to provide a one stop solution for shopping Hence facilities like motor
training schools travel agents RTO etc started operating within the complexes The complexes are
now in dilapidated condition and in order to provide better facilities to the citizens BDA proposes to
redevelop the old BDA Complex at Indiranagar
This report examines the possibility of redeveloping the commercial complex on a PPP Basis In order
to bring in private sector participation in the redevelopment of the complex it is proposed that the land
is handed over to the developer on long term lease basis The selected developer would be
responsible for Finance Design Construction and Operation amp Maintenance of the project
throughout the lease period Ownership of the land will always be with BDA After the lease period
the land along with the BUP area will be transferred back to BDA free of cost One portion of the
proposed commercial development shall be reserved for BDA for rehabilitation of the existing
vendors
For the purpose of cost estimation we have studied the feasibility report developed by SREI
Infrastructure Finance Limited and have also consulted with the BDA The estimated cost of
development of the project is Rs 20810 lakhs
The revenues to the developer would accrue from the revenue earned from the lease rentals as well
as maintenance charges The total revenue from both the heads has been arrived at Rs 6720 Lakhs
for the base year Occupancy of 80 has been assumed for the base year which will stabilize at a
maximum of 95 towards the end of the concession period The average lease rentals have been
assumed at Rs 70 per square feet and maintenance charges have been assumed at Rs 225 per
square feet Appropriate escalation factors have been assumed for both revenue heads
The viability assessment has been carried out over three concession periods of 25 33 and 66 years
The debt to equity ratio has been assumed to be 121
The viability assessment has been worked out with determinants like the project level internal rate of
return (IRR) IRR of equity and the net present value of the equity The project is found to be viable for
all the 3 concession periods In case of the 25 year concession period it is estimated that the
developer would pay BDA an upfront premium of Rs 9650 Lakhs For the concession period of 33
and 66 years the upfront premium to be paid by the developer would be Rs 12300 Lakhs and Rs
6000 lakhs respectively
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Bangalore Development Authority
[2]
A key issue that the BDA will need to address is the relocation of the existing tenants of the
complexes The BDA needs to prepare a rehabilitation plan for the existing tenants and should also
clearly lay out the rehabilitation mechanism for these tenants As part of the project configuration we
have assumed that a certain proportion of the developed spaces would be handed over to the BDA
which can be utilized for the rehabilitation of the existing tenants However if the BDA chooses to
accommodate these tenants in the redeveloped facility the commercial terms may have to be in line
with the rentals being charged to the new tenants We are of the opinion that the BDA should make
an informed decision on this only after a detailed feasibility has been conducted for the site
We have examined the way forward for the project We propose that the BDA should appoint a
transaction advisor for the project who will conduct a detailed feasibility for the project and would also
facilitate the appointment of the developer through bid process management
The procurement plan for the project has been developed to be spread over 11 months which can be
shortened depending on the swiftness of decision making at BDA
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Bangalore Development Authority
[3]
2 Introduction
CRISIL Infrastructure Advisory a division of CRISIL Risk and Infrastructure Solutions Limited (CRIS)
has been appointed by the Infrastructure Development Department Government of Karnataka to
work closely with the Bangalore Development Authority for the assignment ldquoInstitutional Strengthening
and Sector Specific Inventory for PPP Mainstreaming in Sectorsrdquo Under this BDA has identified a set
of nine projects for which pre-feasibility assessments are to be carried out
In order to provide advanced recreational facilities and services to the citizens BDA has proposed the
redevelopment of its Complexes through Public Private Partnership model Redevelopment of BDA
Complex at Indiranagar is one of the nine projects proposed by BDA
21 Project idea
Bangalore Development Authority (BDA) is one of the premier urban planning and development
agencies that oversee the growth of the city The BDA came into being with effect from 6th January
1976 under a separate Act of the State Legislature viz the BDA Act 1976 This Authority combined in
itself the Planning functions of the City Planning Authority and the developmental functions of the
erstwhile City Improvement Trust Board (CITB)
The key objectives of the authority as per the BDA Act shall be to promote and secure the
development of the Bangalore Metropolitan Area (BMA) and for that purpose the Authority shall have
the power to acquire hold manage and dispose of moveable and immoveable property whether
within or outside the area under its jurisdiction to carry out building engineering and other operations
and generally to do all things necessary or expedient for the purposes of such development and for
purposes incidental thereto
In line with the objectives of BDA the BDA Complexes were built at strategic locations in near
residential localities in order to provide a one stop solution for shopping Hence convenient stores like
motor training schools travel agents RTO etc started operating within the complexes The complexes
are now in dilapidated condition and in order to provide better facilities to the citizens BDA proposed
to develop the old BDA Complex at Indiranagar The project is also an outcome of reducing
commercial spaces in key residential areas
22 Approach amp methodologyThe broad approach and methodology followed for study of these projects has been depicted
graphically below
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Bangalore Development Authorit
Figure 2-1 Approach and Met
23 Review of pre
Bangalore Development Authori
development works identified by
29102010 BDA retained Tand
identified projects namely ldquoDevel
TUSPL had submitted their Fe
estimations The report submitte
been presented as below
The project cost indicate
to reflect the market
contingencies prelimina
The financials indicated
Developer and BDA an
given the market conditi
The report does not cle
1062701 sq ft And an
2440023 square metre
officials
1 The cost incurred towards upfront pre
figure
Study of existingreports
y
odology
ious studies
ty had invited proposals for appointment of Co
BDA vide Tender Notification No BDAEMTA-
on Urban Solutions Pvt Ltd (TUSPL) as Cons
opment of Commercial Complex at Indiranagar
sibility Report for the Indiranagar site along
d by TUSPL was studied in detail and the CRISI
d in the report is Rs 39165 Lakhs The project c
rates The Revised project cost is Rs 239
ry and pre-operative expenses
in the Feasibility Report is assuming a revenu
an upfront premium which the developer woul
ns and rates this has been revised
arly mention the area of the plot It indicates a
open land development area of 131322 sq f
has been assumed for the pre-feasibility in c
ium and the interest during construction period is not includ
Discussions withBDA personnel
Be
a
Finalrecommendation
[4]
nsultants for various
3802010-11 dated
ultant for one of the
angalorerdquo
ith the designs and
Lrsquos observations has
ost has been revised
11 Lakhs including
share between the
ld provide However
construction area of
t Hence an area of
nsultation with BDA
d in the above mentioned
lock coststimation
inancialsessment
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
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Bangalore Development Authority
[5]
3 Sector profile
The city of Bangalore has witnessed very rapid growth The city today is home to over 84 million
people (2011 Census) The salubrious weather and the rapid concentration of economic activities in
Bangalore have fuelled the growth of Bangalore As one of the worldrsquos fastest growing cities
Bangalore is experiencing a steady growth in population
Bangalore has been substantially affected by globalization and rapid urbanization over the last
decade The demand for services and quality of life is not confined to the central core or the erstwhile
Bangalore Mahanagra Palike jurisdiction but spreads beyond into the peri-urban areas the
Metropolitan Area and outwards into Bangalore Metropolitan Region With the emergence of the
Bangalore-Mysore Infrastructure Corridor the Bangalore International Airport and the planned ring
roads urbanization has sprawled out
Banaglore has incontestable advantages to develop into an international metropolis but at the same
time faces significant constraints The city is embedded in its history and depicts the greatness of a
truly Indian city established before the invasions and colonization It has a diverse set of activities
from silk to aeronautics from clothing to information technology and is a gauge of dynamism and
solidity of the city Natural drainage climatic advantage and the availability of water in the Cauvery
baisn are factors assisting in improving the quality of life
31 Industry overview
Bengaluru is countryrsquos third leading realty market With the IT boom and corresponding growth of the
economy saw large-scale increase in the cityrsquos population mostly due to migration from across India
Bengalurursquos population grew about 35 percent in the last six years
This increase in population along with steady demand and restricted supply led to saturation in central
Bengaluru region and pushed development to peripheral areas like Whitefield Sarjapur road Outer
Ring Road (ORR) Bannerghatta Road Hosur Road
With the opening of International Airport Real estate in North Bangalore (Bellary Road to Yelahanka)
has also witnessed the launch of numerous projects with apartments and villas Given the improved
infrastructure accessibility and the future potential for this area the area has been attracting both the
segments of investors and end-users alike
The city leads the country in office space with 738 million square feet of commercial capacityavailable However Bengaluru also has 22 per cent of the available space vacant with a large number
of projects under development and reduced demand
32 Regional profile
Bengaluru (formerly Bangalore) also known as Garden City for its beautiful gardens is the
administrative industrial commercial educational and cultural capital of Karnataka and located on
the Deccan Plateau in the South-Western part of India Bengaluru is Indias third most populous city
fastest growing and fifth largest metropolitan area with population of about 57 million (as per 2001
census) The population is expected to reach around 11 million and 22 million in 2021 and 2041respectively
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Bangalore Development Authority
[6]
With ever increasing boundaries and gross domestic product of 59123 billion in FY 06-07 Bengaluru
has some well-recognized IT companies and numerous public sector heavy industries aerospace
telecommunications and defence organisations located within Bengaluru also has some well known
colleges and research institutes
Geography
With an average elevation from the sea level of 920 m and total area of 741 km2 Bengaluru is located
in the south-eastern part of Karnataka in the Mysore Plateau - a region of Deccan Plateau The city
has an uneven landscape of hills and valleys to the south and relatively more level plateau towards
the north
Because of its elevation the city enjoys a pleasant and equable climate throughout the year The city
is situated in the Bengaluru Urban district which is divided into four taluks - Bangalore North
Bangalore East Bangalore South and Anekal and covers a total geographical area of 2190 sq km
Bangalore District is surrounded by Kolar District to the northeast Tumkur District on the northwest
Mandya District on the southwest Chamarajanagar District on the south and neighbouring state of
Tamil Nadu on the southeast
Connectivity
Bangalore is well connected to other Indian cities by road rail and air transport The connectivity by
rail road and air is detailed in the sections below
Road
Bengaluru is located at the junction of National Highways 4 7 and 48 connecting to various important
cities in India including Chennai Hyderabad Kanyakumari Madurai Mangalore Mumbai Nagpur
Pune and Varanasi
Railways
Bengaluru has two major railway stations Bengaluru City railway station and Yeswantpur Junction
The city has a well maintained railway network connecting major cities of the country and is
connected to the rest of the country both by metre gauge and broad gauge rail services
Air
Bengaluru has an International Airport at Devanahalli and is well connected to all cities in India
Internationally Bengaluru is connected to European and Asian cities like Frankfurt Singapore Kuala
Lumpur London Dubai Paris Bangkok and Hong Kong
Major commercial areas
The following are the major commercial areas in and around Bangalore
Central Business District Seshadripuram Jayanagar JP Nagar Yeshwantapura
Eastern Suburb Marathalli-sarjapur ORR Sarjapur Road Whitefield and Brookfield
Secondary Business District Indiranagar JP Nagar RT Nagar Vijayanagar
Northern Suburb HRBR Layout Bellary Road Jakkur
Southern Suburb Mysore Road Hosur Road
West Suburb BEL Factory HMT Layout
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Bangalore Development Authority
[7]
33 Key issues
The recessionary trends in 2007 across the world had also adversely affected the entire real estate
market in Bengaluru All the three categories of residential commercial (office space) and retail had
experienced slump in market and the real estate market in several erstwhile prime locations of the citywere facing oversupply situation and a drastic fall in the capital as well as rental values
With the revival of the industry and economy the residential market is expected to witness a jump
across all the areas in Bengaluru as per CRISILrsquos analysis The eastern and southern areas are
estimated to emerge as up-scaled developments as these areas are expected to see maximum
supply in the next three years
Good quality developments have been the key feature of Bangalorersquos commercial developments The
boom in IT sector especially in South India has enabled the city to have a metropolitan culture which
brings along the urban demands like malls and multiplexes
Recently the market in Bangalore has stabilized to a large extent after the sudden jump in prices post
recession However this is cyclical in nature and the saturation of IT services has led to a scenario
where there would not be much increase in the lease rentals
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Bangalore Development Authorit
4 Project
41 Description of
It is proposed that for the redev
over to the developer on long
Finance Design Construction
period Ownership of the land wi
BUP area will be transferred b
proposed commercial develop
vendors
42 Components o
The project would be develope
basis The structure of the mode
Figure 4-1 Development struc
43 Description of
The site is located at Indiranaga
the main commercial centres in
Road in the North Old Airport
the East Indiranagar is located
famous for housing the Somes
and educational institutions like
y
the project
lopment of BDA Complex at Indiranagar the la
erm lease basis The selected developer woul
and Operation amp Maintenance of the project t
ll always be with BDA After the lease period th
ack to BDA free of cost We have assumed
ent shall be reserved for BDA for rehabilit
f the project
on a Design Build Finance Operate and Tra
l has been illustrated below
ture of the Commercial Complex
the site
r a suburb of Bangalore located about 4 km ea
the city This medium sized suburb is enclose
oad in the South Halasura in the West and Je
within a diameter of few kilometre radii from the
ara Temple several reputed hospitals like Amrj
r Ambedkar College KH Patel College etc
[8]
nd would be handed
d be responsible for
hroughout the lease
e land along with the
hat a portion of the
tion of the existing
sfer model on PPP
t of MG road one of
by the Old Madras
vanbheemanagar in
airport The place is
yoti Vijaya and ESI
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Bangalore Development Authority
[9]
The site is situated at a junction near a residential area and is frequented by elders and youngsters
alike The present building consists of Motor driving schools RTO office computer vendors and travel
agents There is a water tank situated in the site
Figure 4-2 BDA Complex at Indiranagar
44 Interaction with stakeholders
CRISIL conducted a series of interactions with the stakeholders namely the BDA officials Citizens
and the establishment owners The interactions revealed that the building has to undergo
redevelopment The condition of the BDA office is not up to the standards expected and the officials
complained about leaks and short circuits The establishment owners suggested that the building was
planned with less road facing establishments due to which they are not able to attract footfalls
45 Case studies
In order to generate revenues from the real estate value of the land in the ownership of the ULBrsquos
commercial projects have been developed on a PPP basis on these lands Typically under such
arrangements the ULB would have identified a site under its ownership where a property for
commercial use can be developed Commercial development would include the development of
shopping complexes markets bus terminals multi-level car parking townships etc
Under such an arrangement the ULB would require of the private developer to undertake
construction of a commercial complex on the land The land would be provided by the ULB to the
private operator on a lease basis The ULB would provide specifications on the nature and type of
commercial development required The private developer would need to bear all the capital costs
associated with the construction of the commercial complex Post construction of the commercial
complex as per the arrangement the private developer would either hand over the constructed
facility to the ULB or would sub-lease the property The private developer would be required to make
to the ULB an upfront payment or provide a share in the ULB revenues earned from sub-leasing the
properties
The following case study compiled by the Ministry of Urban Development Government of India
highlights the development of municipalurban lands on a PPP basis
Category Details
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Bangalore Development Authority
[10]
Category Details
Project Construction of Commercial Complex at Ranipura Market
Cost of
ProjectRs 1500 lakhs
Description
The land was allotted to the concessionaire to construct the Commercial Complex by
the Corporation
Corporation continues to own the land
After the concession period the built-up structure (Commercial Complex) will be
transferred to the Corporation by the concessionaire
The concessionaire was given the right to recover its investment from the premium
received for ldquoRight of Occupationrdquo of the constructed shops
At the time of award of concession it was estimated that a profit of Rs 200 lakh will
be accrued from the venture which will be shared by the concessionaire with the
Corporation
The Corporation is expected to receive a profit share of Rs 100 lakh from the
concessionaire
Source Compendium on Public Private Partnership in Urban Infrastructure Case Studies Ministry of Urban
Development Government of India in association with Confederation of Indian Industry (CII)
We have also studied another case wherein the development affordable housing units was structure
on a PPP basis by the Pimpri Chinchwad New Township Development Authority (PCNTDA)
451 Public private partnership in affordable housing under Jawaharlal
Nehru National Urban Renewal Mission (JNNURM)
The Pune metropolitan region comprising Pune and Pimpri Chinchwad cities is one of the fastest
growing urban agglomerations in India A major automobile and auto-ancillary hub and a well-known
international education destination it also ranks among the top IT destinations of India Besides the
region has many industrial clusters housing industries focused on FMCG engineering agro-based
technology
The Pimpri-Chinchwad New Town Develompent Authority (PCNTDA) a key development authority of
the PMR is responsible for development of peri-urban especially in its north In line with the
phenomenal growth of the region and its strident aspirations PCNTDA has envisioned the
development of an integrated township at Sector 12 spanning 53 hectares Given the success of the
Public Private Partnership (PPP) model in involving private sector participation for development based
projects PCNTDS proposed to develop the integrated township on PPP basis
With this objective PCNTDA appointed the consortium of CRISIL Risk and Infrastructure Solutions
Limited (CRIS) Omkar Associates and Creations as project development consultants for the
development of an eco-friendly affordable township at Bhosari Sector 12 CRISILrsquos role was to
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Bangalore Development Authority
[11]
undertake a detailed demand assessment financial feasibility project structuring and management of
the bid process
The concept
Keep in mind the PCNTDArsquos vision CRIS designed integrated township such that it compriseshousing untis for the poor affordable housing units for the general public a primary health care
centre a hospital and a school
As per the structure the Developer shall construct 5040 housing units under the Basic Services for
Urban Poor (BSUP) scheme of JNNURM PCNTDA shall transfer the amount of grant sanctioned for
developing these units under the JNNURM scheme to the developer The remaining project cost of
the BUSP units was to be financed by the developer
In addition to this the Developer shall also construct affordable housing units as per pre-specified
specifications and hand over to PCNTDA free of cost The developer shall also construction the
physical and social infrastructure for the integrated township thereby ensuring good road adequate
water supply an efficient sewerage system as well as schools and hospitals The project shall bedeveloped in a manner such that it has minimum possible impact on the surrounding environment and
is in harmony with nature To this end the developer shall undertake eco-friendly initiatives including
rain water harvesting use of solar power environment-friendly materials and vermin-composting
The project
The developer has to complete the BSUP housing units within 2 years and hand over to the PCNTDA
For the remaining portion of the land PCNTDA shall execute a lease deed for 99 years with the
developer The lease rights shall be granted to the developer in phases upon completion of
milestones as defined in the project agreement The main scope of work for the developer shall
include
Master planning for the entire 53 hectares of land and construction of common physical and
social infrastructure for the entire area
Development construction and marketing of 795 lakhs square meters of integrated real
estate space
Construction and handing over of 5040 housing units under the BSUP scheme of JNNURM
on a separate layout carved out of the said land PCNTDA will provide the developer the grant
sanctioned by the Government of India for these housing units
Successful selection of private developer
With the objective of undertaking this project on a PPP basis in a transparent and objective manner
PCNTDA launched a three-cover Request for Proposal in June 2009 The bidding parameter was theconstructed ldquoCarpet Areardquo in ldquosquare metersrdquo of affordable housing units that the bidder shall
construct and hand over free of cost to PCNTDA
The tender received good response from four interested bidders Of the four bidders two bidders
were adjudged technically and financially capable and short-listed for the final stage The bidder with
the highest construction carpet area offered to PCNTDA was selected The successful bidder quoted
a carpet area of 130599 square meters of affordable housing units
Thereby the PCNTDA derived a value of 7369 housing units (including 5040 BSUP units) a school
and a hospital for the BSUP units a school and hospital for the general public and development of
public amenities
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Bangalore Development Authority
[12]
Value addition to PCNTDA
In commercial terms PCNTDA saved (i) Rs 190 crores as the gap amount required to fund the BSUP
scheme (ii) Rs 210 crores of construction cost of affordable housing units and (iii) Rs 100 crores on
the development of physical and social infrastructure In addition to this PCNTDA shall receive anupfront payment of Rs 50 crores from the successful bidder The project structure also protects
PCNTDA from cost escalation risks valuation risks and engineering risks
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Bangalore Development Authorit
5 Market asse
51 Bangalore gro
The growth of Bangalore has be
from the growth in population in
to the economic opportunities it
Bangalore an obvious choice for
Bangalore has grown at averag
decades It is projected that B
explosive growth has meant th
pressure
Figure 5-1 Population growth
Source City Development Plan Ba
The city leads the country in
available However Bengaluru a
of projects under development a
983089983086983094983091 983089983086983096983097 983090983086983092
983088
983089983088
983090983088
983091983088
983092983088
983093983088
983094983088
983095983088
983096983088
983097983088
983089983097983088983089 983089983097983089983089 983089983097983090983089
983120 983151 983152 983157 983148 983137 983156 983145 983151 983150 983145 983150 983116
983137 983147 983144 983155
y
sment
th overview
en unprecedented in the past couple of decades
the last century Bangalore continues to attract t
offers This is also supported by a salubrious
not only businesses but also for people
compounded annual growth rate (CAGR) of 3
ngalorersquos population will cross the 10 million
at the infrastructure in Bangalore has been p
in Bangalore between 1901 and 2011
galore Development Authority and Census of India
ffice space with 738 million square feet of
lso has 22 per cent of the available space vacan
nd reduced demand
983091983086983089 983092983086983089983089983095983086983096983094
983089983090983086983088983094
983089983094983086983094983092
983090983097983086983090983090
983092
983089983097983091983089 983089983097983092983089 983089983097983093983089 983089983097983094983089 983089983097983095983089 983089983097983096983089 983089983097
[13]
This fact is laid bare
rongs of people due
eather which makes
58 in the last three
mark by 2021 This
t under tremendous
commercial capacity
with a large number
983086983091
983093983094983086983096983094
983096983092
983097983089 983090983088983088983089 983090983088983089983089
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Bangalore Development Authority
[14]
52 Demand projections
Bangalore is the largest commercial market and third largest residential market in India The city has
typically been preferred by home buyers because of its favorable socio-economic conditions and a
salubrious climate In recent years Bangalore has attracted a large influx of population engaged inthe thriving IT sector City residential demand is more end-user driven with moderate price
appreciation The average residential real estate price in the city is 20-25 lesser than in Delhi and
Mumbai In the recent National Housing Bank Residex the index indicating property prices across key
cities in India Bangalore witnessed a mere 1 YoY fall in residential prices in 2011-12 Mumbai saw
an 116 YoY jump in home prices while Delhi witnessed 358 YoY increase during 2011-12 The
city witnessed tremendous growth in terms of population and the number of companies setting up
offices there Thus the ongoing projects such as Bengaluru metro rail project various flyovers and
the under-pass construction activities in Outer Ring Road (ORR) CNR and BHEL circles would ease
the congestion and provide better connectivity for all commuters This will boost real estate demand in
and around Bangalore city
In 2011-12 Bangalorersquos commercial market exhibited resiliency with comparatively high demand
levels despite the discomfort in the market on account of global uncertainty Though commercial
property demand in Bangalore is largely dependent on ITITES sectors the share of manufacturing is
increasing at a faster pace and thereby giving further boost to office space demand According to real
estate consultancy firm Knight Frank the manufacturing sector witnessed a quantum leap as its share
of absorption increased from 3 in 4QCY10 to 23 in 4QCY11 The absorption of commercial space
has gone up from 5mn sq ftquarter in CY09 to 7mn sq ftquarter in CY11 thanks to sustained
demand for Bangalore commercial space which witnessed 43 CAGR in absorption level over CY09-
11 Subdued supply during the first two quarters of 2011 coupled with high absorption level has
substantially lowered the vacancy level in the city (bringing it down from 17 in CY10 to 12 in
CY11) With the expansion of existing operations in the IT sector and the entry of newer sectors dueto renewed optimism in the market we expect the level of absorption of office space to remain stable
Revised Master Plan-2015 for the BMA has been published This document gives the likely growth to
take place in various areas of the BMA The population of the BMA is expected to grow from 61 lakh
in 2001 to 122 lakh in 2025
The proposed growth rate and the ever changing urban scenario is bound to increase the commercial
space demand in the region The site at Indiranagar is situated at a junction and has two road facing
sides which makes it very attractive for commercial development The site is also huge in size and
can easily accommodate a mall
Hence in view of the above it can be safely recommended that the site would generate huge interest
within the developers
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Bangalore Development Authority
[15]
6 Project financials
The project costs have been largely derived from the costs indicated by the Bangalore Development
Authority (BDA)
61 Cost estimation
The estimated cost of development of the project is Rs 23931 lakhs The costs have been outlined
below
Table 6-1 Project Cost of the proposed development
Particular Amount inRs Lakhs
Construction Cost 19967
Land Development 793
Other Infrastructure 50
Total Hard Costs 20810
Contingencies 3121
Total Project Development Cost 23931
Apart from the above mentioned project development cost the Concessionaire would incur the
development premium and Interest during construction (IDC) cost
Particulars 25 years 33 Years 66 years
Upfront Premium (Rs Lakh) 965000 1230000 600000
IDC Cost (Rs Lakh) 315600 361500 259100
Revenue Share every year 15 15 15
Total Project Cost (Rs Lakhs) 36737 39846 33022
62 Revenue stream
The Revenues to the Developer would accrue from the revenue earned from the lease rentals and the
maintenance charges which the developer earns from the tenants The total revenue from both the
heads has been arrived at Rs 6720 Lakhs for the base year It has been assumed that the
occupancy of the commercial complex 80 in the base year and stabilizes to a maximum of 95towards the end of the concession period The average lease rentals have been assumed at Rs 70
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Bangalore Development Authority
[16]
per square feet and the maintenance charges have been assumed at Rs 225 per square feet Both
the revenues are escalating at the rate of 10 per annum The income statement for the developer
has been provided in Annexure 1
63 Viability assessment
The viability assessment has been carried out over two concession period ie 25 33 and 66 years
The debt to equity ratio has been assumed to be 121
The project level internal rate of return (IRR) IRR of equity and the net present value of the equity
have been worked out
Table 6-2 Viability assessment for BDA complex at Indiranagar
Concession Period Project IRR Equity IRR NPV of Equity
Upfront Premium
(Rs in Lakhs)
25 years 1777 2007 96 9650
33 years 1818 2006 108 12300
66 years 2101 2333 5285 6000
It is evident that the project is viable for the developer for all the 3 concession periods In case of the
25 year concession period it is estimated that the developer would pay BDA an estimated upfront
premium of Rs 9650 lakhs Similarly the developer would pay BDA an amount of Rs 12300 lakhsand Rs 6000 lakhs for the concession periods of 33 years and 66 years respectively
64 Ranking of options based on commercial viability
Having assessed the project for two concession periods of 25 33 and 66 years we are of the view
that the 25 year concession option will be more suitable since it allows the developer to make
reasonable returns on the projects and his own investments along with a sizeable upfront premium for
BDA BDA would be in a position to renew the contract or retender the project after 25 years which
may enable BDA to earn as per the prevailing market rates
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[17]
7 Statutory amp legal framework
71 Legal amp regulatory framework
Development Control Regulations (DCR)
As per RMP ndash 2015 published by BDA the project site has been classified as ldquoCommercial Businessrdquo
As per the definitions of RMP-2015 Commercial Business Zone allows development of Commercial
and Corporate offices Retail Shopping Complexes Restaurants and Hotels Convention centres and
banquet halls financial institutions Cinema and multiplexes places of assembly exhibition centres
Entertainment and amusement centres and stores
Permissible land uses under Commercial (Business) Zone as per RMP-2015 of BDA
Main land use category C3
Other land uses permissible (as main land use) R I-3 T3 amp U4
If the road width is less than 120 m and plot area is less than 240 square metre then C2 I-2
R and U4 only are allowed
The plot size is 24000 square metre Presently it has 18m wide access road The applicable DCR for
the plot as per proposed road width is as follows
Table 7-1 Plot details of Indiranagar site
Sr No Particulars Description Unit
1 Land Use Commercial Business
2 Road Width 18 Metre
3 Permissible FAR 325
4Permissible ground
coverage50
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[18]
8 Indicative environmental amp social impacts
81 Environmental impacts
The proposed development is in line with the layout of BDA Due to the reasonably large site area the
development will be on the higher side A set back of 50 is found to be acceptable for the site
however an Environmental Impact Assessment studies have to be undertaken for the sites Since
already a commercial complex is existent redevelopment of the complex would need demolition of
the existent structures Hence a suitable disposal of construction and debris has to be undertaken by
the developer Also a Green building can be developed to ensure minimal effect on nature
82 Social impactsDuring the construction period the existing establishments have to be shifted or compensated
temporarily Hence a clear resettlement plan has to be decided before the implementation of the
project It is envisaged that if due care is taken about the existing tenants the development would go
smoothly
83 Mitigation measures
It is necessary that the impacts are identified early and action plans are prepared for their mitigation in
advance For instance for environmental impacts the BDA may insist on the developer to use clean
and green building technologies
It is also necessary that the project development plan is also accompanied by a Relocation and
Rehabilitation plan which will layout detailed action points with the requisite intervening entity
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Bangalore Development Authority
[19]
9 Operating framework
91 Risks amp mitigation
The risk framework for this project has been outlined below
Table 9-1 Risk mitigation measures
Risk Category Risk implication Mitigation measure
Sponsor risk BDA scraps the project Termination payments in case of BDA scrapping the
project
Environment
risk
Adverse impact on
surrounding environment
Penalty clauses in case of default on
Concessionairersquos part
Environmental Impact Assessment to identify all
risks in advance
Political riskChange in government may
put project in jeopardy
Termination payments in case of project being
scrapped
Force
majeure riskProject is abandoned
Force majeure clauses in the concession
agreement
Operating riskThe operations of the
facility are stalled
Performance security clause in case of default on
Concessionairersquos part
Design risk Overdesign of the projectProject design to be finalized in mutual agreement
of concessionaire and BDA
Completion
risk
Completion of project is
delayed inconvenience to
citizens and tenants
Penalty clauses for time overrun in the concession
agreement
Cost overrun
risk
Project cost increases
beyond reasonable limits
Project cost increment ceiling to be specified in the
concession agreement Increase beyond this ceiling
to be borne by the developer No change in revenue
sharing
92 Indicative project structure
The best approach for such a large ticket project would be for the BDA to become a key actor in the
entire process of development The BDA may ask the private sector partner to form a Special
Purpose Company where the equity will be brought in by the private sector developer The designs
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Bangalore Development Authority
[20]
should be left to the developer and BDArsquos role would be in approving the same in accordance with the
Development Control Regulations
The SPC will develop and maintain Complex throughout the concession period The tenants would
pay the developer a sub-lease premium or lease rentals which will be escrowed in a separate accountand can be withdrawn based on the revenue sharing structure adopted
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Bangalore Development Authorit
10 Way ahead
101 Project develo
The key task for BDA is to ap
feasibility of the project Once t
the bid process
Figure 10-1 Project developm
The transaction advisor shall stralso prepare the relevant bid
management on behalf of BDA
102 Procurement
The foremost step for BDA is
feasibility The detailed financial
parameter Also an optimum str
bid documents would be prepar
process be conducted as a 2 sta
983105983152983152983151983145983150983156983149983141983150983156 983151983142 983156983154983137
983108983141983156983137983145983148983141983140 983142983141983137983155983145983138
983155983156983154983157983139983156983157983154983145983150983143
983120983154983141983152983137983154983137983156983145983151
983123983141983148983141983139
y
pment framework
oint a Transaction Advisor in order to conduc
e financial numbers are acceptable BDA BDA
nt framework
ucture the project upon completion of the feasibidocuments The transaction advisor shall un
nd will assist in appointment of the private secto
lan
to appoint a Transaction Advisor for the co
feasibility would determine the tentative revenue
cture would be arrived at Post the approval of
d for the selection of the developer It is recom
ge process involving Technical qualification and
983155983137983139983156983145983151983150 983137983140983158983145983155983151983154
983148983145983156983161 983155983156983157983140983145983141983155 983137983150983140 983152983154983151983146983141983139983156
983150 983151983142 983138983145983140 983140983151983139983157983149983141983150983156983155
983145983151983150 983151983142 983152983154983145983158983137983156983141 983155983141983139983156983151983154 983152983137983154983156983150983141983154
[21]
a detailed financial
should proceed with
ility studies and shallertake bid process
partner
nducting the project
for BDA and the bid
easibility Report the
mended that the Bid
inancial proposal
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
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B a n g a l o r e D e v e l o p m e n t A u t h o r i t y
B D A s h o u l d i n i t i a t e t h e p r o c e s s o f a p p o
i n t i n g a t r a n s a c t i o n a d v i s o r a t t h e
e a r l i e s t T h i s p r o c e s s c a n b e c o m p l e t e d i n 2 m o n t h s
O n c e t h e T A
i s i n p l a c e
t h e B D
A s h o u l d a l l o w
a t l e a s t 4 m o n t h s f o r t h e p r e p a r a t i o n o f f e a s i b i l i t y p r o j e c t s t r u c t u r i n g a n d b i d d o c u m e n
t s
O n c e t
h e b i d d o c u m e n t s a r e i n p l a c e t h
e B D A
s h o u l d i n i t i a t e t h e p r o c e s s
o f s e l e c t i n g t h e p r i v a t e s e c t o r p a
r t n e r w h i c h c a n b e c o m p l e t e d o v e r a 4 m o n t h
p e r i o d
T h e c u
r r e n t p r o c u r e m e n t p l a n i s s p r e a d
o v e r 1 1 m o n t h s w h i c h c a n b e s
h o r t e n e d d e p e n d i n g o n t h e m a n n e r i n w h i c h B D A
m a k e s d e c i s i o n
s r e l a t i n g t o
a p p o i n
t m e n t o f T A a n d p r i v a t e d e v e l o p e r
A c t i v i t y
M 1
M 2
M 3
M 4
M 5
M 6
M 7
M 8 M
9
M 1 0
M 1 1
M 1 2
A p p o i n t m e t o f t r a n s a c t i o n a d v i s o r
D e t a i l e d t e c h n o - e c o n o m i c f e a s i b i l i t y a n d
b i d d o c u m e n t p r e p a r a t i o n
B i d p r
o c e s s m a n a g e m e n t
S e l e c t i o n o f p r e f e r r e d b i d d e r a n d f o r m a t i o n o f S P C
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
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B a n g a l o r e D e v e l o p m e n t A u t h o r i t y
1 1
A n n e x u r e 1 ndash C a s h - f l o w
s t a t e m e n t
R e v e n u e H e a d
S u b H e a d R a t e
U n i t
3 1 - M a r - 1 4
3 1 - M
a r - 1 7
3 1 - M a r - 2 2
3 1 - M a r - 2 7
3 1 - M a r - 3 2
3 1 - M a r - 3 7
3 1 - M a r - 4 2
3 1 - M a r - 4 7
3 1 - M
a r - 5 2
3 1 - M a r - 5 7
3 1 - M a r - 6 2
C o m m e
r c i a l S p a c e
O c c u p a
n c y
P e r c e n t a g
0
9 0
9 5
9 5
9 5
9 5
9 5
9 5
9 5
9 5
9 5
C o m m e
r c i a l s p a c e l e a s e d o u t
s q f t
-
7 2 0 6
9 0
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6
0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
D e p o s i t f o r L e a s e
( N o o f m o n t h s r e n t )
1 2
A v e r a g e
L e a s e R e n t a l s
7 0
R s p s f p e r m o n t h
E s c a l a t i o n
1 0
M a i n t e n
a n c e c h a r g e s
2 2 5
R s p s f p e r m o n t h
R e v e n u e f r o m
L e a s e R e n t a l
R s
L a k h s
-
8 8
6 3
1 5 0
6 8
2 4 2
6 6
3 9 0
8 1
6 2 9
4 1
1 0 1 3
6 7
1 6 3 2
5 3
2 6
2 9
2 0
4 2 3 4
3 5
6 8 1 9
4 7
R e v e n u e f r o m
M a i n t e n a n c e c h a r g e s
-
2 8 5
4 8 4
7 8 0
1 2
5 6
2 0
2 3
3 2
5 8
5 2
4 7
8 4
5 1
1 3 6
1 0
2 1 9
2 0
T o t a l R
e v e n u e
-
9 1 4 8
1 5 5 5 2
2 5 0 4 6
4 0 3 3 8
6 4 9 6 4
1 0 4 6 2 5
1 6 8 5 0 0
2 7
1 3 7 1
4 3 7 0 4 6
7 0 3 8 6 7
R e v e n
u e H e a d
S u b H e a d R a t e
U n i t
3 1 - M a r - 6
7
3 1 - M a r - 7 2
3 1 - M a r - 7 8
3 1 - M a r - 7 9
C o m m e r c i a l S p a c e
O c c u p a n c y
P e r c e n t a g
9 5
9 5
9 5
9 5
C o m m e r c i a l s p a c e l e a s e d o u t
s q f t
7 6 0 7 2
8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
D e p o s i t f o r L e a s e
( N o o f m o n t h s r e n t )
1 2
A v e r a g
e L e a s e R e n t a l s
7 0 R s p s f p e r m o n t h
E s c a l a
t i o n
1 0
M a i n t e
n a n c e c h a r g e s
2 2
5 R s p s f p e r m o n t h
R e v e n u
e f r o m
L e a s e R e n t a l
R s
L a k h s
1 0
9 8 2 8 2
1 7
6 8 7
9 4
3 1
3 3 5
2 7
3 4
4 6 8
8 0
R e v e n u
e f r o m
M a i n t e n a n c e c h a r g e s
3 5 3 0 2
5 6 8
5 4
1 0 0 7
2 1
1 1 0 7
9 3
T o t a l R e v e n u e
1 1 3 3 5 8 4
1 8 2 5 6 4 8
3 2 3 4 2 4 8
3 5 5 7 6 7 2
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
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[x]
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
httpslidepdfcomreaderfullgim-pre-feasibility-report-indiranagarrevised 3233
[y]
Disclaimer
CRISIL Risk and Infrastructure Solutions Limited (CRIS) has taken due care and caution in preparation of this Report for
Bangalore Development Authority which is under the purview of the Urban Development Department Government of
Karnataka This Report is based on the information documents provided by the Company andor information available publicly
andor obtained by CRIS from sources which it considers reliable CRIS does not guarantee the accuracy adequacy or
completeness of the information documents Report and is not responsible for any errors or omissions or for the results
obtained from the use of the same The Report and results stated therein are subject to change CRIS especially states that it
has no financial liability whatsoever to the Company users of this Report This Report is strictly confidential and should not be
reproduced or redistributed or communicated directly or indirectly in any form or published or copied in whole or in part
especially outside India for any purpose
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
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Registered Office ndash Mum
CRISIL House Central AvenueHiranandani Business ParkPowai Mumbai- 400 076Phone 91-22-3342 3000Fax 91-22-3342 3810
New Delhi
The Mira G-1 1st Floor Plot NoIshwar Nagar Mathura Road
New Delhi - 110 065 IndiaPhone 91-11-4250 510091-11-2693 0117 - 121Fax 91-11-2684 2213
Hyderabad
3rd Floor Uma ChambersPlot No 9amp10 Nagarjuna HillsNear Punjagutta Cross RoadHyderabad - 500 082Phone 91-40-40328200Fax 91-40-2335 7507
Bengaluru
W-101 Sunrise Chambers22 Ulsoor RoadBengaluru - 560 042Phone 91-80-2558 0899Fax 91-80-2559 4801
Ahmedabad
706 Venus AtlantisNear Reliance Petrol PumpPrahladnagarAhmedabad -Phone 91-79-4024 4500Fax 91-79-2755 9863
Visit us atwwwcrisilcom
ai
1 amp 2
About CRISIL Infrastructu
CRISIL Infrastructure Advisory
CRISIL Risk and Infrastructure
Limited a 100 subsidiary of
Indiarsquos leading Ratings Resear
Policy Advisory Company
CRISIL Infrastructure Advisory
premier advisor focusing on po
well as commercial and contra
the areas of transport energyinfrastructure We also provide
international firms planning inv
India Over a period of time C
Infrastructure Advisory has buil
position for itself in these doma
considered the preferred cons
governments multilateral agen
sector clients We have extend
operations beyond India and ar
other emerging markets in Afri
and South Asia
re Advisory
is a division of
Solutions
RISIL Limited ndash
ch Risk and
is Indiarsquos
licy issues as
tual issues in
nd urbansupport to
stments in
ISIL
t a unique
ins and is
ltant by
cies and private-
ed our
e present in
a Middle East
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
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Bangalore Development Authority
[2]
A key issue that the BDA will need to address is the relocation of the existing tenants of the
complexes The BDA needs to prepare a rehabilitation plan for the existing tenants and should also
clearly lay out the rehabilitation mechanism for these tenants As part of the project configuration we
have assumed that a certain proportion of the developed spaces would be handed over to the BDA
which can be utilized for the rehabilitation of the existing tenants However if the BDA chooses to
accommodate these tenants in the redeveloped facility the commercial terms may have to be in line
with the rentals being charged to the new tenants We are of the opinion that the BDA should make
an informed decision on this only after a detailed feasibility has been conducted for the site
We have examined the way forward for the project We propose that the BDA should appoint a
transaction advisor for the project who will conduct a detailed feasibility for the project and would also
facilitate the appointment of the developer through bid process management
The procurement plan for the project has been developed to be spread over 11 months which can be
shortened depending on the swiftness of decision making at BDA
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
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Bangalore Development Authority
[3]
2 Introduction
CRISIL Infrastructure Advisory a division of CRISIL Risk and Infrastructure Solutions Limited (CRIS)
has been appointed by the Infrastructure Development Department Government of Karnataka to
work closely with the Bangalore Development Authority for the assignment ldquoInstitutional Strengthening
and Sector Specific Inventory for PPP Mainstreaming in Sectorsrdquo Under this BDA has identified a set
of nine projects for which pre-feasibility assessments are to be carried out
In order to provide advanced recreational facilities and services to the citizens BDA has proposed the
redevelopment of its Complexes through Public Private Partnership model Redevelopment of BDA
Complex at Indiranagar is one of the nine projects proposed by BDA
21 Project idea
Bangalore Development Authority (BDA) is one of the premier urban planning and development
agencies that oversee the growth of the city The BDA came into being with effect from 6th January
1976 under a separate Act of the State Legislature viz the BDA Act 1976 This Authority combined in
itself the Planning functions of the City Planning Authority and the developmental functions of the
erstwhile City Improvement Trust Board (CITB)
The key objectives of the authority as per the BDA Act shall be to promote and secure the
development of the Bangalore Metropolitan Area (BMA) and for that purpose the Authority shall have
the power to acquire hold manage and dispose of moveable and immoveable property whether
within or outside the area under its jurisdiction to carry out building engineering and other operations
and generally to do all things necessary or expedient for the purposes of such development and for
purposes incidental thereto
In line with the objectives of BDA the BDA Complexes were built at strategic locations in near
residential localities in order to provide a one stop solution for shopping Hence convenient stores like
motor training schools travel agents RTO etc started operating within the complexes The complexes
are now in dilapidated condition and in order to provide better facilities to the citizens BDA proposed
to develop the old BDA Complex at Indiranagar The project is also an outcome of reducing
commercial spaces in key residential areas
22 Approach amp methodologyThe broad approach and methodology followed for study of these projects has been depicted
graphically below
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
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Bangalore Development Authorit
Figure 2-1 Approach and Met
23 Review of pre
Bangalore Development Authori
development works identified by
29102010 BDA retained Tand
identified projects namely ldquoDevel
TUSPL had submitted their Fe
estimations The report submitte
been presented as below
The project cost indicate
to reflect the market
contingencies prelimina
The financials indicated
Developer and BDA an
given the market conditi
The report does not cle
1062701 sq ft And an
2440023 square metre
officials
1 The cost incurred towards upfront pre
figure
Study of existingreports
y
odology
ious studies
ty had invited proposals for appointment of Co
BDA vide Tender Notification No BDAEMTA-
on Urban Solutions Pvt Ltd (TUSPL) as Cons
opment of Commercial Complex at Indiranagar
sibility Report for the Indiranagar site along
d by TUSPL was studied in detail and the CRISI
d in the report is Rs 39165 Lakhs The project c
rates The Revised project cost is Rs 239
ry and pre-operative expenses
in the Feasibility Report is assuming a revenu
an upfront premium which the developer woul
ns and rates this has been revised
arly mention the area of the plot It indicates a
open land development area of 131322 sq f
has been assumed for the pre-feasibility in c
ium and the interest during construction period is not includ
Discussions withBDA personnel
Be
a
Finalrecommendation
[4]
nsultants for various
3802010-11 dated
ultant for one of the
angalorerdquo
ith the designs and
Lrsquos observations has
ost has been revised
11 Lakhs including
share between the
ld provide However
construction area of
t Hence an area of
nsultation with BDA
d in the above mentioned
lock coststimation
inancialsessment
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
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Bangalore Development Authority
[5]
3 Sector profile
The city of Bangalore has witnessed very rapid growth The city today is home to over 84 million
people (2011 Census) The salubrious weather and the rapid concentration of economic activities in
Bangalore have fuelled the growth of Bangalore As one of the worldrsquos fastest growing cities
Bangalore is experiencing a steady growth in population
Bangalore has been substantially affected by globalization and rapid urbanization over the last
decade The demand for services and quality of life is not confined to the central core or the erstwhile
Bangalore Mahanagra Palike jurisdiction but spreads beyond into the peri-urban areas the
Metropolitan Area and outwards into Bangalore Metropolitan Region With the emergence of the
Bangalore-Mysore Infrastructure Corridor the Bangalore International Airport and the planned ring
roads urbanization has sprawled out
Banaglore has incontestable advantages to develop into an international metropolis but at the same
time faces significant constraints The city is embedded in its history and depicts the greatness of a
truly Indian city established before the invasions and colonization It has a diverse set of activities
from silk to aeronautics from clothing to information technology and is a gauge of dynamism and
solidity of the city Natural drainage climatic advantage and the availability of water in the Cauvery
baisn are factors assisting in improving the quality of life
31 Industry overview
Bengaluru is countryrsquos third leading realty market With the IT boom and corresponding growth of the
economy saw large-scale increase in the cityrsquos population mostly due to migration from across India
Bengalurursquos population grew about 35 percent in the last six years
This increase in population along with steady demand and restricted supply led to saturation in central
Bengaluru region and pushed development to peripheral areas like Whitefield Sarjapur road Outer
Ring Road (ORR) Bannerghatta Road Hosur Road
With the opening of International Airport Real estate in North Bangalore (Bellary Road to Yelahanka)
has also witnessed the launch of numerous projects with apartments and villas Given the improved
infrastructure accessibility and the future potential for this area the area has been attracting both the
segments of investors and end-users alike
The city leads the country in office space with 738 million square feet of commercial capacityavailable However Bengaluru also has 22 per cent of the available space vacant with a large number
of projects under development and reduced demand
32 Regional profile
Bengaluru (formerly Bangalore) also known as Garden City for its beautiful gardens is the
administrative industrial commercial educational and cultural capital of Karnataka and located on
the Deccan Plateau in the South-Western part of India Bengaluru is Indias third most populous city
fastest growing and fifth largest metropolitan area with population of about 57 million (as per 2001
census) The population is expected to reach around 11 million and 22 million in 2021 and 2041respectively
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Bangalore Development Authority
[6]
With ever increasing boundaries and gross domestic product of 59123 billion in FY 06-07 Bengaluru
has some well-recognized IT companies and numerous public sector heavy industries aerospace
telecommunications and defence organisations located within Bengaluru also has some well known
colleges and research institutes
Geography
With an average elevation from the sea level of 920 m and total area of 741 km2 Bengaluru is located
in the south-eastern part of Karnataka in the Mysore Plateau - a region of Deccan Plateau The city
has an uneven landscape of hills and valleys to the south and relatively more level plateau towards
the north
Because of its elevation the city enjoys a pleasant and equable climate throughout the year The city
is situated in the Bengaluru Urban district which is divided into four taluks - Bangalore North
Bangalore East Bangalore South and Anekal and covers a total geographical area of 2190 sq km
Bangalore District is surrounded by Kolar District to the northeast Tumkur District on the northwest
Mandya District on the southwest Chamarajanagar District on the south and neighbouring state of
Tamil Nadu on the southeast
Connectivity
Bangalore is well connected to other Indian cities by road rail and air transport The connectivity by
rail road and air is detailed in the sections below
Road
Bengaluru is located at the junction of National Highways 4 7 and 48 connecting to various important
cities in India including Chennai Hyderabad Kanyakumari Madurai Mangalore Mumbai Nagpur
Pune and Varanasi
Railways
Bengaluru has two major railway stations Bengaluru City railway station and Yeswantpur Junction
The city has a well maintained railway network connecting major cities of the country and is
connected to the rest of the country both by metre gauge and broad gauge rail services
Air
Bengaluru has an International Airport at Devanahalli and is well connected to all cities in India
Internationally Bengaluru is connected to European and Asian cities like Frankfurt Singapore Kuala
Lumpur London Dubai Paris Bangkok and Hong Kong
Major commercial areas
The following are the major commercial areas in and around Bangalore
Central Business District Seshadripuram Jayanagar JP Nagar Yeshwantapura
Eastern Suburb Marathalli-sarjapur ORR Sarjapur Road Whitefield and Brookfield
Secondary Business District Indiranagar JP Nagar RT Nagar Vijayanagar
Northern Suburb HRBR Layout Bellary Road Jakkur
Southern Suburb Mysore Road Hosur Road
West Suburb BEL Factory HMT Layout
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Bangalore Development Authority
[7]
33 Key issues
The recessionary trends in 2007 across the world had also adversely affected the entire real estate
market in Bengaluru All the three categories of residential commercial (office space) and retail had
experienced slump in market and the real estate market in several erstwhile prime locations of the citywere facing oversupply situation and a drastic fall in the capital as well as rental values
With the revival of the industry and economy the residential market is expected to witness a jump
across all the areas in Bengaluru as per CRISILrsquos analysis The eastern and southern areas are
estimated to emerge as up-scaled developments as these areas are expected to see maximum
supply in the next three years
Good quality developments have been the key feature of Bangalorersquos commercial developments The
boom in IT sector especially in South India has enabled the city to have a metropolitan culture which
brings along the urban demands like malls and multiplexes
Recently the market in Bangalore has stabilized to a large extent after the sudden jump in prices post
recession However this is cyclical in nature and the saturation of IT services has led to a scenario
where there would not be much increase in the lease rentals
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Bangalore Development Authorit
4 Project
41 Description of
It is proposed that for the redev
over to the developer on long
Finance Design Construction
period Ownership of the land wi
BUP area will be transferred b
proposed commercial develop
vendors
42 Components o
The project would be develope
basis The structure of the mode
Figure 4-1 Development struc
43 Description of
The site is located at Indiranaga
the main commercial centres in
Road in the North Old Airport
the East Indiranagar is located
famous for housing the Somes
and educational institutions like
y
the project
lopment of BDA Complex at Indiranagar the la
erm lease basis The selected developer woul
and Operation amp Maintenance of the project t
ll always be with BDA After the lease period th
ack to BDA free of cost We have assumed
ent shall be reserved for BDA for rehabilit
f the project
on a Design Build Finance Operate and Tra
l has been illustrated below
ture of the Commercial Complex
the site
r a suburb of Bangalore located about 4 km ea
the city This medium sized suburb is enclose
oad in the South Halasura in the West and Je
within a diameter of few kilometre radii from the
ara Temple several reputed hospitals like Amrj
r Ambedkar College KH Patel College etc
[8]
nd would be handed
d be responsible for
hroughout the lease
e land along with the
hat a portion of the
tion of the existing
sfer model on PPP
t of MG road one of
by the Old Madras
vanbheemanagar in
airport The place is
yoti Vijaya and ESI
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Bangalore Development Authority
[9]
The site is situated at a junction near a residential area and is frequented by elders and youngsters
alike The present building consists of Motor driving schools RTO office computer vendors and travel
agents There is a water tank situated in the site
Figure 4-2 BDA Complex at Indiranagar
44 Interaction with stakeholders
CRISIL conducted a series of interactions with the stakeholders namely the BDA officials Citizens
and the establishment owners The interactions revealed that the building has to undergo
redevelopment The condition of the BDA office is not up to the standards expected and the officials
complained about leaks and short circuits The establishment owners suggested that the building was
planned with less road facing establishments due to which they are not able to attract footfalls
45 Case studies
In order to generate revenues from the real estate value of the land in the ownership of the ULBrsquos
commercial projects have been developed on a PPP basis on these lands Typically under such
arrangements the ULB would have identified a site under its ownership where a property for
commercial use can be developed Commercial development would include the development of
shopping complexes markets bus terminals multi-level car parking townships etc
Under such an arrangement the ULB would require of the private developer to undertake
construction of a commercial complex on the land The land would be provided by the ULB to the
private operator on a lease basis The ULB would provide specifications on the nature and type of
commercial development required The private developer would need to bear all the capital costs
associated with the construction of the commercial complex Post construction of the commercial
complex as per the arrangement the private developer would either hand over the constructed
facility to the ULB or would sub-lease the property The private developer would be required to make
to the ULB an upfront payment or provide a share in the ULB revenues earned from sub-leasing the
properties
The following case study compiled by the Ministry of Urban Development Government of India
highlights the development of municipalurban lands on a PPP basis
Category Details
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Bangalore Development Authority
[10]
Category Details
Project Construction of Commercial Complex at Ranipura Market
Cost of
ProjectRs 1500 lakhs
Description
The land was allotted to the concessionaire to construct the Commercial Complex by
the Corporation
Corporation continues to own the land
After the concession period the built-up structure (Commercial Complex) will be
transferred to the Corporation by the concessionaire
The concessionaire was given the right to recover its investment from the premium
received for ldquoRight of Occupationrdquo of the constructed shops
At the time of award of concession it was estimated that a profit of Rs 200 lakh will
be accrued from the venture which will be shared by the concessionaire with the
Corporation
The Corporation is expected to receive a profit share of Rs 100 lakh from the
concessionaire
Source Compendium on Public Private Partnership in Urban Infrastructure Case Studies Ministry of Urban
Development Government of India in association with Confederation of Indian Industry (CII)
We have also studied another case wherein the development affordable housing units was structure
on a PPP basis by the Pimpri Chinchwad New Township Development Authority (PCNTDA)
451 Public private partnership in affordable housing under Jawaharlal
Nehru National Urban Renewal Mission (JNNURM)
The Pune metropolitan region comprising Pune and Pimpri Chinchwad cities is one of the fastest
growing urban agglomerations in India A major automobile and auto-ancillary hub and a well-known
international education destination it also ranks among the top IT destinations of India Besides the
region has many industrial clusters housing industries focused on FMCG engineering agro-based
technology
The Pimpri-Chinchwad New Town Develompent Authority (PCNTDA) a key development authority of
the PMR is responsible for development of peri-urban especially in its north In line with the
phenomenal growth of the region and its strident aspirations PCNTDA has envisioned the
development of an integrated township at Sector 12 spanning 53 hectares Given the success of the
Public Private Partnership (PPP) model in involving private sector participation for development based
projects PCNTDS proposed to develop the integrated township on PPP basis
With this objective PCNTDA appointed the consortium of CRISIL Risk and Infrastructure Solutions
Limited (CRIS) Omkar Associates and Creations as project development consultants for the
development of an eco-friendly affordable township at Bhosari Sector 12 CRISILrsquos role was to
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Bangalore Development Authority
[11]
undertake a detailed demand assessment financial feasibility project structuring and management of
the bid process
The concept
Keep in mind the PCNTDArsquos vision CRIS designed integrated township such that it compriseshousing untis for the poor affordable housing units for the general public a primary health care
centre a hospital and a school
As per the structure the Developer shall construct 5040 housing units under the Basic Services for
Urban Poor (BSUP) scheme of JNNURM PCNTDA shall transfer the amount of grant sanctioned for
developing these units under the JNNURM scheme to the developer The remaining project cost of
the BUSP units was to be financed by the developer
In addition to this the Developer shall also construct affordable housing units as per pre-specified
specifications and hand over to PCNTDA free of cost The developer shall also construction the
physical and social infrastructure for the integrated township thereby ensuring good road adequate
water supply an efficient sewerage system as well as schools and hospitals The project shall bedeveloped in a manner such that it has minimum possible impact on the surrounding environment and
is in harmony with nature To this end the developer shall undertake eco-friendly initiatives including
rain water harvesting use of solar power environment-friendly materials and vermin-composting
The project
The developer has to complete the BSUP housing units within 2 years and hand over to the PCNTDA
For the remaining portion of the land PCNTDA shall execute a lease deed for 99 years with the
developer The lease rights shall be granted to the developer in phases upon completion of
milestones as defined in the project agreement The main scope of work for the developer shall
include
Master planning for the entire 53 hectares of land and construction of common physical and
social infrastructure for the entire area
Development construction and marketing of 795 lakhs square meters of integrated real
estate space
Construction and handing over of 5040 housing units under the BSUP scheme of JNNURM
on a separate layout carved out of the said land PCNTDA will provide the developer the grant
sanctioned by the Government of India for these housing units
Successful selection of private developer
With the objective of undertaking this project on a PPP basis in a transparent and objective manner
PCNTDA launched a three-cover Request for Proposal in June 2009 The bidding parameter was theconstructed ldquoCarpet Areardquo in ldquosquare metersrdquo of affordable housing units that the bidder shall
construct and hand over free of cost to PCNTDA
The tender received good response from four interested bidders Of the four bidders two bidders
were adjudged technically and financially capable and short-listed for the final stage The bidder with
the highest construction carpet area offered to PCNTDA was selected The successful bidder quoted
a carpet area of 130599 square meters of affordable housing units
Thereby the PCNTDA derived a value of 7369 housing units (including 5040 BSUP units) a school
and a hospital for the BSUP units a school and hospital for the general public and development of
public amenities
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Bangalore Development Authority
[12]
Value addition to PCNTDA
In commercial terms PCNTDA saved (i) Rs 190 crores as the gap amount required to fund the BSUP
scheme (ii) Rs 210 crores of construction cost of affordable housing units and (iii) Rs 100 crores on
the development of physical and social infrastructure In addition to this PCNTDA shall receive anupfront payment of Rs 50 crores from the successful bidder The project structure also protects
PCNTDA from cost escalation risks valuation risks and engineering risks
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Bangalore Development Authorit
5 Market asse
51 Bangalore gro
The growth of Bangalore has be
from the growth in population in
to the economic opportunities it
Bangalore an obvious choice for
Bangalore has grown at averag
decades It is projected that B
explosive growth has meant th
pressure
Figure 5-1 Population growth
Source City Development Plan Ba
The city leads the country in
available However Bengaluru a
of projects under development a
983089983086983094983091 983089983086983096983097 983090983086983092
983088
983089983088
983090983088
983091983088
983092983088
983093983088
983094983088
983095983088
983096983088
983097983088
983089983097983088983089 983089983097983089983089 983089983097983090983089
983120 983151 983152 983157 983148 983137 983156 983145 983151 983150 983145 983150 983116
983137 983147 983144 983155
y
sment
th overview
en unprecedented in the past couple of decades
the last century Bangalore continues to attract t
offers This is also supported by a salubrious
not only businesses but also for people
compounded annual growth rate (CAGR) of 3
ngalorersquos population will cross the 10 million
at the infrastructure in Bangalore has been p
in Bangalore between 1901 and 2011
galore Development Authority and Census of India
ffice space with 738 million square feet of
lso has 22 per cent of the available space vacan
nd reduced demand
983091983086983089 983092983086983089983089983095983086983096983094
983089983090983086983088983094
983089983094983086983094983092
983090983097983086983090983090
983092
983089983097983091983089 983089983097983092983089 983089983097983093983089 983089983097983094983089 983089983097983095983089 983089983097983096983089 983089983097
[13]
This fact is laid bare
rongs of people due
eather which makes
58 in the last three
mark by 2021 This
t under tremendous
commercial capacity
with a large number
983086983091
983093983094983086983096983094
983096983092
983097983089 983090983088983088983089 983090983088983089983089
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Bangalore Development Authority
[14]
52 Demand projections
Bangalore is the largest commercial market and third largest residential market in India The city has
typically been preferred by home buyers because of its favorable socio-economic conditions and a
salubrious climate In recent years Bangalore has attracted a large influx of population engaged inthe thriving IT sector City residential demand is more end-user driven with moderate price
appreciation The average residential real estate price in the city is 20-25 lesser than in Delhi and
Mumbai In the recent National Housing Bank Residex the index indicating property prices across key
cities in India Bangalore witnessed a mere 1 YoY fall in residential prices in 2011-12 Mumbai saw
an 116 YoY jump in home prices while Delhi witnessed 358 YoY increase during 2011-12 The
city witnessed tremendous growth in terms of population and the number of companies setting up
offices there Thus the ongoing projects such as Bengaluru metro rail project various flyovers and
the under-pass construction activities in Outer Ring Road (ORR) CNR and BHEL circles would ease
the congestion and provide better connectivity for all commuters This will boost real estate demand in
and around Bangalore city
In 2011-12 Bangalorersquos commercial market exhibited resiliency with comparatively high demand
levels despite the discomfort in the market on account of global uncertainty Though commercial
property demand in Bangalore is largely dependent on ITITES sectors the share of manufacturing is
increasing at a faster pace and thereby giving further boost to office space demand According to real
estate consultancy firm Knight Frank the manufacturing sector witnessed a quantum leap as its share
of absorption increased from 3 in 4QCY10 to 23 in 4QCY11 The absorption of commercial space
has gone up from 5mn sq ftquarter in CY09 to 7mn sq ftquarter in CY11 thanks to sustained
demand for Bangalore commercial space which witnessed 43 CAGR in absorption level over CY09-
11 Subdued supply during the first two quarters of 2011 coupled with high absorption level has
substantially lowered the vacancy level in the city (bringing it down from 17 in CY10 to 12 in
CY11) With the expansion of existing operations in the IT sector and the entry of newer sectors dueto renewed optimism in the market we expect the level of absorption of office space to remain stable
Revised Master Plan-2015 for the BMA has been published This document gives the likely growth to
take place in various areas of the BMA The population of the BMA is expected to grow from 61 lakh
in 2001 to 122 lakh in 2025
The proposed growth rate and the ever changing urban scenario is bound to increase the commercial
space demand in the region The site at Indiranagar is situated at a junction and has two road facing
sides which makes it very attractive for commercial development The site is also huge in size and
can easily accommodate a mall
Hence in view of the above it can be safely recommended that the site would generate huge interest
within the developers
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Bangalore Development Authority
[15]
6 Project financials
The project costs have been largely derived from the costs indicated by the Bangalore Development
Authority (BDA)
61 Cost estimation
The estimated cost of development of the project is Rs 23931 lakhs The costs have been outlined
below
Table 6-1 Project Cost of the proposed development
Particular Amount inRs Lakhs
Construction Cost 19967
Land Development 793
Other Infrastructure 50
Total Hard Costs 20810
Contingencies 3121
Total Project Development Cost 23931
Apart from the above mentioned project development cost the Concessionaire would incur the
development premium and Interest during construction (IDC) cost
Particulars 25 years 33 Years 66 years
Upfront Premium (Rs Lakh) 965000 1230000 600000
IDC Cost (Rs Lakh) 315600 361500 259100
Revenue Share every year 15 15 15
Total Project Cost (Rs Lakhs) 36737 39846 33022
62 Revenue stream
The Revenues to the Developer would accrue from the revenue earned from the lease rentals and the
maintenance charges which the developer earns from the tenants The total revenue from both the
heads has been arrived at Rs 6720 Lakhs for the base year It has been assumed that the
occupancy of the commercial complex 80 in the base year and stabilizes to a maximum of 95towards the end of the concession period The average lease rentals have been assumed at Rs 70
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Bangalore Development Authority
[16]
per square feet and the maintenance charges have been assumed at Rs 225 per square feet Both
the revenues are escalating at the rate of 10 per annum The income statement for the developer
has been provided in Annexure 1
63 Viability assessment
The viability assessment has been carried out over two concession period ie 25 33 and 66 years
The debt to equity ratio has been assumed to be 121
The project level internal rate of return (IRR) IRR of equity and the net present value of the equity
have been worked out
Table 6-2 Viability assessment for BDA complex at Indiranagar
Concession Period Project IRR Equity IRR NPV of Equity
Upfront Premium
(Rs in Lakhs)
25 years 1777 2007 96 9650
33 years 1818 2006 108 12300
66 years 2101 2333 5285 6000
It is evident that the project is viable for the developer for all the 3 concession periods In case of the
25 year concession period it is estimated that the developer would pay BDA an estimated upfront
premium of Rs 9650 lakhs Similarly the developer would pay BDA an amount of Rs 12300 lakhsand Rs 6000 lakhs for the concession periods of 33 years and 66 years respectively
64 Ranking of options based on commercial viability
Having assessed the project for two concession periods of 25 33 and 66 years we are of the view
that the 25 year concession option will be more suitable since it allows the developer to make
reasonable returns on the projects and his own investments along with a sizeable upfront premium for
BDA BDA would be in a position to renew the contract or retender the project after 25 years which
may enable BDA to earn as per the prevailing market rates
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Bangalore Development Authority
[17]
7 Statutory amp legal framework
71 Legal amp regulatory framework
Development Control Regulations (DCR)
As per RMP ndash 2015 published by BDA the project site has been classified as ldquoCommercial Businessrdquo
As per the definitions of RMP-2015 Commercial Business Zone allows development of Commercial
and Corporate offices Retail Shopping Complexes Restaurants and Hotels Convention centres and
banquet halls financial institutions Cinema and multiplexes places of assembly exhibition centres
Entertainment and amusement centres and stores
Permissible land uses under Commercial (Business) Zone as per RMP-2015 of BDA
Main land use category C3
Other land uses permissible (as main land use) R I-3 T3 amp U4
If the road width is less than 120 m and plot area is less than 240 square metre then C2 I-2
R and U4 only are allowed
The plot size is 24000 square metre Presently it has 18m wide access road The applicable DCR for
the plot as per proposed road width is as follows
Table 7-1 Plot details of Indiranagar site
Sr No Particulars Description Unit
1 Land Use Commercial Business
2 Road Width 18 Metre
3 Permissible FAR 325
4Permissible ground
coverage50
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Bangalore Development Authority
[18]
8 Indicative environmental amp social impacts
81 Environmental impacts
The proposed development is in line with the layout of BDA Due to the reasonably large site area the
development will be on the higher side A set back of 50 is found to be acceptable for the site
however an Environmental Impact Assessment studies have to be undertaken for the sites Since
already a commercial complex is existent redevelopment of the complex would need demolition of
the existent structures Hence a suitable disposal of construction and debris has to be undertaken by
the developer Also a Green building can be developed to ensure minimal effect on nature
82 Social impactsDuring the construction period the existing establishments have to be shifted or compensated
temporarily Hence a clear resettlement plan has to be decided before the implementation of the
project It is envisaged that if due care is taken about the existing tenants the development would go
smoothly
83 Mitigation measures
It is necessary that the impacts are identified early and action plans are prepared for their mitigation in
advance For instance for environmental impacts the BDA may insist on the developer to use clean
and green building technologies
It is also necessary that the project development plan is also accompanied by a Relocation and
Rehabilitation plan which will layout detailed action points with the requisite intervening entity
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Bangalore Development Authority
[19]
9 Operating framework
91 Risks amp mitigation
The risk framework for this project has been outlined below
Table 9-1 Risk mitigation measures
Risk Category Risk implication Mitigation measure
Sponsor risk BDA scraps the project Termination payments in case of BDA scrapping the
project
Environment
risk
Adverse impact on
surrounding environment
Penalty clauses in case of default on
Concessionairersquos part
Environmental Impact Assessment to identify all
risks in advance
Political riskChange in government may
put project in jeopardy
Termination payments in case of project being
scrapped
Force
majeure riskProject is abandoned
Force majeure clauses in the concession
agreement
Operating riskThe operations of the
facility are stalled
Performance security clause in case of default on
Concessionairersquos part
Design risk Overdesign of the projectProject design to be finalized in mutual agreement
of concessionaire and BDA
Completion
risk
Completion of project is
delayed inconvenience to
citizens and tenants
Penalty clauses for time overrun in the concession
agreement
Cost overrun
risk
Project cost increases
beyond reasonable limits
Project cost increment ceiling to be specified in the
concession agreement Increase beyond this ceiling
to be borne by the developer No change in revenue
sharing
92 Indicative project structure
The best approach for such a large ticket project would be for the BDA to become a key actor in the
entire process of development The BDA may ask the private sector partner to form a Special
Purpose Company where the equity will be brought in by the private sector developer The designs
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Bangalore Development Authority
[20]
should be left to the developer and BDArsquos role would be in approving the same in accordance with the
Development Control Regulations
The SPC will develop and maintain Complex throughout the concession period The tenants would
pay the developer a sub-lease premium or lease rentals which will be escrowed in a separate accountand can be withdrawn based on the revenue sharing structure adopted
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Bangalore Development Authorit
10 Way ahead
101 Project develo
The key task for BDA is to ap
feasibility of the project Once t
the bid process
Figure 10-1 Project developm
The transaction advisor shall stralso prepare the relevant bid
management on behalf of BDA
102 Procurement
The foremost step for BDA is
feasibility The detailed financial
parameter Also an optimum str
bid documents would be prepar
process be conducted as a 2 sta
983105983152983152983151983145983150983156983149983141983150983156 983151983142 983156983154983137
983108983141983156983137983145983148983141983140 983142983141983137983155983145983138
983155983156983154983157983139983156983157983154983145983150983143
983120983154983141983152983137983154983137983156983145983151
983123983141983148983141983139
y
pment framework
oint a Transaction Advisor in order to conduc
e financial numbers are acceptable BDA BDA
nt framework
ucture the project upon completion of the feasibidocuments The transaction advisor shall un
nd will assist in appointment of the private secto
lan
to appoint a Transaction Advisor for the co
feasibility would determine the tentative revenue
cture would be arrived at Post the approval of
d for the selection of the developer It is recom
ge process involving Technical qualification and
983155983137983139983156983145983151983150 983137983140983158983145983155983151983154
983148983145983156983161 983155983156983157983140983145983141983155 983137983150983140 983152983154983151983146983141983139983156
983150 983151983142 983138983145983140 983140983151983139983157983149983141983150983156983155
983145983151983150 983151983142 983152983154983145983158983137983156983141 983155983141983139983156983151983154 983152983137983154983156983150983141983154
[21]
a detailed financial
should proceed with
ility studies and shallertake bid process
partner
nducting the project
for BDA and the bid
easibility Report the
mended that the Bid
inancial proposal
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B a n g a l o r e D e v e l o p m e n t A u t h o r i t y
B D A s h o u l d i n i t i a t e t h e p r o c e s s o f a p p o
i n t i n g a t r a n s a c t i o n a d v i s o r a t t h e
e a r l i e s t T h i s p r o c e s s c a n b e c o m p l e t e d i n 2 m o n t h s
O n c e t h e T A
i s i n p l a c e
t h e B D
A s h o u l d a l l o w
a t l e a s t 4 m o n t h s f o r t h e p r e p a r a t i o n o f f e a s i b i l i t y p r o j e c t s t r u c t u r i n g a n d b i d d o c u m e n
t s
O n c e t
h e b i d d o c u m e n t s a r e i n p l a c e t h
e B D A
s h o u l d i n i t i a t e t h e p r o c e s s
o f s e l e c t i n g t h e p r i v a t e s e c t o r p a
r t n e r w h i c h c a n b e c o m p l e t e d o v e r a 4 m o n t h
p e r i o d
T h e c u
r r e n t p r o c u r e m e n t p l a n i s s p r e a d
o v e r 1 1 m o n t h s w h i c h c a n b e s
h o r t e n e d d e p e n d i n g o n t h e m a n n e r i n w h i c h B D A
m a k e s d e c i s i o n
s r e l a t i n g t o
a p p o i n
t m e n t o f T A a n d p r i v a t e d e v e l o p e r
A c t i v i t y
M 1
M 2
M 3
M 4
M 5
M 6
M 7
M 8 M
9
M 1 0
M 1 1
M 1 2
A p p o i n t m e t o f t r a n s a c t i o n a d v i s o r
D e t a i l e d t e c h n o - e c o n o m i c f e a s i b i l i t y a n d
b i d d o c u m e n t p r e p a r a t i o n
B i d p r
o c e s s m a n a g e m e n t
S e l e c t i o n o f p r e f e r r e d b i d d e r a n d f o r m a t i o n o f S P C
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B a n g a l o r e D e v e l o p m e n t A u t h o r i t y
1 1
A n n e x u r e 1 ndash C a s h - f l o w
s t a t e m e n t
R e v e n u e H e a d
S u b H e a d R a t e
U n i t
3 1 - M a r - 1 4
3 1 - M
a r - 1 7
3 1 - M a r - 2 2
3 1 - M a r - 2 7
3 1 - M a r - 3 2
3 1 - M a r - 3 7
3 1 - M a r - 4 2
3 1 - M a r - 4 7
3 1 - M
a r - 5 2
3 1 - M a r - 5 7
3 1 - M a r - 6 2
C o m m e
r c i a l S p a c e
O c c u p a
n c y
P e r c e n t a g
0
9 0
9 5
9 5
9 5
9 5
9 5
9 5
9 5
9 5
9 5
C o m m e
r c i a l s p a c e l e a s e d o u t
s q f t
-
7 2 0 6
9 0
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6
0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
D e p o s i t f o r L e a s e
( N o o f m o n t h s r e n t )
1 2
A v e r a g e
L e a s e R e n t a l s
7 0
R s p s f p e r m o n t h
E s c a l a t i o n
1 0
M a i n t e n
a n c e c h a r g e s
2 2 5
R s p s f p e r m o n t h
R e v e n u e f r o m
L e a s e R e n t a l
R s
L a k h s
-
8 8
6 3
1 5 0
6 8
2 4 2
6 6
3 9 0
8 1
6 2 9
4 1
1 0 1 3
6 7
1 6 3 2
5 3
2 6
2 9
2 0
4 2 3 4
3 5
6 8 1 9
4 7
R e v e n u e f r o m
M a i n t e n a n c e c h a r g e s
-
2 8 5
4 8 4
7 8 0
1 2
5 6
2 0
2 3
3 2
5 8
5 2
4 7
8 4
5 1
1 3 6
1 0
2 1 9
2 0
T o t a l R
e v e n u e
-
9 1 4 8
1 5 5 5 2
2 5 0 4 6
4 0 3 3 8
6 4 9 6 4
1 0 4 6 2 5
1 6 8 5 0 0
2 7
1 3 7 1
4 3 7 0 4 6
7 0 3 8 6 7
R e v e n
u e H e a d
S u b H e a d R a t e
U n i t
3 1 - M a r - 6
7
3 1 - M a r - 7 2
3 1 - M a r - 7 8
3 1 - M a r - 7 9
C o m m e r c i a l S p a c e
O c c u p a n c y
P e r c e n t a g
9 5
9 5
9 5
9 5
C o m m e r c i a l s p a c e l e a s e d o u t
s q f t
7 6 0 7 2
8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
D e p o s i t f o r L e a s e
( N o o f m o n t h s r e n t )
1 2
A v e r a g
e L e a s e R e n t a l s
7 0 R s p s f p e r m o n t h
E s c a l a
t i o n
1 0
M a i n t e
n a n c e c h a r g e s
2 2
5 R s p s f p e r m o n t h
R e v e n u
e f r o m
L e a s e R e n t a l
R s
L a k h s
1 0
9 8 2 8 2
1 7
6 8 7
9 4
3 1
3 3 5
2 7
3 4
4 6 8
8 0
R e v e n u
e f r o m
M a i n t e n a n c e c h a r g e s
3 5 3 0 2
5 6 8
5 4
1 0 0 7
2 1
1 1 0 7
9 3
T o t a l R e v e n u e
1 1 3 3 5 8 4
1 8 2 5 6 4 8
3 2 3 4 2 4 8
3 5 5 7 6 7 2
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[x]
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[y]
Disclaimer
CRISIL Risk and Infrastructure Solutions Limited (CRIS) has taken due care and caution in preparation of this Report for
Bangalore Development Authority which is under the purview of the Urban Development Department Government of
Karnataka This Report is based on the information documents provided by the Company andor information available publicly
andor obtained by CRIS from sources which it considers reliable CRIS does not guarantee the accuracy adequacy or
completeness of the information documents Report and is not responsible for any errors or omissions or for the results
obtained from the use of the same The Report and results stated therein are subject to change CRIS especially states that it
has no financial liability whatsoever to the Company users of this Report This Report is strictly confidential and should not be
reproduced or redistributed or communicated directly or indirectly in any form or published or copied in whole or in part
especially outside India for any purpose
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Registered Office ndash Mum
CRISIL House Central AvenueHiranandani Business ParkPowai Mumbai- 400 076Phone 91-22-3342 3000Fax 91-22-3342 3810
New Delhi
The Mira G-1 1st Floor Plot NoIshwar Nagar Mathura Road
New Delhi - 110 065 IndiaPhone 91-11-4250 510091-11-2693 0117 - 121Fax 91-11-2684 2213
Hyderabad
3rd Floor Uma ChambersPlot No 9amp10 Nagarjuna HillsNear Punjagutta Cross RoadHyderabad - 500 082Phone 91-40-40328200Fax 91-40-2335 7507
Bengaluru
W-101 Sunrise Chambers22 Ulsoor RoadBengaluru - 560 042Phone 91-80-2558 0899Fax 91-80-2559 4801
Ahmedabad
706 Venus AtlantisNear Reliance Petrol PumpPrahladnagarAhmedabad -Phone 91-79-4024 4500Fax 91-79-2755 9863
Visit us atwwwcrisilcom
ai
1 amp 2
About CRISIL Infrastructu
CRISIL Infrastructure Advisory
CRISIL Risk and Infrastructure
Limited a 100 subsidiary of
Indiarsquos leading Ratings Resear
Policy Advisory Company
CRISIL Infrastructure Advisory
premier advisor focusing on po
well as commercial and contra
the areas of transport energyinfrastructure We also provide
international firms planning inv
India Over a period of time C
Infrastructure Advisory has buil
position for itself in these doma
considered the preferred cons
governments multilateral agen
sector clients We have extend
operations beyond India and ar
other emerging markets in Afri
and South Asia
re Advisory
is a division of
Solutions
RISIL Limited ndash
ch Risk and
is Indiarsquos
licy issues as
tual issues in
nd urbansupport to
stments in
ISIL
t a unique
ins and is
ltant by
cies and private-
ed our
e present in
a Middle East
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
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Bangalore Development Authority
[3]
2 Introduction
CRISIL Infrastructure Advisory a division of CRISIL Risk and Infrastructure Solutions Limited (CRIS)
has been appointed by the Infrastructure Development Department Government of Karnataka to
work closely with the Bangalore Development Authority for the assignment ldquoInstitutional Strengthening
and Sector Specific Inventory for PPP Mainstreaming in Sectorsrdquo Under this BDA has identified a set
of nine projects for which pre-feasibility assessments are to be carried out
In order to provide advanced recreational facilities and services to the citizens BDA has proposed the
redevelopment of its Complexes through Public Private Partnership model Redevelopment of BDA
Complex at Indiranagar is one of the nine projects proposed by BDA
21 Project idea
Bangalore Development Authority (BDA) is one of the premier urban planning and development
agencies that oversee the growth of the city The BDA came into being with effect from 6th January
1976 under a separate Act of the State Legislature viz the BDA Act 1976 This Authority combined in
itself the Planning functions of the City Planning Authority and the developmental functions of the
erstwhile City Improvement Trust Board (CITB)
The key objectives of the authority as per the BDA Act shall be to promote and secure the
development of the Bangalore Metropolitan Area (BMA) and for that purpose the Authority shall have
the power to acquire hold manage and dispose of moveable and immoveable property whether
within or outside the area under its jurisdiction to carry out building engineering and other operations
and generally to do all things necessary or expedient for the purposes of such development and for
purposes incidental thereto
In line with the objectives of BDA the BDA Complexes were built at strategic locations in near
residential localities in order to provide a one stop solution for shopping Hence convenient stores like
motor training schools travel agents RTO etc started operating within the complexes The complexes
are now in dilapidated condition and in order to provide better facilities to the citizens BDA proposed
to develop the old BDA Complex at Indiranagar The project is also an outcome of reducing
commercial spaces in key residential areas
22 Approach amp methodologyThe broad approach and methodology followed for study of these projects has been depicted
graphically below
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
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Bangalore Development Authorit
Figure 2-1 Approach and Met
23 Review of pre
Bangalore Development Authori
development works identified by
29102010 BDA retained Tand
identified projects namely ldquoDevel
TUSPL had submitted their Fe
estimations The report submitte
been presented as below
The project cost indicate
to reflect the market
contingencies prelimina
The financials indicated
Developer and BDA an
given the market conditi
The report does not cle
1062701 sq ft And an
2440023 square metre
officials
1 The cost incurred towards upfront pre
figure
Study of existingreports
y
odology
ious studies
ty had invited proposals for appointment of Co
BDA vide Tender Notification No BDAEMTA-
on Urban Solutions Pvt Ltd (TUSPL) as Cons
opment of Commercial Complex at Indiranagar
sibility Report for the Indiranagar site along
d by TUSPL was studied in detail and the CRISI
d in the report is Rs 39165 Lakhs The project c
rates The Revised project cost is Rs 239
ry and pre-operative expenses
in the Feasibility Report is assuming a revenu
an upfront premium which the developer woul
ns and rates this has been revised
arly mention the area of the plot It indicates a
open land development area of 131322 sq f
has been assumed for the pre-feasibility in c
ium and the interest during construction period is not includ
Discussions withBDA personnel
Be
a
Finalrecommendation
[4]
nsultants for various
3802010-11 dated
ultant for one of the
angalorerdquo
ith the designs and
Lrsquos observations has
ost has been revised
11 Lakhs including
share between the
ld provide However
construction area of
t Hence an area of
nsultation with BDA
d in the above mentioned
lock coststimation
inancialsessment
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
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Bangalore Development Authority
[5]
3 Sector profile
The city of Bangalore has witnessed very rapid growth The city today is home to over 84 million
people (2011 Census) The salubrious weather and the rapid concentration of economic activities in
Bangalore have fuelled the growth of Bangalore As one of the worldrsquos fastest growing cities
Bangalore is experiencing a steady growth in population
Bangalore has been substantially affected by globalization and rapid urbanization over the last
decade The demand for services and quality of life is not confined to the central core or the erstwhile
Bangalore Mahanagra Palike jurisdiction but spreads beyond into the peri-urban areas the
Metropolitan Area and outwards into Bangalore Metropolitan Region With the emergence of the
Bangalore-Mysore Infrastructure Corridor the Bangalore International Airport and the planned ring
roads urbanization has sprawled out
Banaglore has incontestable advantages to develop into an international metropolis but at the same
time faces significant constraints The city is embedded in its history and depicts the greatness of a
truly Indian city established before the invasions and colonization It has a diverse set of activities
from silk to aeronautics from clothing to information technology and is a gauge of dynamism and
solidity of the city Natural drainage climatic advantage and the availability of water in the Cauvery
baisn are factors assisting in improving the quality of life
31 Industry overview
Bengaluru is countryrsquos third leading realty market With the IT boom and corresponding growth of the
economy saw large-scale increase in the cityrsquos population mostly due to migration from across India
Bengalurursquos population grew about 35 percent in the last six years
This increase in population along with steady demand and restricted supply led to saturation in central
Bengaluru region and pushed development to peripheral areas like Whitefield Sarjapur road Outer
Ring Road (ORR) Bannerghatta Road Hosur Road
With the opening of International Airport Real estate in North Bangalore (Bellary Road to Yelahanka)
has also witnessed the launch of numerous projects with apartments and villas Given the improved
infrastructure accessibility and the future potential for this area the area has been attracting both the
segments of investors and end-users alike
The city leads the country in office space with 738 million square feet of commercial capacityavailable However Bengaluru also has 22 per cent of the available space vacant with a large number
of projects under development and reduced demand
32 Regional profile
Bengaluru (formerly Bangalore) also known as Garden City for its beautiful gardens is the
administrative industrial commercial educational and cultural capital of Karnataka and located on
the Deccan Plateau in the South-Western part of India Bengaluru is Indias third most populous city
fastest growing and fifth largest metropolitan area with population of about 57 million (as per 2001
census) The population is expected to reach around 11 million and 22 million in 2021 and 2041respectively
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
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Bangalore Development Authority
[6]
With ever increasing boundaries and gross domestic product of 59123 billion in FY 06-07 Bengaluru
has some well-recognized IT companies and numerous public sector heavy industries aerospace
telecommunications and defence organisations located within Bengaluru also has some well known
colleges and research institutes
Geography
With an average elevation from the sea level of 920 m and total area of 741 km2 Bengaluru is located
in the south-eastern part of Karnataka in the Mysore Plateau - a region of Deccan Plateau The city
has an uneven landscape of hills and valleys to the south and relatively more level plateau towards
the north
Because of its elevation the city enjoys a pleasant and equable climate throughout the year The city
is situated in the Bengaluru Urban district which is divided into four taluks - Bangalore North
Bangalore East Bangalore South and Anekal and covers a total geographical area of 2190 sq km
Bangalore District is surrounded by Kolar District to the northeast Tumkur District on the northwest
Mandya District on the southwest Chamarajanagar District on the south and neighbouring state of
Tamil Nadu on the southeast
Connectivity
Bangalore is well connected to other Indian cities by road rail and air transport The connectivity by
rail road and air is detailed in the sections below
Road
Bengaluru is located at the junction of National Highways 4 7 and 48 connecting to various important
cities in India including Chennai Hyderabad Kanyakumari Madurai Mangalore Mumbai Nagpur
Pune and Varanasi
Railways
Bengaluru has two major railway stations Bengaluru City railway station and Yeswantpur Junction
The city has a well maintained railway network connecting major cities of the country and is
connected to the rest of the country both by metre gauge and broad gauge rail services
Air
Bengaluru has an International Airport at Devanahalli and is well connected to all cities in India
Internationally Bengaluru is connected to European and Asian cities like Frankfurt Singapore Kuala
Lumpur London Dubai Paris Bangkok and Hong Kong
Major commercial areas
The following are the major commercial areas in and around Bangalore
Central Business District Seshadripuram Jayanagar JP Nagar Yeshwantapura
Eastern Suburb Marathalli-sarjapur ORR Sarjapur Road Whitefield and Brookfield
Secondary Business District Indiranagar JP Nagar RT Nagar Vijayanagar
Northern Suburb HRBR Layout Bellary Road Jakkur
Southern Suburb Mysore Road Hosur Road
West Suburb BEL Factory HMT Layout
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
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Bangalore Development Authority
[7]
33 Key issues
The recessionary trends in 2007 across the world had also adversely affected the entire real estate
market in Bengaluru All the three categories of residential commercial (office space) and retail had
experienced slump in market and the real estate market in several erstwhile prime locations of the citywere facing oversupply situation and a drastic fall in the capital as well as rental values
With the revival of the industry and economy the residential market is expected to witness a jump
across all the areas in Bengaluru as per CRISILrsquos analysis The eastern and southern areas are
estimated to emerge as up-scaled developments as these areas are expected to see maximum
supply in the next three years
Good quality developments have been the key feature of Bangalorersquos commercial developments The
boom in IT sector especially in South India has enabled the city to have a metropolitan culture which
brings along the urban demands like malls and multiplexes
Recently the market in Bangalore has stabilized to a large extent after the sudden jump in prices post
recession However this is cyclical in nature and the saturation of IT services has led to a scenario
where there would not be much increase in the lease rentals
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
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Bangalore Development Authorit
4 Project
41 Description of
It is proposed that for the redev
over to the developer on long
Finance Design Construction
period Ownership of the land wi
BUP area will be transferred b
proposed commercial develop
vendors
42 Components o
The project would be develope
basis The structure of the mode
Figure 4-1 Development struc
43 Description of
The site is located at Indiranaga
the main commercial centres in
Road in the North Old Airport
the East Indiranagar is located
famous for housing the Somes
and educational institutions like
y
the project
lopment of BDA Complex at Indiranagar the la
erm lease basis The selected developer woul
and Operation amp Maintenance of the project t
ll always be with BDA After the lease period th
ack to BDA free of cost We have assumed
ent shall be reserved for BDA for rehabilit
f the project
on a Design Build Finance Operate and Tra
l has been illustrated below
ture of the Commercial Complex
the site
r a suburb of Bangalore located about 4 km ea
the city This medium sized suburb is enclose
oad in the South Halasura in the West and Je
within a diameter of few kilometre radii from the
ara Temple several reputed hospitals like Amrj
r Ambedkar College KH Patel College etc
[8]
nd would be handed
d be responsible for
hroughout the lease
e land along with the
hat a portion of the
tion of the existing
sfer model on PPP
t of MG road one of
by the Old Madras
vanbheemanagar in
airport The place is
yoti Vijaya and ESI
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Bangalore Development Authority
[9]
The site is situated at a junction near a residential area and is frequented by elders and youngsters
alike The present building consists of Motor driving schools RTO office computer vendors and travel
agents There is a water tank situated in the site
Figure 4-2 BDA Complex at Indiranagar
44 Interaction with stakeholders
CRISIL conducted a series of interactions with the stakeholders namely the BDA officials Citizens
and the establishment owners The interactions revealed that the building has to undergo
redevelopment The condition of the BDA office is not up to the standards expected and the officials
complained about leaks and short circuits The establishment owners suggested that the building was
planned with less road facing establishments due to which they are not able to attract footfalls
45 Case studies
In order to generate revenues from the real estate value of the land in the ownership of the ULBrsquos
commercial projects have been developed on a PPP basis on these lands Typically under such
arrangements the ULB would have identified a site under its ownership where a property for
commercial use can be developed Commercial development would include the development of
shopping complexes markets bus terminals multi-level car parking townships etc
Under such an arrangement the ULB would require of the private developer to undertake
construction of a commercial complex on the land The land would be provided by the ULB to the
private operator on a lease basis The ULB would provide specifications on the nature and type of
commercial development required The private developer would need to bear all the capital costs
associated with the construction of the commercial complex Post construction of the commercial
complex as per the arrangement the private developer would either hand over the constructed
facility to the ULB or would sub-lease the property The private developer would be required to make
to the ULB an upfront payment or provide a share in the ULB revenues earned from sub-leasing the
properties
The following case study compiled by the Ministry of Urban Development Government of India
highlights the development of municipalurban lands on a PPP basis
Category Details
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Bangalore Development Authority
[10]
Category Details
Project Construction of Commercial Complex at Ranipura Market
Cost of
ProjectRs 1500 lakhs
Description
The land was allotted to the concessionaire to construct the Commercial Complex by
the Corporation
Corporation continues to own the land
After the concession period the built-up structure (Commercial Complex) will be
transferred to the Corporation by the concessionaire
The concessionaire was given the right to recover its investment from the premium
received for ldquoRight of Occupationrdquo of the constructed shops
At the time of award of concession it was estimated that a profit of Rs 200 lakh will
be accrued from the venture which will be shared by the concessionaire with the
Corporation
The Corporation is expected to receive a profit share of Rs 100 lakh from the
concessionaire
Source Compendium on Public Private Partnership in Urban Infrastructure Case Studies Ministry of Urban
Development Government of India in association with Confederation of Indian Industry (CII)
We have also studied another case wherein the development affordable housing units was structure
on a PPP basis by the Pimpri Chinchwad New Township Development Authority (PCNTDA)
451 Public private partnership in affordable housing under Jawaharlal
Nehru National Urban Renewal Mission (JNNURM)
The Pune metropolitan region comprising Pune and Pimpri Chinchwad cities is one of the fastest
growing urban agglomerations in India A major automobile and auto-ancillary hub and a well-known
international education destination it also ranks among the top IT destinations of India Besides the
region has many industrial clusters housing industries focused on FMCG engineering agro-based
technology
The Pimpri-Chinchwad New Town Develompent Authority (PCNTDA) a key development authority of
the PMR is responsible for development of peri-urban especially in its north In line with the
phenomenal growth of the region and its strident aspirations PCNTDA has envisioned the
development of an integrated township at Sector 12 spanning 53 hectares Given the success of the
Public Private Partnership (PPP) model in involving private sector participation for development based
projects PCNTDS proposed to develop the integrated township on PPP basis
With this objective PCNTDA appointed the consortium of CRISIL Risk and Infrastructure Solutions
Limited (CRIS) Omkar Associates and Creations as project development consultants for the
development of an eco-friendly affordable township at Bhosari Sector 12 CRISILrsquos role was to
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Bangalore Development Authority
[11]
undertake a detailed demand assessment financial feasibility project structuring and management of
the bid process
The concept
Keep in mind the PCNTDArsquos vision CRIS designed integrated township such that it compriseshousing untis for the poor affordable housing units for the general public a primary health care
centre a hospital and a school
As per the structure the Developer shall construct 5040 housing units under the Basic Services for
Urban Poor (BSUP) scheme of JNNURM PCNTDA shall transfer the amount of grant sanctioned for
developing these units under the JNNURM scheme to the developer The remaining project cost of
the BUSP units was to be financed by the developer
In addition to this the Developer shall also construct affordable housing units as per pre-specified
specifications and hand over to PCNTDA free of cost The developer shall also construction the
physical and social infrastructure for the integrated township thereby ensuring good road adequate
water supply an efficient sewerage system as well as schools and hospitals The project shall bedeveloped in a manner such that it has minimum possible impact on the surrounding environment and
is in harmony with nature To this end the developer shall undertake eco-friendly initiatives including
rain water harvesting use of solar power environment-friendly materials and vermin-composting
The project
The developer has to complete the BSUP housing units within 2 years and hand over to the PCNTDA
For the remaining portion of the land PCNTDA shall execute a lease deed for 99 years with the
developer The lease rights shall be granted to the developer in phases upon completion of
milestones as defined in the project agreement The main scope of work for the developer shall
include
Master planning for the entire 53 hectares of land and construction of common physical and
social infrastructure for the entire area
Development construction and marketing of 795 lakhs square meters of integrated real
estate space
Construction and handing over of 5040 housing units under the BSUP scheme of JNNURM
on a separate layout carved out of the said land PCNTDA will provide the developer the grant
sanctioned by the Government of India for these housing units
Successful selection of private developer
With the objective of undertaking this project on a PPP basis in a transparent and objective manner
PCNTDA launched a three-cover Request for Proposal in June 2009 The bidding parameter was theconstructed ldquoCarpet Areardquo in ldquosquare metersrdquo of affordable housing units that the bidder shall
construct and hand over free of cost to PCNTDA
The tender received good response from four interested bidders Of the four bidders two bidders
were adjudged technically and financially capable and short-listed for the final stage The bidder with
the highest construction carpet area offered to PCNTDA was selected The successful bidder quoted
a carpet area of 130599 square meters of affordable housing units
Thereby the PCNTDA derived a value of 7369 housing units (including 5040 BSUP units) a school
and a hospital for the BSUP units a school and hospital for the general public and development of
public amenities
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
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Bangalore Development Authority
[12]
Value addition to PCNTDA
In commercial terms PCNTDA saved (i) Rs 190 crores as the gap amount required to fund the BSUP
scheme (ii) Rs 210 crores of construction cost of affordable housing units and (iii) Rs 100 crores on
the development of physical and social infrastructure In addition to this PCNTDA shall receive anupfront payment of Rs 50 crores from the successful bidder The project structure also protects
PCNTDA from cost escalation risks valuation risks and engineering risks
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
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Bangalore Development Authorit
5 Market asse
51 Bangalore gro
The growth of Bangalore has be
from the growth in population in
to the economic opportunities it
Bangalore an obvious choice for
Bangalore has grown at averag
decades It is projected that B
explosive growth has meant th
pressure
Figure 5-1 Population growth
Source City Development Plan Ba
The city leads the country in
available However Bengaluru a
of projects under development a
983089983086983094983091 983089983086983096983097 983090983086983092
983088
983089983088
983090983088
983091983088
983092983088
983093983088
983094983088
983095983088
983096983088
983097983088
983089983097983088983089 983089983097983089983089 983089983097983090983089
983120 983151 983152 983157 983148 983137 983156 983145 983151 983150 983145 983150 983116
983137 983147 983144 983155
y
sment
th overview
en unprecedented in the past couple of decades
the last century Bangalore continues to attract t
offers This is also supported by a salubrious
not only businesses but also for people
compounded annual growth rate (CAGR) of 3
ngalorersquos population will cross the 10 million
at the infrastructure in Bangalore has been p
in Bangalore between 1901 and 2011
galore Development Authority and Census of India
ffice space with 738 million square feet of
lso has 22 per cent of the available space vacan
nd reduced demand
983091983086983089 983092983086983089983089983095983086983096983094
983089983090983086983088983094
983089983094983086983094983092
983090983097983086983090983090
983092
983089983097983091983089 983089983097983092983089 983089983097983093983089 983089983097983094983089 983089983097983095983089 983089983097983096983089 983089983097
[13]
This fact is laid bare
rongs of people due
eather which makes
58 in the last three
mark by 2021 This
t under tremendous
commercial capacity
with a large number
983086983091
983093983094983086983096983094
983096983092
983097983089 983090983088983088983089 983090983088983089983089
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
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Bangalore Development Authority
[14]
52 Demand projections
Bangalore is the largest commercial market and third largest residential market in India The city has
typically been preferred by home buyers because of its favorable socio-economic conditions and a
salubrious climate In recent years Bangalore has attracted a large influx of population engaged inthe thriving IT sector City residential demand is more end-user driven with moderate price
appreciation The average residential real estate price in the city is 20-25 lesser than in Delhi and
Mumbai In the recent National Housing Bank Residex the index indicating property prices across key
cities in India Bangalore witnessed a mere 1 YoY fall in residential prices in 2011-12 Mumbai saw
an 116 YoY jump in home prices while Delhi witnessed 358 YoY increase during 2011-12 The
city witnessed tremendous growth in terms of population and the number of companies setting up
offices there Thus the ongoing projects such as Bengaluru metro rail project various flyovers and
the under-pass construction activities in Outer Ring Road (ORR) CNR and BHEL circles would ease
the congestion and provide better connectivity for all commuters This will boost real estate demand in
and around Bangalore city
In 2011-12 Bangalorersquos commercial market exhibited resiliency with comparatively high demand
levels despite the discomfort in the market on account of global uncertainty Though commercial
property demand in Bangalore is largely dependent on ITITES sectors the share of manufacturing is
increasing at a faster pace and thereby giving further boost to office space demand According to real
estate consultancy firm Knight Frank the manufacturing sector witnessed a quantum leap as its share
of absorption increased from 3 in 4QCY10 to 23 in 4QCY11 The absorption of commercial space
has gone up from 5mn sq ftquarter in CY09 to 7mn sq ftquarter in CY11 thanks to sustained
demand for Bangalore commercial space which witnessed 43 CAGR in absorption level over CY09-
11 Subdued supply during the first two quarters of 2011 coupled with high absorption level has
substantially lowered the vacancy level in the city (bringing it down from 17 in CY10 to 12 in
CY11) With the expansion of existing operations in the IT sector and the entry of newer sectors dueto renewed optimism in the market we expect the level of absorption of office space to remain stable
Revised Master Plan-2015 for the BMA has been published This document gives the likely growth to
take place in various areas of the BMA The population of the BMA is expected to grow from 61 lakh
in 2001 to 122 lakh in 2025
The proposed growth rate and the ever changing urban scenario is bound to increase the commercial
space demand in the region The site at Indiranagar is situated at a junction and has two road facing
sides which makes it very attractive for commercial development The site is also huge in size and
can easily accommodate a mall
Hence in view of the above it can be safely recommended that the site would generate huge interest
within the developers
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
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Bangalore Development Authority
[15]
6 Project financials
The project costs have been largely derived from the costs indicated by the Bangalore Development
Authority (BDA)
61 Cost estimation
The estimated cost of development of the project is Rs 23931 lakhs The costs have been outlined
below
Table 6-1 Project Cost of the proposed development
Particular Amount inRs Lakhs
Construction Cost 19967
Land Development 793
Other Infrastructure 50
Total Hard Costs 20810
Contingencies 3121
Total Project Development Cost 23931
Apart from the above mentioned project development cost the Concessionaire would incur the
development premium and Interest during construction (IDC) cost
Particulars 25 years 33 Years 66 years
Upfront Premium (Rs Lakh) 965000 1230000 600000
IDC Cost (Rs Lakh) 315600 361500 259100
Revenue Share every year 15 15 15
Total Project Cost (Rs Lakhs) 36737 39846 33022
62 Revenue stream
The Revenues to the Developer would accrue from the revenue earned from the lease rentals and the
maintenance charges which the developer earns from the tenants The total revenue from both the
heads has been arrived at Rs 6720 Lakhs for the base year It has been assumed that the
occupancy of the commercial complex 80 in the base year and stabilizes to a maximum of 95towards the end of the concession period The average lease rentals have been assumed at Rs 70
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
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Bangalore Development Authority
[16]
per square feet and the maintenance charges have been assumed at Rs 225 per square feet Both
the revenues are escalating at the rate of 10 per annum The income statement for the developer
has been provided in Annexure 1
63 Viability assessment
The viability assessment has been carried out over two concession period ie 25 33 and 66 years
The debt to equity ratio has been assumed to be 121
The project level internal rate of return (IRR) IRR of equity and the net present value of the equity
have been worked out
Table 6-2 Viability assessment for BDA complex at Indiranagar
Concession Period Project IRR Equity IRR NPV of Equity
Upfront Premium
(Rs in Lakhs)
25 years 1777 2007 96 9650
33 years 1818 2006 108 12300
66 years 2101 2333 5285 6000
It is evident that the project is viable for the developer for all the 3 concession periods In case of the
25 year concession period it is estimated that the developer would pay BDA an estimated upfront
premium of Rs 9650 lakhs Similarly the developer would pay BDA an amount of Rs 12300 lakhsand Rs 6000 lakhs for the concession periods of 33 years and 66 years respectively
64 Ranking of options based on commercial viability
Having assessed the project for two concession periods of 25 33 and 66 years we are of the view
that the 25 year concession option will be more suitable since it allows the developer to make
reasonable returns on the projects and his own investments along with a sizeable upfront premium for
BDA BDA would be in a position to renew the contract or retender the project after 25 years which
may enable BDA to earn as per the prevailing market rates
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
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Bangalore Development Authority
[17]
7 Statutory amp legal framework
71 Legal amp regulatory framework
Development Control Regulations (DCR)
As per RMP ndash 2015 published by BDA the project site has been classified as ldquoCommercial Businessrdquo
As per the definitions of RMP-2015 Commercial Business Zone allows development of Commercial
and Corporate offices Retail Shopping Complexes Restaurants and Hotels Convention centres and
banquet halls financial institutions Cinema and multiplexes places of assembly exhibition centres
Entertainment and amusement centres and stores
Permissible land uses under Commercial (Business) Zone as per RMP-2015 of BDA
Main land use category C3
Other land uses permissible (as main land use) R I-3 T3 amp U4
If the road width is less than 120 m and plot area is less than 240 square metre then C2 I-2
R and U4 only are allowed
The plot size is 24000 square metre Presently it has 18m wide access road The applicable DCR for
the plot as per proposed road width is as follows
Table 7-1 Plot details of Indiranagar site
Sr No Particulars Description Unit
1 Land Use Commercial Business
2 Road Width 18 Metre
3 Permissible FAR 325
4Permissible ground
coverage50
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
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Bangalore Development Authority
[18]
8 Indicative environmental amp social impacts
81 Environmental impacts
The proposed development is in line with the layout of BDA Due to the reasonably large site area the
development will be on the higher side A set back of 50 is found to be acceptable for the site
however an Environmental Impact Assessment studies have to be undertaken for the sites Since
already a commercial complex is existent redevelopment of the complex would need demolition of
the existent structures Hence a suitable disposal of construction and debris has to be undertaken by
the developer Also a Green building can be developed to ensure minimal effect on nature
82 Social impactsDuring the construction period the existing establishments have to be shifted or compensated
temporarily Hence a clear resettlement plan has to be decided before the implementation of the
project It is envisaged that if due care is taken about the existing tenants the development would go
smoothly
83 Mitigation measures
It is necessary that the impacts are identified early and action plans are prepared for their mitigation in
advance For instance for environmental impacts the BDA may insist on the developer to use clean
and green building technologies
It is also necessary that the project development plan is also accompanied by a Relocation and
Rehabilitation plan which will layout detailed action points with the requisite intervening entity
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
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Bangalore Development Authority
[19]
9 Operating framework
91 Risks amp mitigation
The risk framework for this project has been outlined below
Table 9-1 Risk mitigation measures
Risk Category Risk implication Mitigation measure
Sponsor risk BDA scraps the project Termination payments in case of BDA scrapping the
project
Environment
risk
Adverse impact on
surrounding environment
Penalty clauses in case of default on
Concessionairersquos part
Environmental Impact Assessment to identify all
risks in advance
Political riskChange in government may
put project in jeopardy
Termination payments in case of project being
scrapped
Force
majeure riskProject is abandoned
Force majeure clauses in the concession
agreement
Operating riskThe operations of the
facility are stalled
Performance security clause in case of default on
Concessionairersquos part
Design risk Overdesign of the projectProject design to be finalized in mutual agreement
of concessionaire and BDA
Completion
risk
Completion of project is
delayed inconvenience to
citizens and tenants
Penalty clauses for time overrun in the concession
agreement
Cost overrun
risk
Project cost increases
beyond reasonable limits
Project cost increment ceiling to be specified in the
concession agreement Increase beyond this ceiling
to be borne by the developer No change in revenue
sharing
92 Indicative project structure
The best approach for such a large ticket project would be for the BDA to become a key actor in the
entire process of development The BDA may ask the private sector partner to form a Special
Purpose Company where the equity will be brought in by the private sector developer The designs
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Bangalore Development Authority
[20]
should be left to the developer and BDArsquos role would be in approving the same in accordance with the
Development Control Regulations
The SPC will develop and maintain Complex throughout the concession period The tenants would
pay the developer a sub-lease premium or lease rentals which will be escrowed in a separate accountand can be withdrawn based on the revenue sharing structure adopted
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Bangalore Development Authorit
10 Way ahead
101 Project develo
The key task for BDA is to ap
feasibility of the project Once t
the bid process
Figure 10-1 Project developm
The transaction advisor shall stralso prepare the relevant bid
management on behalf of BDA
102 Procurement
The foremost step for BDA is
feasibility The detailed financial
parameter Also an optimum str
bid documents would be prepar
process be conducted as a 2 sta
983105983152983152983151983145983150983156983149983141983150983156 983151983142 983156983154983137
983108983141983156983137983145983148983141983140 983142983141983137983155983145983138
983155983156983154983157983139983156983157983154983145983150983143
983120983154983141983152983137983154983137983156983145983151
983123983141983148983141983139
y
pment framework
oint a Transaction Advisor in order to conduc
e financial numbers are acceptable BDA BDA
nt framework
ucture the project upon completion of the feasibidocuments The transaction advisor shall un
nd will assist in appointment of the private secto
lan
to appoint a Transaction Advisor for the co
feasibility would determine the tentative revenue
cture would be arrived at Post the approval of
d for the selection of the developer It is recom
ge process involving Technical qualification and
983155983137983139983156983145983151983150 983137983140983158983145983155983151983154
983148983145983156983161 983155983156983157983140983145983141983155 983137983150983140 983152983154983151983146983141983139983156
983150 983151983142 983138983145983140 983140983151983139983157983149983141983150983156983155
983145983151983150 983151983142 983152983154983145983158983137983156983141 983155983141983139983156983151983154 983152983137983154983156983150983141983154
[21]
a detailed financial
should proceed with
ility studies and shallertake bid process
partner
nducting the project
for BDA and the bid
easibility Report the
mended that the Bid
inancial proposal
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
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B a n g a l o r e D e v e l o p m e n t A u t h o r i t y
B D A s h o u l d i n i t i a t e t h e p r o c e s s o f a p p o
i n t i n g a t r a n s a c t i o n a d v i s o r a t t h e
e a r l i e s t T h i s p r o c e s s c a n b e c o m p l e t e d i n 2 m o n t h s
O n c e t h e T A
i s i n p l a c e
t h e B D
A s h o u l d a l l o w
a t l e a s t 4 m o n t h s f o r t h e p r e p a r a t i o n o f f e a s i b i l i t y p r o j e c t s t r u c t u r i n g a n d b i d d o c u m e n
t s
O n c e t
h e b i d d o c u m e n t s a r e i n p l a c e t h
e B D A
s h o u l d i n i t i a t e t h e p r o c e s s
o f s e l e c t i n g t h e p r i v a t e s e c t o r p a
r t n e r w h i c h c a n b e c o m p l e t e d o v e r a 4 m o n t h
p e r i o d
T h e c u
r r e n t p r o c u r e m e n t p l a n i s s p r e a d
o v e r 1 1 m o n t h s w h i c h c a n b e s
h o r t e n e d d e p e n d i n g o n t h e m a n n e r i n w h i c h B D A
m a k e s d e c i s i o n
s r e l a t i n g t o
a p p o i n
t m e n t o f T A a n d p r i v a t e d e v e l o p e r
A c t i v i t y
M 1
M 2
M 3
M 4
M 5
M 6
M 7
M 8 M
9
M 1 0
M 1 1
M 1 2
A p p o i n t m e t o f t r a n s a c t i o n a d v i s o r
D e t a i l e d t e c h n o - e c o n o m i c f e a s i b i l i t y a n d
b i d d o c u m e n t p r e p a r a t i o n
B i d p r
o c e s s m a n a g e m e n t
S e l e c t i o n o f p r e f e r r e d b i d d e r a n d f o r m a t i o n o f S P C
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
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B a n g a l o r e D e v e l o p m e n t A u t h o r i t y
1 1
A n n e x u r e 1 ndash C a s h - f l o w
s t a t e m e n t
R e v e n u e H e a d
S u b H e a d R a t e
U n i t
3 1 - M a r - 1 4
3 1 - M
a r - 1 7
3 1 - M a r - 2 2
3 1 - M a r - 2 7
3 1 - M a r - 3 2
3 1 - M a r - 3 7
3 1 - M a r - 4 2
3 1 - M a r - 4 7
3 1 - M
a r - 5 2
3 1 - M a r - 5 7
3 1 - M a r - 6 2
C o m m e
r c i a l S p a c e
O c c u p a
n c y
P e r c e n t a g
0
9 0
9 5
9 5
9 5
9 5
9 5
9 5
9 5
9 5
9 5
C o m m e
r c i a l s p a c e l e a s e d o u t
s q f t
-
7 2 0 6
9 0
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6
0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
D e p o s i t f o r L e a s e
( N o o f m o n t h s r e n t )
1 2
A v e r a g e
L e a s e R e n t a l s
7 0
R s p s f p e r m o n t h
E s c a l a t i o n
1 0
M a i n t e n
a n c e c h a r g e s
2 2 5
R s p s f p e r m o n t h
R e v e n u e f r o m
L e a s e R e n t a l
R s
L a k h s
-
8 8
6 3
1 5 0
6 8
2 4 2
6 6
3 9 0
8 1
6 2 9
4 1
1 0 1 3
6 7
1 6 3 2
5 3
2 6
2 9
2 0
4 2 3 4
3 5
6 8 1 9
4 7
R e v e n u e f r o m
M a i n t e n a n c e c h a r g e s
-
2 8 5
4 8 4
7 8 0
1 2
5 6
2 0
2 3
3 2
5 8
5 2
4 7
8 4
5 1
1 3 6
1 0
2 1 9
2 0
T o t a l R
e v e n u e
-
9 1 4 8
1 5 5 5 2
2 5 0 4 6
4 0 3 3 8
6 4 9 6 4
1 0 4 6 2 5
1 6 8 5 0 0
2 7
1 3 7 1
4 3 7 0 4 6
7 0 3 8 6 7
R e v e n
u e H e a d
S u b H e a d R a t e
U n i t
3 1 - M a r - 6
7
3 1 - M a r - 7 2
3 1 - M a r - 7 8
3 1 - M a r - 7 9
C o m m e r c i a l S p a c e
O c c u p a n c y
P e r c e n t a g
9 5
9 5
9 5
9 5
C o m m e r c i a l s p a c e l e a s e d o u t
s q f t
7 6 0 7 2
8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
D e p o s i t f o r L e a s e
( N o o f m o n t h s r e n t )
1 2
A v e r a g
e L e a s e R e n t a l s
7 0 R s p s f p e r m o n t h
E s c a l a
t i o n
1 0
M a i n t e
n a n c e c h a r g e s
2 2
5 R s p s f p e r m o n t h
R e v e n u
e f r o m
L e a s e R e n t a l
R s
L a k h s
1 0
9 8 2 8 2
1 7
6 8 7
9 4
3 1
3 3 5
2 7
3 4
4 6 8
8 0
R e v e n u
e f r o m
M a i n t e n a n c e c h a r g e s
3 5 3 0 2
5 6 8
5 4
1 0 0 7
2 1
1 1 0 7
9 3
T o t a l R e v e n u e
1 1 3 3 5 8 4
1 8 2 5 6 4 8
3 2 3 4 2 4 8
3 5 5 7 6 7 2
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
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[x]
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
httpslidepdfcomreaderfullgim-pre-feasibility-report-indiranagarrevised 3233
[y]
Disclaimer
CRISIL Risk and Infrastructure Solutions Limited (CRIS) has taken due care and caution in preparation of this Report for
Bangalore Development Authority which is under the purview of the Urban Development Department Government of
Karnataka This Report is based on the information documents provided by the Company andor information available publicly
andor obtained by CRIS from sources which it considers reliable CRIS does not guarantee the accuracy adequacy or
completeness of the information documents Report and is not responsible for any errors or omissions or for the results
obtained from the use of the same The Report and results stated therein are subject to change CRIS especially states that it
has no financial liability whatsoever to the Company users of this Report This Report is strictly confidential and should not be
reproduced or redistributed or communicated directly or indirectly in any form or published or copied in whole or in part
especially outside India for any purpose
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Registered Office ndash Mum
CRISIL House Central AvenueHiranandani Business ParkPowai Mumbai- 400 076Phone 91-22-3342 3000Fax 91-22-3342 3810
New Delhi
The Mira G-1 1st Floor Plot NoIshwar Nagar Mathura Road
New Delhi - 110 065 IndiaPhone 91-11-4250 510091-11-2693 0117 - 121Fax 91-11-2684 2213
Hyderabad
3rd Floor Uma ChambersPlot No 9amp10 Nagarjuna HillsNear Punjagutta Cross RoadHyderabad - 500 082Phone 91-40-40328200Fax 91-40-2335 7507
Bengaluru
W-101 Sunrise Chambers22 Ulsoor RoadBengaluru - 560 042Phone 91-80-2558 0899Fax 91-80-2559 4801
Ahmedabad
706 Venus AtlantisNear Reliance Petrol PumpPrahladnagarAhmedabad -Phone 91-79-4024 4500Fax 91-79-2755 9863
Visit us atwwwcrisilcom
ai
1 amp 2
About CRISIL Infrastructu
CRISIL Infrastructure Advisory
CRISIL Risk and Infrastructure
Limited a 100 subsidiary of
Indiarsquos leading Ratings Resear
Policy Advisory Company
CRISIL Infrastructure Advisory
premier advisor focusing on po
well as commercial and contra
the areas of transport energyinfrastructure We also provide
international firms planning inv
India Over a period of time C
Infrastructure Advisory has buil
position for itself in these doma
considered the preferred cons
governments multilateral agen
sector clients We have extend
operations beyond India and ar
other emerging markets in Afri
and South Asia
re Advisory
is a division of
Solutions
RISIL Limited ndash
ch Risk and
is Indiarsquos
licy issues as
tual issues in
nd urbansupport to
stments in
ISIL
t a unique
ins and is
ltant by
cies and private-
ed our
e present in
a Middle East
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
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Bangalore Development Authorit
Figure 2-1 Approach and Met
23 Review of pre
Bangalore Development Authori
development works identified by
29102010 BDA retained Tand
identified projects namely ldquoDevel
TUSPL had submitted their Fe
estimations The report submitte
been presented as below
The project cost indicate
to reflect the market
contingencies prelimina
The financials indicated
Developer and BDA an
given the market conditi
The report does not cle
1062701 sq ft And an
2440023 square metre
officials
1 The cost incurred towards upfront pre
figure
Study of existingreports
y
odology
ious studies
ty had invited proposals for appointment of Co
BDA vide Tender Notification No BDAEMTA-
on Urban Solutions Pvt Ltd (TUSPL) as Cons
opment of Commercial Complex at Indiranagar
sibility Report for the Indiranagar site along
d by TUSPL was studied in detail and the CRISI
d in the report is Rs 39165 Lakhs The project c
rates The Revised project cost is Rs 239
ry and pre-operative expenses
in the Feasibility Report is assuming a revenu
an upfront premium which the developer woul
ns and rates this has been revised
arly mention the area of the plot It indicates a
open land development area of 131322 sq f
has been assumed for the pre-feasibility in c
ium and the interest during construction period is not includ
Discussions withBDA personnel
Be
a
Finalrecommendation
[4]
nsultants for various
3802010-11 dated
ultant for one of the
angalorerdquo
ith the designs and
Lrsquos observations has
ost has been revised
11 Lakhs including
share between the
ld provide However
construction area of
t Hence an area of
nsultation with BDA
d in the above mentioned
lock coststimation
inancialsessment
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Bangalore Development Authority
[5]
3 Sector profile
The city of Bangalore has witnessed very rapid growth The city today is home to over 84 million
people (2011 Census) The salubrious weather and the rapid concentration of economic activities in
Bangalore have fuelled the growth of Bangalore As one of the worldrsquos fastest growing cities
Bangalore is experiencing a steady growth in population
Bangalore has been substantially affected by globalization and rapid urbanization over the last
decade The demand for services and quality of life is not confined to the central core or the erstwhile
Bangalore Mahanagra Palike jurisdiction but spreads beyond into the peri-urban areas the
Metropolitan Area and outwards into Bangalore Metropolitan Region With the emergence of the
Bangalore-Mysore Infrastructure Corridor the Bangalore International Airport and the planned ring
roads urbanization has sprawled out
Banaglore has incontestable advantages to develop into an international metropolis but at the same
time faces significant constraints The city is embedded in its history and depicts the greatness of a
truly Indian city established before the invasions and colonization It has a diverse set of activities
from silk to aeronautics from clothing to information technology and is a gauge of dynamism and
solidity of the city Natural drainage climatic advantage and the availability of water in the Cauvery
baisn are factors assisting in improving the quality of life
31 Industry overview
Bengaluru is countryrsquos third leading realty market With the IT boom and corresponding growth of the
economy saw large-scale increase in the cityrsquos population mostly due to migration from across India
Bengalurursquos population grew about 35 percent in the last six years
This increase in population along with steady demand and restricted supply led to saturation in central
Bengaluru region and pushed development to peripheral areas like Whitefield Sarjapur road Outer
Ring Road (ORR) Bannerghatta Road Hosur Road
With the opening of International Airport Real estate in North Bangalore (Bellary Road to Yelahanka)
has also witnessed the launch of numerous projects with apartments and villas Given the improved
infrastructure accessibility and the future potential for this area the area has been attracting both the
segments of investors and end-users alike
The city leads the country in office space with 738 million square feet of commercial capacityavailable However Bengaluru also has 22 per cent of the available space vacant with a large number
of projects under development and reduced demand
32 Regional profile
Bengaluru (formerly Bangalore) also known as Garden City for its beautiful gardens is the
administrative industrial commercial educational and cultural capital of Karnataka and located on
the Deccan Plateau in the South-Western part of India Bengaluru is Indias third most populous city
fastest growing and fifth largest metropolitan area with population of about 57 million (as per 2001
census) The population is expected to reach around 11 million and 22 million in 2021 and 2041respectively
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Bangalore Development Authority
[6]
With ever increasing boundaries and gross domestic product of 59123 billion in FY 06-07 Bengaluru
has some well-recognized IT companies and numerous public sector heavy industries aerospace
telecommunications and defence organisations located within Bengaluru also has some well known
colleges and research institutes
Geography
With an average elevation from the sea level of 920 m and total area of 741 km2 Bengaluru is located
in the south-eastern part of Karnataka in the Mysore Plateau - a region of Deccan Plateau The city
has an uneven landscape of hills and valleys to the south and relatively more level plateau towards
the north
Because of its elevation the city enjoys a pleasant and equable climate throughout the year The city
is situated in the Bengaluru Urban district which is divided into four taluks - Bangalore North
Bangalore East Bangalore South and Anekal and covers a total geographical area of 2190 sq km
Bangalore District is surrounded by Kolar District to the northeast Tumkur District on the northwest
Mandya District on the southwest Chamarajanagar District on the south and neighbouring state of
Tamil Nadu on the southeast
Connectivity
Bangalore is well connected to other Indian cities by road rail and air transport The connectivity by
rail road and air is detailed in the sections below
Road
Bengaluru is located at the junction of National Highways 4 7 and 48 connecting to various important
cities in India including Chennai Hyderabad Kanyakumari Madurai Mangalore Mumbai Nagpur
Pune and Varanasi
Railways
Bengaluru has two major railway stations Bengaluru City railway station and Yeswantpur Junction
The city has a well maintained railway network connecting major cities of the country and is
connected to the rest of the country both by metre gauge and broad gauge rail services
Air
Bengaluru has an International Airport at Devanahalli and is well connected to all cities in India
Internationally Bengaluru is connected to European and Asian cities like Frankfurt Singapore Kuala
Lumpur London Dubai Paris Bangkok and Hong Kong
Major commercial areas
The following are the major commercial areas in and around Bangalore
Central Business District Seshadripuram Jayanagar JP Nagar Yeshwantapura
Eastern Suburb Marathalli-sarjapur ORR Sarjapur Road Whitefield and Brookfield
Secondary Business District Indiranagar JP Nagar RT Nagar Vijayanagar
Northern Suburb HRBR Layout Bellary Road Jakkur
Southern Suburb Mysore Road Hosur Road
West Suburb BEL Factory HMT Layout
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Bangalore Development Authority
[7]
33 Key issues
The recessionary trends in 2007 across the world had also adversely affected the entire real estate
market in Bengaluru All the three categories of residential commercial (office space) and retail had
experienced slump in market and the real estate market in several erstwhile prime locations of the citywere facing oversupply situation and a drastic fall in the capital as well as rental values
With the revival of the industry and economy the residential market is expected to witness a jump
across all the areas in Bengaluru as per CRISILrsquos analysis The eastern and southern areas are
estimated to emerge as up-scaled developments as these areas are expected to see maximum
supply in the next three years
Good quality developments have been the key feature of Bangalorersquos commercial developments The
boom in IT sector especially in South India has enabled the city to have a metropolitan culture which
brings along the urban demands like malls and multiplexes
Recently the market in Bangalore has stabilized to a large extent after the sudden jump in prices post
recession However this is cyclical in nature and the saturation of IT services has led to a scenario
where there would not be much increase in the lease rentals
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Bangalore Development Authorit
4 Project
41 Description of
It is proposed that for the redev
over to the developer on long
Finance Design Construction
period Ownership of the land wi
BUP area will be transferred b
proposed commercial develop
vendors
42 Components o
The project would be develope
basis The structure of the mode
Figure 4-1 Development struc
43 Description of
The site is located at Indiranaga
the main commercial centres in
Road in the North Old Airport
the East Indiranagar is located
famous for housing the Somes
and educational institutions like
y
the project
lopment of BDA Complex at Indiranagar the la
erm lease basis The selected developer woul
and Operation amp Maintenance of the project t
ll always be with BDA After the lease period th
ack to BDA free of cost We have assumed
ent shall be reserved for BDA for rehabilit
f the project
on a Design Build Finance Operate and Tra
l has been illustrated below
ture of the Commercial Complex
the site
r a suburb of Bangalore located about 4 km ea
the city This medium sized suburb is enclose
oad in the South Halasura in the West and Je
within a diameter of few kilometre radii from the
ara Temple several reputed hospitals like Amrj
r Ambedkar College KH Patel College etc
[8]
nd would be handed
d be responsible for
hroughout the lease
e land along with the
hat a portion of the
tion of the existing
sfer model on PPP
t of MG road one of
by the Old Madras
vanbheemanagar in
airport The place is
yoti Vijaya and ESI
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Bangalore Development Authority
[9]
The site is situated at a junction near a residential area and is frequented by elders and youngsters
alike The present building consists of Motor driving schools RTO office computer vendors and travel
agents There is a water tank situated in the site
Figure 4-2 BDA Complex at Indiranagar
44 Interaction with stakeholders
CRISIL conducted a series of interactions with the stakeholders namely the BDA officials Citizens
and the establishment owners The interactions revealed that the building has to undergo
redevelopment The condition of the BDA office is not up to the standards expected and the officials
complained about leaks and short circuits The establishment owners suggested that the building was
planned with less road facing establishments due to which they are not able to attract footfalls
45 Case studies
In order to generate revenues from the real estate value of the land in the ownership of the ULBrsquos
commercial projects have been developed on a PPP basis on these lands Typically under such
arrangements the ULB would have identified a site under its ownership where a property for
commercial use can be developed Commercial development would include the development of
shopping complexes markets bus terminals multi-level car parking townships etc
Under such an arrangement the ULB would require of the private developer to undertake
construction of a commercial complex on the land The land would be provided by the ULB to the
private operator on a lease basis The ULB would provide specifications on the nature and type of
commercial development required The private developer would need to bear all the capital costs
associated with the construction of the commercial complex Post construction of the commercial
complex as per the arrangement the private developer would either hand over the constructed
facility to the ULB or would sub-lease the property The private developer would be required to make
to the ULB an upfront payment or provide a share in the ULB revenues earned from sub-leasing the
properties
The following case study compiled by the Ministry of Urban Development Government of India
highlights the development of municipalurban lands on a PPP basis
Category Details
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Bangalore Development Authority
[10]
Category Details
Project Construction of Commercial Complex at Ranipura Market
Cost of
ProjectRs 1500 lakhs
Description
The land was allotted to the concessionaire to construct the Commercial Complex by
the Corporation
Corporation continues to own the land
After the concession period the built-up structure (Commercial Complex) will be
transferred to the Corporation by the concessionaire
The concessionaire was given the right to recover its investment from the premium
received for ldquoRight of Occupationrdquo of the constructed shops
At the time of award of concession it was estimated that a profit of Rs 200 lakh will
be accrued from the venture which will be shared by the concessionaire with the
Corporation
The Corporation is expected to receive a profit share of Rs 100 lakh from the
concessionaire
Source Compendium on Public Private Partnership in Urban Infrastructure Case Studies Ministry of Urban
Development Government of India in association with Confederation of Indian Industry (CII)
We have also studied another case wherein the development affordable housing units was structure
on a PPP basis by the Pimpri Chinchwad New Township Development Authority (PCNTDA)
451 Public private partnership in affordable housing under Jawaharlal
Nehru National Urban Renewal Mission (JNNURM)
The Pune metropolitan region comprising Pune and Pimpri Chinchwad cities is one of the fastest
growing urban agglomerations in India A major automobile and auto-ancillary hub and a well-known
international education destination it also ranks among the top IT destinations of India Besides the
region has many industrial clusters housing industries focused on FMCG engineering agro-based
technology
The Pimpri-Chinchwad New Town Develompent Authority (PCNTDA) a key development authority of
the PMR is responsible for development of peri-urban especially in its north In line with the
phenomenal growth of the region and its strident aspirations PCNTDA has envisioned the
development of an integrated township at Sector 12 spanning 53 hectares Given the success of the
Public Private Partnership (PPP) model in involving private sector participation for development based
projects PCNTDS proposed to develop the integrated township on PPP basis
With this objective PCNTDA appointed the consortium of CRISIL Risk and Infrastructure Solutions
Limited (CRIS) Omkar Associates and Creations as project development consultants for the
development of an eco-friendly affordable township at Bhosari Sector 12 CRISILrsquos role was to
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Bangalore Development Authority
[11]
undertake a detailed demand assessment financial feasibility project structuring and management of
the bid process
The concept
Keep in mind the PCNTDArsquos vision CRIS designed integrated township such that it compriseshousing untis for the poor affordable housing units for the general public a primary health care
centre a hospital and a school
As per the structure the Developer shall construct 5040 housing units under the Basic Services for
Urban Poor (BSUP) scheme of JNNURM PCNTDA shall transfer the amount of grant sanctioned for
developing these units under the JNNURM scheme to the developer The remaining project cost of
the BUSP units was to be financed by the developer
In addition to this the Developer shall also construct affordable housing units as per pre-specified
specifications and hand over to PCNTDA free of cost The developer shall also construction the
physical and social infrastructure for the integrated township thereby ensuring good road adequate
water supply an efficient sewerage system as well as schools and hospitals The project shall bedeveloped in a manner such that it has minimum possible impact on the surrounding environment and
is in harmony with nature To this end the developer shall undertake eco-friendly initiatives including
rain water harvesting use of solar power environment-friendly materials and vermin-composting
The project
The developer has to complete the BSUP housing units within 2 years and hand over to the PCNTDA
For the remaining portion of the land PCNTDA shall execute a lease deed for 99 years with the
developer The lease rights shall be granted to the developer in phases upon completion of
milestones as defined in the project agreement The main scope of work for the developer shall
include
Master planning for the entire 53 hectares of land and construction of common physical and
social infrastructure for the entire area
Development construction and marketing of 795 lakhs square meters of integrated real
estate space
Construction and handing over of 5040 housing units under the BSUP scheme of JNNURM
on a separate layout carved out of the said land PCNTDA will provide the developer the grant
sanctioned by the Government of India for these housing units
Successful selection of private developer
With the objective of undertaking this project on a PPP basis in a transparent and objective manner
PCNTDA launched a three-cover Request for Proposal in June 2009 The bidding parameter was theconstructed ldquoCarpet Areardquo in ldquosquare metersrdquo of affordable housing units that the bidder shall
construct and hand over free of cost to PCNTDA
The tender received good response from four interested bidders Of the four bidders two bidders
were adjudged technically and financially capable and short-listed for the final stage The bidder with
the highest construction carpet area offered to PCNTDA was selected The successful bidder quoted
a carpet area of 130599 square meters of affordable housing units
Thereby the PCNTDA derived a value of 7369 housing units (including 5040 BSUP units) a school
and a hospital for the BSUP units a school and hospital for the general public and development of
public amenities
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Bangalore Development Authority
[12]
Value addition to PCNTDA
In commercial terms PCNTDA saved (i) Rs 190 crores as the gap amount required to fund the BSUP
scheme (ii) Rs 210 crores of construction cost of affordable housing units and (iii) Rs 100 crores on
the development of physical and social infrastructure In addition to this PCNTDA shall receive anupfront payment of Rs 50 crores from the successful bidder The project structure also protects
PCNTDA from cost escalation risks valuation risks and engineering risks
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Bangalore Development Authorit
5 Market asse
51 Bangalore gro
The growth of Bangalore has be
from the growth in population in
to the economic opportunities it
Bangalore an obvious choice for
Bangalore has grown at averag
decades It is projected that B
explosive growth has meant th
pressure
Figure 5-1 Population growth
Source City Development Plan Ba
The city leads the country in
available However Bengaluru a
of projects under development a
983089983086983094983091 983089983086983096983097 983090983086983092
983088
983089983088
983090983088
983091983088
983092983088
983093983088
983094983088
983095983088
983096983088
983097983088
983089983097983088983089 983089983097983089983089 983089983097983090983089
983120 983151 983152 983157 983148 983137 983156 983145 983151 983150 983145 983150 983116
983137 983147 983144 983155
y
sment
th overview
en unprecedented in the past couple of decades
the last century Bangalore continues to attract t
offers This is also supported by a salubrious
not only businesses but also for people
compounded annual growth rate (CAGR) of 3
ngalorersquos population will cross the 10 million
at the infrastructure in Bangalore has been p
in Bangalore between 1901 and 2011
galore Development Authority and Census of India
ffice space with 738 million square feet of
lso has 22 per cent of the available space vacan
nd reduced demand
983091983086983089 983092983086983089983089983095983086983096983094
983089983090983086983088983094
983089983094983086983094983092
983090983097983086983090983090
983092
983089983097983091983089 983089983097983092983089 983089983097983093983089 983089983097983094983089 983089983097983095983089 983089983097983096983089 983089983097
[13]
This fact is laid bare
rongs of people due
eather which makes
58 in the last three
mark by 2021 This
t under tremendous
commercial capacity
with a large number
983086983091
983093983094983086983096983094
983096983092
983097983089 983090983088983088983089 983090983088983089983089
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Bangalore Development Authority
[14]
52 Demand projections
Bangalore is the largest commercial market and third largest residential market in India The city has
typically been preferred by home buyers because of its favorable socio-economic conditions and a
salubrious climate In recent years Bangalore has attracted a large influx of population engaged inthe thriving IT sector City residential demand is more end-user driven with moderate price
appreciation The average residential real estate price in the city is 20-25 lesser than in Delhi and
Mumbai In the recent National Housing Bank Residex the index indicating property prices across key
cities in India Bangalore witnessed a mere 1 YoY fall in residential prices in 2011-12 Mumbai saw
an 116 YoY jump in home prices while Delhi witnessed 358 YoY increase during 2011-12 The
city witnessed tremendous growth in terms of population and the number of companies setting up
offices there Thus the ongoing projects such as Bengaluru metro rail project various flyovers and
the under-pass construction activities in Outer Ring Road (ORR) CNR and BHEL circles would ease
the congestion and provide better connectivity for all commuters This will boost real estate demand in
and around Bangalore city
In 2011-12 Bangalorersquos commercial market exhibited resiliency with comparatively high demand
levels despite the discomfort in the market on account of global uncertainty Though commercial
property demand in Bangalore is largely dependent on ITITES sectors the share of manufacturing is
increasing at a faster pace and thereby giving further boost to office space demand According to real
estate consultancy firm Knight Frank the manufacturing sector witnessed a quantum leap as its share
of absorption increased from 3 in 4QCY10 to 23 in 4QCY11 The absorption of commercial space
has gone up from 5mn sq ftquarter in CY09 to 7mn sq ftquarter in CY11 thanks to sustained
demand for Bangalore commercial space which witnessed 43 CAGR in absorption level over CY09-
11 Subdued supply during the first two quarters of 2011 coupled with high absorption level has
substantially lowered the vacancy level in the city (bringing it down from 17 in CY10 to 12 in
CY11) With the expansion of existing operations in the IT sector and the entry of newer sectors dueto renewed optimism in the market we expect the level of absorption of office space to remain stable
Revised Master Plan-2015 for the BMA has been published This document gives the likely growth to
take place in various areas of the BMA The population of the BMA is expected to grow from 61 lakh
in 2001 to 122 lakh in 2025
The proposed growth rate and the ever changing urban scenario is bound to increase the commercial
space demand in the region The site at Indiranagar is situated at a junction and has two road facing
sides which makes it very attractive for commercial development The site is also huge in size and
can easily accommodate a mall
Hence in view of the above it can be safely recommended that the site would generate huge interest
within the developers
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Bangalore Development Authority
[15]
6 Project financials
The project costs have been largely derived from the costs indicated by the Bangalore Development
Authority (BDA)
61 Cost estimation
The estimated cost of development of the project is Rs 23931 lakhs The costs have been outlined
below
Table 6-1 Project Cost of the proposed development
Particular Amount inRs Lakhs
Construction Cost 19967
Land Development 793
Other Infrastructure 50
Total Hard Costs 20810
Contingencies 3121
Total Project Development Cost 23931
Apart from the above mentioned project development cost the Concessionaire would incur the
development premium and Interest during construction (IDC) cost
Particulars 25 years 33 Years 66 years
Upfront Premium (Rs Lakh) 965000 1230000 600000
IDC Cost (Rs Lakh) 315600 361500 259100
Revenue Share every year 15 15 15
Total Project Cost (Rs Lakhs) 36737 39846 33022
62 Revenue stream
The Revenues to the Developer would accrue from the revenue earned from the lease rentals and the
maintenance charges which the developer earns from the tenants The total revenue from both the
heads has been arrived at Rs 6720 Lakhs for the base year It has been assumed that the
occupancy of the commercial complex 80 in the base year and stabilizes to a maximum of 95towards the end of the concession period The average lease rentals have been assumed at Rs 70
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Bangalore Development Authority
[16]
per square feet and the maintenance charges have been assumed at Rs 225 per square feet Both
the revenues are escalating at the rate of 10 per annum The income statement for the developer
has been provided in Annexure 1
63 Viability assessment
The viability assessment has been carried out over two concession period ie 25 33 and 66 years
The debt to equity ratio has been assumed to be 121
The project level internal rate of return (IRR) IRR of equity and the net present value of the equity
have been worked out
Table 6-2 Viability assessment for BDA complex at Indiranagar
Concession Period Project IRR Equity IRR NPV of Equity
Upfront Premium
(Rs in Lakhs)
25 years 1777 2007 96 9650
33 years 1818 2006 108 12300
66 years 2101 2333 5285 6000
It is evident that the project is viable for the developer for all the 3 concession periods In case of the
25 year concession period it is estimated that the developer would pay BDA an estimated upfront
premium of Rs 9650 lakhs Similarly the developer would pay BDA an amount of Rs 12300 lakhsand Rs 6000 lakhs for the concession periods of 33 years and 66 years respectively
64 Ranking of options based on commercial viability
Having assessed the project for two concession periods of 25 33 and 66 years we are of the view
that the 25 year concession option will be more suitable since it allows the developer to make
reasonable returns on the projects and his own investments along with a sizeable upfront premium for
BDA BDA would be in a position to renew the contract or retender the project after 25 years which
may enable BDA to earn as per the prevailing market rates
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Bangalore Development Authority
[17]
7 Statutory amp legal framework
71 Legal amp regulatory framework
Development Control Regulations (DCR)
As per RMP ndash 2015 published by BDA the project site has been classified as ldquoCommercial Businessrdquo
As per the definitions of RMP-2015 Commercial Business Zone allows development of Commercial
and Corporate offices Retail Shopping Complexes Restaurants and Hotels Convention centres and
banquet halls financial institutions Cinema and multiplexes places of assembly exhibition centres
Entertainment and amusement centres and stores
Permissible land uses under Commercial (Business) Zone as per RMP-2015 of BDA
Main land use category C3
Other land uses permissible (as main land use) R I-3 T3 amp U4
If the road width is less than 120 m and plot area is less than 240 square metre then C2 I-2
R and U4 only are allowed
The plot size is 24000 square metre Presently it has 18m wide access road The applicable DCR for
the plot as per proposed road width is as follows
Table 7-1 Plot details of Indiranagar site
Sr No Particulars Description Unit
1 Land Use Commercial Business
2 Road Width 18 Metre
3 Permissible FAR 325
4Permissible ground
coverage50
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Bangalore Development Authority
[18]
8 Indicative environmental amp social impacts
81 Environmental impacts
The proposed development is in line with the layout of BDA Due to the reasonably large site area the
development will be on the higher side A set back of 50 is found to be acceptable for the site
however an Environmental Impact Assessment studies have to be undertaken for the sites Since
already a commercial complex is existent redevelopment of the complex would need demolition of
the existent structures Hence a suitable disposal of construction and debris has to be undertaken by
the developer Also a Green building can be developed to ensure minimal effect on nature
82 Social impactsDuring the construction period the existing establishments have to be shifted or compensated
temporarily Hence a clear resettlement plan has to be decided before the implementation of the
project It is envisaged that if due care is taken about the existing tenants the development would go
smoothly
83 Mitigation measures
It is necessary that the impacts are identified early and action plans are prepared for their mitigation in
advance For instance for environmental impacts the BDA may insist on the developer to use clean
and green building technologies
It is also necessary that the project development plan is also accompanied by a Relocation and
Rehabilitation plan which will layout detailed action points with the requisite intervening entity
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Bangalore Development Authority
[19]
9 Operating framework
91 Risks amp mitigation
The risk framework for this project has been outlined below
Table 9-1 Risk mitigation measures
Risk Category Risk implication Mitigation measure
Sponsor risk BDA scraps the project Termination payments in case of BDA scrapping the
project
Environment
risk
Adverse impact on
surrounding environment
Penalty clauses in case of default on
Concessionairersquos part
Environmental Impact Assessment to identify all
risks in advance
Political riskChange in government may
put project in jeopardy
Termination payments in case of project being
scrapped
Force
majeure riskProject is abandoned
Force majeure clauses in the concession
agreement
Operating riskThe operations of the
facility are stalled
Performance security clause in case of default on
Concessionairersquos part
Design risk Overdesign of the projectProject design to be finalized in mutual agreement
of concessionaire and BDA
Completion
risk
Completion of project is
delayed inconvenience to
citizens and tenants
Penalty clauses for time overrun in the concession
agreement
Cost overrun
risk
Project cost increases
beyond reasonable limits
Project cost increment ceiling to be specified in the
concession agreement Increase beyond this ceiling
to be borne by the developer No change in revenue
sharing
92 Indicative project structure
The best approach for such a large ticket project would be for the BDA to become a key actor in the
entire process of development The BDA may ask the private sector partner to form a Special
Purpose Company where the equity will be brought in by the private sector developer The designs
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Bangalore Development Authority
[20]
should be left to the developer and BDArsquos role would be in approving the same in accordance with the
Development Control Regulations
The SPC will develop and maintain Complex throughout the concession period The tenants would
pay the developer a sub-lease premium or lease rentals which will be escrowed in a separate accountand can be withdrawn based on the revenue sharing structure adopted
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Bangalore Development Authorit
10 Way ahead
101 Project develo
The key task for BDA is to ap
feasibility of the project Once t
the bid process
Figure 10-1 Project developm
The transaction advisor shall stralso prepare the relevant bid
management on behalf of BDA
102 Procurement
The foremost step for BDA is
feasibility The detailed financial
parameter Also an optimum str
bid documents would be prepar
process be conducted as a 2 sta
983105983152983152983151983145983150983156983149983141983150983156 983151983142 983156983154983137
983108983141983156983137983145983148983141983140 983142983141983137983155983145983138
983155983156983154983157983139983156983157983154983145983150983143
983120983154983141983152983137983154983137983156983145983151
983123983141983148983141983139
y
pment framework
oint a Transaction Advisor in order to conduc
e financial numbers are acceptable BDA BDA
nt framework
ucture the project upon completion of the feasibidocuments The transaction advisor shall un
nd will assist in appointment of the private secto
lan
to appoint a Transaction Advisor for the co
feasibility would determine the tentative revenue
cture would be arrived at Post the approval of
d for the selection of the developer It is recom
ge process involving Technical qualification and
983155983137983139983156983145983151983150 983137983140983158983145983155983151983154
983148983145983156983161 983155983156983157983140983145983141983155 983137983150983140 983152983154983151983146983141983139983156
983150 983151983142 983138983145983140 983140983151983139983157983149983141983150983156983155
983145983151983150 983151983142 983152983154983145983158983137983156983141 983155983141983139983156983151983154 983152983137983154983156983150983141983154
[21]
a detailed financial
should proceed with
ility studies and shallertake bid process
partner
nducting the project
for BDA and the bid
easibility Report the
mended that the Bid
inancial proposal
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B a n g a l o r e D e v e l o p m e n t A u t h o r i t y
B D A s h o u l d i n i t i a t e t h e p r o c e s s o f a p p o
i n t i n g a t r a n s a c t i o n a d v i s o r a t t h e
e a r l i e s t T h i s p r o c e s s c a n b e c o m p l e t e d i n 2 m o n t h s
O n c e t h e T A
i s i n p l a c e
t h e B D
A s h o u l d a l l o w
a t l e a s t 4 m o n t h s f o r t h e p r e p a r a t i o n o f f e a s i b i l i t y p r o j e c t s t r u c t u r i n g a n d b i d d o c u m e n
t s
O n c e t
h e b i d d o c u m e n t s a r e i n p l a c e t h
e B D A
s h o u l d i n i t i a t e t h e p r o c e s s
o f s e l e c t i n g t h e p r i v a t e s e c t o r p a
r t n e r w h i c h c a n b e c o m p l e t e d o v e r a 4 m o n t h
p e r i o d
T h e c u
r r e n t p r o c u r e m e n t p l a n i s s p r e a d
o v e r 1 1 m o n t h s w h i c h c a n b e s
h o r t e n e d d e p e n d i n g o n t h e m a n n e r i n w h i c h B D A
m a k e s d e c i s i o n
s r e l a t i n g t o
a p p o i n
t m e n t o f T A a n d p r i v a t e d e v e l o p e r
A c t i v i t y
M 1
M 2
M 3
M 4
M 5
M 6
M 7
M 8 M
9
M 1 0
M 1 1
M 1 2
A p p o i n t m e t o f t r a n s a c t i o n a d v i s o r
D e t a i l e d t e c h n o - e c o n o m i c f e a s i b i l i t y a n d
b i d d o c u m e n t p r e p a r a t i o n
B i d p r
o c e s s m a n a g e m e n t
S e l e c t i o n o f p r e f e r r e d b i d d e r a n d f o r m a t i o n o f S P C
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B a n g a l o r e D e v e l o p m e n t A u t h o r i t y
1 1
A n n e x u r e 1 ndash C a s h - f l o w
s t a t e m e n t
R e v e n u e H e a d
S u b H e a d R a t e
U n i t
3 1 - M a r - 1 4
3 1 - M
a r - 1 7
3 1 - M a r - 2 2
3 1 - M a r - 2 7
3 1 - M a r - 3 2
3 1 - M a r - 3 7
3 1 - M a r - 4 2
3 1 - M a r - 4 7
3 1 - M
a r - 5 2
3 1 - M a r - 5 7
3 1 - M a r - 6 2
C o m m e
r c i a l S p a c e
O c c u p a
n c y
P e r c e n t a g
0
9 0
9 5
9 5
9 5
9 5
9 5
9 5
9 5
9 5
9 5
C o m m e
r c i a l s p a c e l e a s e d o u t
s q f t
-
7 2 0 6
9 0
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6
0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
D e p o s i t f o r L e a s e
( N o o f m o n t h s r e n t )
1 2
A v e r a g e
L e a s e R e n t a l s
7 0
R s p s f p e r m o n t h
E s c a l a t i o n
1 0
M a i n t e n
a n c e c h a r g e s
2 2 5
R s p s f p e r m o n t h
R e v e n u e f r o m
L e a s e R e n t a l
R s
L a k h s
-
8 8
6 3
1 5 0
6 8
2 4 2
6 6
3 9 0
8 1
6 2 9
4 1
1 0 1 3
6 7
1 6 3 2
5 3
2 6
2 9
2 0
4 2 3 4
3 5
6 8 1 9
4 7
R e v e n u e f r o m
M a i n t e n a n c e c h a r g e s
-
2 8 5
4 8 4
7 8 0
1 2
5 6
2 0
2 3
3 2
5 8
5 2
4 7
8 4
5 1
1 3 6
1 0
2 1 9
2 0
T o t a l R
e v e n u e
-
9 1 4 8
1 5 5 5 2
2 5 0 4 6
4 0 3 3 8
6 4 9 6 4
1 0 4 6 2 5
1 6 8 5 0 0
2 7
1 3 7 1
4 3 7 0 4 6
7 0 3 8 6 7
R e v e n
u e H e a d
S u b H e a d R a t e
U n i t
3 1 - M a r - 6
7
3 1 - M a r - 7 2
3 1 - M a r - 7 8
3 1 - M a r - 7 9
C o m m e r c i a l S p a c e
O c c u p a n c y
P e r c e n t a g
9 5
9 5
9 5
9 5
C o m m e r c i a l s p a c e l e a s e d o u t
s q f t
7 6 0 7 2
8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
D e p o s i t f o r L e a s e
( N o o f m o n t h s r e n t )
1 2
A v e r a g
e L e a s e R e n t a l s
7 0 R s p s f p e r m o n t h
E s c a l a
t i o n
1 0
M a i n t e
n a n c e c h a r g e s
2 2
5 R s p s f p e r m o n t h
R e v e n u
e f r o m
L e a s e R e n t a l
R s
L a k h s
1 0
9 8 2 8 2
1 7
6 8 7
9 4
3 1
3 3 5
2 7
3 4
4 6 8
8 0
R e v e n u
e f r o m
M a i n t e n a n c e c h a r g e s
3 5 3 0 2
5 6 8
5 4
1 0 0 7
2 1
1 1 0 7
9 3
T o t a l R e v e n u e
1 1 3 3 5 8 4
1 8 2 5 6 4 8
3 2 3 4 2 4 8
3 5 5 7 6 7 2
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
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[x]
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
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[y]
Disclaimer
CRISIL Risk and Infrastructure Solutions Limited (CRIS) has taken due care and caution in preparation of this Report for
Bangalore Development Authority which is under the purview of the Urban Development Department Government of
Karnataka This Report is based on the information documents provided by the Company andor information available publicly
andor obtained by CRIS from sources which it considers reliable CRIS does not guarantee the accuracy adequacy or
completeness of the information documents Report and is not responsible for any errors or omissions or for the results
obtained from the use of the same The Report and results stated therein are subject to change CRIS especially states that it
has no financial liability whatsoever to the Company users of this Report This Report is strictly confidential and should not be
reproduced or redistributed or communicated directly or indirectly in any form or published or copied in whole or in part
especially outside India for any purpose
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
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Registered Office ndash Mum
CRISIL House Central AvenueHiranandani Business ParkPowai Mumbai- 400 076Phone 91-22-3342 3000Fax 91-22-3342 3810
New Delhi
The Mira G-1 1st Floor Plot NoIshwar Nagar Mathura Road
New Delhi - 110 065 IndiaPhone 91-11-4250 510091-11-2693 0117 - 121Fax 91-11-2684 2213
Hyderabad
3rd Floor Uma ChambersPlot No 9amp10 Nagarjuna HillsNear Punjagutta Cross RoadHyderabad - 500 082Phone 91-40-40328200Fax 91-40-2335 7507
Bengaluru
W-101 Sunrise Chambers22 Ulsoor RoadBengaluru - 560 042Phone 91-80-2558 0899Fax 91-80-2559 4801
Ahmedabad
706 Venus AtlantisNear Reliance Petrol PumpPrahladnagarAhmedabad -Phone 91-79-4024 4500Fax 91-79-2755 9863
Visit us atwwwcrisilcom
ai
1 amp 2
About CRISIL Infrastructu
CRISIL Infrastructure Advisory
CRISIL Risk and Infrastructure
Limited a 100 subsidiary of
Indiarsquos leading Ratings Resear
Policy Advisory Company
CRISIL Infrastructure Advisory
premier advisor focusing on po
well as commercial and contra
the areas of transport energyinfrastructure We also provide
international firms planning inv
India Over a period of time C
Infrastructure Advisory has buil
position for itself in these doma
considered the preferred cons
governments multilateral agen
sector clients We have extend
operations beyond India and ar
other emerging markets in Afri
and South Asia
re Advisory
is a division of
Solutions
RISIL Limited ndash
ch Risk and
is Indiarsquos
licy issues as
tual issues in
nd urbansupport to
stments in
ISIL
t a unique
ins and is
ltant by
cies and private-
ed our
e present in
a Middle East
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
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Bangalore Development Authority
[5]
3 Sector profile
The city of Bangalore has witnessed very rapid growth The city today is home to over 84 million
people (2011 Census) The salubrious weather and the rapid concentration of economic activities in
Bangalore have fuelled the growth of Bangalore As one of the worldrsquos fastest growing cities
Bangalore is experiencing a steady growth in population
Bangalore has been substantially affected by globalization and rapid urbanization over the last
decade The demand for services and quality of life is not confined to the central core or the erstwhile
Bangalore Mahanagra Palike jurisdiction but spreads beyond into the peri-urban areas the
Metropolitan Area and outwards into Bangalore Metropolitan Region With the emergence of the
Bangalore-Mysore Infrastructure Corridor the Bangalore International Airport and the planned ring
roads urbanization has sprawled out
Banaglore has incontestable advantages to develop into an international metropolis but at the same
time faces significant constraints The city is embedded in its history and depicts the greatness of a
truly Indian city established before the invasions and colonization It has a diverse set of activities
from silk to aeronautics from clothing to information technology and is a gauge of dynamism and
solidity of the city Natural drainage climatic advantage and the availability of water in the Cauvery
baisn are factors assisting in improving the quality of life
31 Industry overview
Bengaluru is countryrsquos third leading realty market With the IT boom and corresponding growth of the
economy saw large-scale increase in the cityrsquos population mostly due to migration from across India
Bengalurursquos population grew about 35 percent in the last six years
This increase in population along with steady demand and restricted supply led to saturation in central
Bengaluru region and pushed development to peripheral areas like Whitefield Sarjapur road Outer
Ring Road (ORR) Bannerghatta Road Hosur Road
With the opening of International Airport Real estate in North Bangalore (Bellary Road to Yelahanka)
has also witnessed the launch of numerous projects with apartments and villas Given the improved
infrastructure accessibility and the future potential for this area the area has been attracting both the
segments of investors and end-users alike
The city leads the country in office space with 738 million square feet of commercial capacityavailable However Bengaluru also has 22 per cent of the available space vacant with a large number
of projects under development and reduced demand
32 Regional profile
Bengaluru (formerly Bangalore) also known as Garden City for its beautiful gardens is the
administrative industrial commercial educational and cultural capital of Karnataka and located on
the Deccan Plateau in the South-Western part of India Bengaluru is Indias third most populous city
fastest growing and fifth largest metropolitan area with population of about 57 million (as per 2001
census) The population is expected to reach around 11 million and 22 million in 2021 and 2041respectively
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Bangalore Development Authority
[6]
With ever increasing boundaries and gross domestic product of 59123 billion in FY 06-07 Bengaluru
has some well-recognized IT companies and numerous public sector heavy industries aerospace
telecommunications and defence organisations located within Bengaluru also has some well known
colleges and research institutes
Geography
With an average elevation from the sea level of 920 m and total area of 741 km2 Bengaluru is located
in the south-eastern part of Karnataka in the Mysore Plateau - a region of Deccan Plateau The city
has an uneven landscape of hills and valleys to the south and relatively more level plateau towards
the north
Because of its elevation the city enjoys a pleasant and equable climate throughout the year The city
is situated in the Bengaluru Urban district which is divided into four taluks - Bangalore North
Bangalore East Bangalore South and Anekal and covers a total geographical area of 2190 sq km
Bangalore District is surrounded by Kolar District to the northeast Tumkur District on the northwest
Mandya District on the southwest Chamarajanagar District on the south and neighbouring state of
Tamil Nadu on the southeast
Connectivity
Bangalore is well connected to other Indian cities by road rail and air transport The connectivity by
rail road and air is detailed in the sections below
Road
Bengaluru is located at the junction of National Highways 4 7 and 48 connecting to various important
cities in India including Chennai Hyderabad Kanyakumari Madurai Mangalore Mumbai Nagpur
Pune and Varanasi
Railways
Bengaluru has two major railway stations Bengaluru City railway station and Yeswantpur Junction
The city has a well maintained railway network connecting major cities of the country and is
connected to the rest of the country both by metre gauge and broad gauge rail services
Air
Bengaluru has an International Airport at Devanahalli and is well connected to all cities in India
Internationally Bengaluru is connected to European and Asian cities like Frankfurt Singapore Kuala
Lumpur London Dubai Paris Bangkok and Hong Kong
Major commercial areas
The following are the major commercial areas in and around Bangalore
Central Business District Seshadripuram Jayanagar JP Nagar Yeshwantapura
Eastern Suburb Marathalli-sarjapur ORR Sarjapur Road Whitefield and Brookfield
Secondary Business District Indiranagar JP Nagar RT Nagar Vijayanagar
Northern Suburb HRBR Layout Bellary Road Jakkur
Southern Suburb Mysore Road Hosur Road
West Suburb BEL Factory HMT Layout
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Bangalore Development Authority
[7]
33 Key issues
The recessionary trends in 2007 across the world had also adversely affected the entire real estate
market in Bengaluru All the three categories of residential commercial (office space) and retail had
experienced slump in market and the real estate market in several erstwhile prime locations of the citywere facing oversupply situation and a drastic fall in the capital as well as rental values
With the revival of the industry and economy the residential market is expected to witness a jump
across all the areas in Bengaluru as per CRISILrsquos analysis The eastern and southern areas are
estimated to emerge as up-scaled developments as these areas are expected to see maximum
supply in the next three years
Good quality developments have been the key feature of Bangalorersquos commercial developments The
boom in IT sector especially in South India has enabled the city to have a metropolitan culture which
brings along the urban demands like malls and multiplexes
Recently the market in Bangalore has stabilized to a large extent after the sudden jump in prices post
recession However this is cyclical in nature and the saturation of IT services has led to a scenario
where there would not be much increase in the lease rentals
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Bangalore Development Authorit
4 Project
41 Description of
It is proposed that for the redev
over to the developer on long
Finance Design Construction
period Ownership of the land wi
BUP area will be transferred b
proposed commercial develop
vendors
42 Components o
The project would be develope
basis The structure of the mode
Figure 4-1 Development struc
43 Description of
The site is located at Indiranaga
the main commercial centres in
Road in the North Old Airport
the East Indiranagar is located
famous for housing the Somes
and educational institutions like
y
the project
lopment of BDA Complex at Indiranagar the la
erm lease basis The selected developer woul
and Operation amp Maintenance of the project t
ll always be with BDA After the lease period th
ack to BDA free of cost We have assumed
ent shall be reserved for BDA for rehabilit
f the project
on a Design Build Finance Operate and Tra
l has been illustrated below
ture of the Commercial Complex
the site
r a suburb of Bangalore located about 4 km ea
the city This medium sized suburb is enclose
oad in the South Halasura in the West and Je
within a diameter of few kilometre radii from the
ara Temple several reputed hospitals like Amrj
r Ambedkar College KH Patel College etc
[8]
nd would be handed
d be responsible for
hroughout the lease
e land along with the
hat a portion of the
tion of the existing
sfer model on PPP
t of MG road one of
by the Old Madras
vanbheemanagar in
airport The place is
yoti Vijaya and ESI
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Bangalore Development Authority
[9]
The site is situated at a junction near a residential area and is frequented by elders and youngsters
alike The present building consists of Motor driving schools RTO office computer vendors and travel
agents There is a water tank situated in the site
Figure 4-2 BDA Complex at Indiranagar
44 Interaction with stakeholders
CRISIL conducted a series of interactions with the stakeholders namely the BDA officials Citizens
and the establishment owners The interactions revealed that the building has to undergo
redevelopment The condition of the BDA office is not up to the standards expected and the officials
complained about leaks and short circuits The establishment owners suggested that the building was
planned with less road facing establishments due to which they are not able to attract footfalls
45 Case studies
In order to generate revenues from the real estate value of the land in the ownership of the ULBrsquos
commercial projects have been developed on a PPP basis on these lands Typically under such
arrangements the ULB would have identified a site under its ownership where a property for
commercial use can be developed Commercial development would include the development of
shopping complexes markets bus terminals multi-level car parking townships etc
Under such an arrangement the ULB would require of the private developer to undertake
construction of a commercial complex on the land The land would be provided by the ULB to the
private operator on a lease basis The ULB would provide specifications on the nature and type of
commercial development required The private developer would need to bear all the capital costs
associated with the construction of the commercial complex Post construction of the commercial
complex as per the arrangement the private developer would either hand over the constructed
facility to the ULB or would sub-lease the property The private developer would be required to make
to the ULB an upfront payment or provide a share in the ULB revenues earned from sub-leasing the
properties
The following case study compiled by the Ministry of Urban Development Government of India
highlights the development of municipalurban lands on a PPP basis
Category Details
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Bangalore Development Authority
[10]
Category Details
Project Construction of Commercial Complex at Ranipura Market
Cost of
ProjectRs 1500 lakhs
Description
The land was allotted to the concessionaire to construct the Commercial Complex by
the Corporation
Corporation continues to own the land
After the concession period the built-up structure (Commercial Complex) will be
transferred to the Corporation by the concessionaire
The concessionaire was given the right to recover its investment from the premium
received for ldquoRight of Occupationrdquo of the constructed shops
At the time of award of concession it was estimated that a profit of Rs 200 lakh will
be accrued from the venture which will be shared by the concessionaire with the
Corporation
The Corporation is expected to receive a profit share of Rs 100 lakh from the
concessionaire
Source Compendium on Public Private Partnership in Urban Infrastructure Case Studies Ministry of Urban
Development Government of India in association with Confederation of Indian Industry (CII)
We have also studied another case wherein the development affordable housing units was structure
on a PPP basis by the Pimpri Chinchwad New Township Development Authority (PCNTDA)
451 Public private partnership in affordable housing under Jawaharlal
Nehru National Urban Renewal Mission (JNNURM)
The Pune metropolitan region comprising Pune and Pimpri Chinchwad cities is one of the fastest
growing urban agglomerations in India A major automobile and auto-ancillary hub and a well-known
international education destination it also ranks among the top IT destinations of India Besides the
region has many industrial clusters housing industries focused on FMCG engineering agro-based
technology
The Pimpri-Chinchwad New Town Develompent Authority (PCNTDA) a key development authority of
the PMR is responsible for development of peri-urban especially in its north In line with the
phenomenal growth of the region and its strident aspirations PCNTDA has envisioned the
development of an integrated township at Sector 12 spanning 53 hectares Given the success of the
Public Private Partnership (PPP) model in involving private sector participation for development based
projects PCNTDS proposed to develop the integrated township on PPP basis
With this objective PCNTDA appointed the consortium of CRISIL Risk and Infrastructure Solutions
Limited (CRIS) Omkar Associates and Creations as project development consultants for the
development of an eco-friendly affordable township at Bhosari Sector 12 CRISILrsquos role was to
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Bangalore Development Authority
[11]
undertake a detailed demand assessment financial feasibility project structuring and management of
the bid process
The concept
Keep in mind the PCNTDArsquos vision CRIS designed integrated township such that it compriseshousing untis for the poor affordable housing units for the general public a primary health care
centre a hospital and a school
As per the structure the Developer shall construct 5040 housing units under the Basic Services for
Urban Poor (BSUP) scheme of JNNURM PCNTDA shall transfer the amount of grant sanctioned for
developing these units under the JNNURM scheme to the developer The remaining project cost of
the BUSP units was to be financed by the developer
In addition to this the Developer shall also construct affordable housing units as per pre-specified
specifications and hand over to PCNTDA free of cost The developer shall also construction the
physical and social infrastructure for the integrated township thereby ensuring good road adequate
water supply an efficient sewerage system as well as schools and hospitals The project shall bedeveloped in a manner such that it has minimum possible impact on the surrounding environment and
is in harmony with nature To this end the developer shall undertake eco-friendly initiatives including
rain water harvesting use of solar power environment-friendly materials and vermin-composting
The project
The developer has to complete the BSUP housing units within 2 years and hand over to the PCNTDA
For the remaining portion of the land PCNTDA shall execute a lease deed for 99 years with the
developer The lease rights shall be granted to the developer in phases upon completion of
milestones as defined in the project agreement The main scope of work for the developer shall
include
Master planning for the entire 53 hectares of land and construction of common physical and
social infrastructure for the entire area
Development construction and marketing of 795 lakhs square meters of integrated real
estate space
Construction and handing over of 5040 housing units under the BSUP scheme of JNNURM
on a separate layout carved out of the said land PCNTDA will provide the developer the grant
sanctioned by the Government of India for these housing units
Successful selection of private developer
With the objective of undertaking this project on a PPP basis in a transparent and objective manner
PCNTDA launched a three-cover Request for Proposal in June 2009 The bidding parameter was theconstructed ldquoCarpet Areardquo in ldquosquare metersrdquo of affordable housing units that the bidder shall
construct and hand over free of cost to PCNTDA
The tender received good response from four interested bidders Of the four bidders two bidders
were adjudged technically and financially capable and short-listed for the final stage The bidder with
the highest construction carpet area offered to PCNTDA was selected The successful bidder quoted
a carpet area of 130599 square meters of affordable housing units
Thereby the PCNTDA derived a value of 7369 housing units (including 5040 BSUP units) a school
and a hospital for the BSUP units a school and hospital for the general public and development of
public amenities
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Bangalore Development Authority
[12]
Value addition to PCNTDA
In commercial terms PCNTDA saved (i) Rs 190 crores as the gap amount required to fund the BSUP
scheme (ii) Rs 210 crores of construction cost of affordable housing units and (iii) Rs 100 crores on
the development of physical and social infrastructure In addition to this PCNTDA shall receive anupfront payment of Rs 50 crores from the successful bidder The project structure also protects
PCNTDA from cost escalation risks valuation risks and engineering risks
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Bangalore Development Authorit
5 Market asse
51 Bangalore gro
The growth of Bangalore has be
from the growth in population in
to the economic opportunities it
Bangalore an obvious choice for
Bangalore has grown at averag
decades It is projected that B
explosive growth has meant th
pressure
Figure 5-1 Population growth
Source City Development Plan Ba
The city leads the country in
available However Bengaluru a
of projects under development a
983089983086983094983091 983089983086983096983097 983090983086983092
983088
983089983088
983090983088
983091983088
983092983088
983093983088
983094983088
983095983088
983096983088
983097983088
983089983097983088983089 983089983097983089983089 983089983097983090983089
983120 983151 983152 983157 983148 983137 983156 983145 983151 983150 983145 983150 983116
983137 983147 983144 983155
y
sment
th overview
en unprecedented in the past couple of decades
the last century Bangalore continues to attract t
offers This is also supported by a salubrious
not only businesses but also for people
compounded annual growth rate (CAGR) of 3
ngalorersquos population will cross the 10 million
at the infrastructure in Bangalore has been p
in Bangalore between 1901 and 2011
galore Development Authority and Census of India
ffice space with 738 million square feet of
lso has 22 per cent of the available space vacan
nd reduced demand
983091983086983089 983092983086983089983089983095983086983096983094
983089983090983086983088983094
983089983094983086983094983092
983090983097983086983090983090
983092
983089983097983091983089 983089983097983092983089 983089983097983093983089 983089983097983094983089 983089983097983095983089 983089983097983096983089 983089983097
[13]
This fact is laid bare
rongs of people due
eather which makes
58 in the last three
mark by 2021 This
t under tremendous
commercial capacity
with a large number
983086983091
983093983094983086983096983094
983096983092
983097983089 983090983088983088983089 983090983088983089983089
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Bangalore Development Authority
[14]
52 Demand projections
Bangalore is the largest commercial market and third largest residential market in India The city has
typically been preferred by home buyers because of its favorable socio-economic conditions and a
salubrious climate In recent years Bangalore has attracted a large influx of population engaged inthe thriving IT sector City residential demand is more end-user driven with moderate price
appreciation The average residential real estate price in the city is 20-25 lesser than in Delhi and
Mumbai In the recent National Housing Bank Residex the index indicating property prices across key
cities in India Bangalore witnessed a mere 1 YoY fall in residential prices in 2011-12 Mumbai saw
an 116 YoY jump in home prices while Delhi witnessed 358 YoY increase during 2011-12 The
city witnessed tremendous growth in terms of population and the number of companies setting up
offices there Thus the ongoing projects such as Bengaluru metro rail project various flyovers and
the under-pass construction activities in Outer Ring Road (ORR) CNR and BHEL circles would ease
the congestion and provide better connectivity for all commuters This will boost real estate demand in
and around Bangalore city
In 2011-12 Bangalorersquos commercial market exhibited resiliency with comparatively high demand
levels despite the discomfort in the market on account of global uncertainty Though commercial
property demand in Bangalore is largely dependent on ITITES sectors the share of manufacturing is
increasing at a faster pace and thereby giving further boost to office space demand According to real
estate consultancy firm Knight Frank the manufacturing sector witnessed a quantum leap as its share
of absorption increased from 3 in 4QCY10 to 23 in 4QCY11 The absorption of commercial space
has gone up from 5mn sq ftquarter in CY09 to 7mn sq ftquarter in CY11 thanks to sustained
demand for Bangalore commercial space which witnessed 43 CAGR in absorption level over CY09-
11 Subdued supply during the first two quarters of 2011 coupled with high absorption level has
substantially lowered the vacancy level in the city (bringing it down from 17 in CY10 to 12 in
CY11) With the expansion of existing operations in the IT sector and the entry of newer sectors dueto renewed optimism in the market we expect the level of absorption of office space to remain stable
Revised Master Plan-2015 for the BMA has been published This document gives the likely growth to
take place in various areas of the BMA The population of the BMA is expected to grow from 61 lakh
in 2001 to 122 lakh in 2025
The proposed growth rate and the ever changing urban scenario is bound to increase the commercial
space demand in the region The site at Indiranagar is situated at a junction and has two road facing
sides which makes it very attractive for commercial development The site is also huge in size and
can easily accommodate a mall
Hence in view of the above it can be safely recommended that the site would generate huge interest
within the developers
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Bangalore Development Authority
[15]
6 Project financials
The project costs have been largely derived from the costs indicated by the Bangalore Development
Authority (BDA)
61 Cost estimation
The estimated cost of development of the project is Rs 23931 lakhs The costs have been outlined
below
Table 6-1 Project Cost of the proposed development
Particular Amount inRs Lakhs
Construction Cost 19967
Land Development 793
Other Infrastructure 50
Total Hard Costs 20810
Contingencies 3121
Total Project Development Cost 23931
Apart from the above mentioned project development cost the Concessionaire would incur the
development premium and Interest during construction (IDC) cost
Particulars 25 years 33 Years 66 years
Upfront Premium (Rs Lakh) 965000 1230000 600000
IDC Cost (Rs Lakh) 315600 361500 259100
Revenue Share every year 15 15 15
Total Project Cost (Rs Lakhs) 36737 39846 33022
62 Revenue stream
The Revenues to the Developer would accrue from the revenue earned from the lease rentals and the
maintenance charges which the developer earns from the tenants The total revenue from both the
heads has been arrived at Rs 6720 Lakhs for the base year It has been assumed that the
occupancy of the commercial complex 80 in the base year and stabilizes to a maximum of 95towards the end of the concession period The average lease rentals have been assumed at Rs 70
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Bangalore Development Authority
[16]
per square feet and the maintenance charges have been assumed at Rs 225 per square feet Both
the revenues are escalating at the rate of 10 per annum The income statement for the developer
has been provided in Annexure 1
63 Viability assessment
The viability assessment has been carried out over two concession period ie 25 33 and 66 years
The debt to equity ratio has been assumed to be 121
The project level internal rate of return (IRR) IRR of equity and the net present value of the equity
have been worked out
Table 6-2 Viability assessment for BDA complex at Indiranagar
Concession Period Project IRR Equity IRR NPV of Equity
Upfront Premium
(Rs in Lakhs)
25 years 1777 2007 96 9650
33 years 1818 2006 108 12300
66 years 2101 2333 5285 6000
It is evident that the project is viable for the developer for all the 3 concession periods In case of the
25 year concession period it is estimated that the developer would pay BDA an estimated upfront
premium of Rs 9650 lakhs Similarly the developer would pay BDA an amount of Rs 12300 lakhsand Rs 6000 lakhs for the concession periods of 33 years and 66 years respectively
64 Ranking of options based on commercial viability
Having assessed the project for two concession periods of 25 33 and 66 years we are of the view
that the 25 year concession option will be more suitable since it allows the developer to make
reasonable returns on the projects and his own investments along with a sizeable upfront premium for
BDA BDA would be in a position to renew the contract or retender the project after 25 years which
may enable BDA to earn as per the prevailing market rates
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Bangalore Development Authority
[17]
7 Statutory amp legal framework
71 Legal amp regulatory framework
Development Control Regulations (DCR)
As per RMP ndash 2015 published by BDA the project site has been classified as ldquoCommercial Businessrdquo
As per the definitions of RMP-2015 Commercial Business Zone allows development of Commercial
and Corporate offices Retail Shopping Complexes Restaurants and Hotels Convention centres and
banquet halls financial institutions Cinema and multiplexes places of assembly exhibition centres
Entertainment and amusement centres and stores
Permissible land uses under Commercial (Business) Zone as per RMP-2015 of BDA
Main land use category C3
Other land uses permissible (as main land use) R I-3 T3 amp U4
If the road width is less than 120 m and plot area is less than 240 square metre then C2 I-2
R and U4 only are allowed
The plot size is 24000 square metre Presently it has 18m wide access road The applicable DCR for
the plot as per proposed road width is as follows
Table 7-1 Plot details of Indiranagar site
Sr No Particulars Description Unit
1 Land Use Commercial Business
2 Road Width 18 Metre
3 Permissible FAR 325
4Permissible ground
coverage50
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Bangalore Development Authority
[18]
8 Indicative environmental amp social impacts
81 Environmental impacts
The proposed development is in line with the layout of BDA Due to the reasonably large site area the
development will be on the higher side A set back of 50 is found to be acceptable for the site
however an Environmental Impact Assessment studies have to be undertaken for the sites Since
already a commercial complex is existent redevelopment of the complex would need demolition of
the existent structures Hence a suitable disposal of construction and debris has to be undertaken by
the developer Also a Green building can be developed to ensure minimal effect on nature
82 Social impactsDuring the construction period the existing establishments have to be shifted or compensated
temporarily Hence a clear resettlement plan has to be decided before the implementation of the
project It is envisaged that if due care is taken about the existing tenants the development would go
smoothly
83 Mitigation measures
It is necessary that the impacts are identified early and action plans are prepared for their mitigation in
advance For instance for environmental impacts the BDA may insist on the developer to use clean
and green building technologies
It is also necessary that the project development plan is also accompanied by a Relocation and
Rehabilitation plan which will layout detailed action points with the requisite intervening entity
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
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Bangalore Development Authority
[19]
9 Operating framework
91 Risks amp mitigation
The risk framework for this project has been outlined below
Table 9-1 Risk mitigation measures
Risk Category Risk implication Mitigation measure
Sponsor risk BDA scraps the project Termination payments in case of BDA scrapping the
project
Environment
risk
Adverse impact on
surrounding environment
Penalty clauses in case of default on
Concessionairersquos part
Environmental Impact Assessment to identify all
risks in advance
Political riskChange in government may
put project in jeopardy
Termination payments in case of project being
scrapped
Force
majeure riskProject is abandoned
Force majeure clauses in the concession
agreement
Operating riskThe operations of the
facility are stalled
Performance security clause in case of default on
Concessionairersquos part
Design risk Overdesign of the projectProject design to be finalized in mutual agreement
of concessionaire and BDA
Completion
risk
Completion of project is
delayed inconvenience to
citizens and tenants
Penalty clauses for time overrun in the concession
agreement
Cost overrun
risk
Project cost increases
beyond reasonable limits
Project cost increment ceiling to be specified in the
concession agreement Increase beyond this ceiling
to be borne by the developer No change in revenue
sharing
92 Indicative project structure
The best approach for such a large ticket project would be for the BDA to become a key actor in the
entire process of development The BDA may ask the private sector partner to form a Special
Purpose Company where the equity will be brought in by the private sector developer The designs
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Bangalore Development Authority
[20]
should be left to the developer and BDArsquos role would be in approving the same in accordance with the
Development Control Regulations
The SPC will develop and maintain Complex throughout the concession period The tenants would
pay the developer a sub-lease premium or lease rentals which will be escrowed in a separate accountand can be withdrawn based on the revenue sharing structure adopted
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Bangalore Development Authorit
10 Way ahead
101 Project develo
The key task for BDA is to ap
feasibility of the project Once t
the bid process
Figure 10-1 Project developm
The transaction advisor shall stralso prepare the relevant bid
management on behalf of BDA
102 Procurement
The foremost step for BDA is
feasibility The detailed financial
parameter Also an optimum str
bid documents would be prepar
process be conducted as a 2 sta
983105983152983152983151983145983150983156983149983141983150983156 983151983142 983156983154983137
983108983141983156983137983145983148983141983140 983142983141983137983155983145983138
983155983156983154983157983139983156983157983154983145983150983143
983120983154983141983152983137983154983137983156983145983151
983123983141983148983141983139
y
pment framework
oint a Transaction Advisor in order to conduc
e financial numbers are acceptable BDA BDA
nt framework
ucture the project upon completion of the feasibidocuments The transaction advisor shall un
nd will assist in appointment of the private secto
lan
to appoint a Transaction Advisor for the co
feasibility would determine the tentative revenue
cture would be arrived at Post the approval of
d for the selection of the developer It is recom
ge process involving Technical qualification and
983155983137983139983156983145983151983150 983137983140983158983145983155983151983154
983148983145983156983161 983155983156983157983140983145983141983155 983137983150983140 983152983154983151983146983141983139983156
983150 983151983142 983138983145983140 983140983151983139983157983149983141983150983156983155
983145983151983150 983151983142 983152983154983145983158983137983156983141 983155983141983139983156983151983154 983152983137983154983156983150983141983154
[21]
a detailed financial
should proceed with
ility studies and shallertake bid process
partner
nducting the project
for BDA and the bid
easibility Report the
mended that the Bid
inancial proposal
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
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B a n g a l o r e D e v e l o p m e n t A u t h o r i t y
B D A s h o u l d i n i t i a t e t h e p r o c e s s o f a p p o
i n t i n g a t r a n s a c t i o n a d v i s o r a t t h e
e a r l i e s t T h i s p r o c e s s c a n b e c o m p l e t e d i n 2 m o n t h s
O n c e t h e T A
i s i n p l a c e
t h e B D
A s h o u l d a l l o w
a t l e a s t 4 m o n t h s f o r t h e p r e p a r a t i o n o f f e a s i b i l i t y p r o j e c t s t r u c t u r i n g a n d b i d d o c u m e n
t s
O n c e t
h e b i d d o c u m e n t s a r e i n p l a c e t h
e B D A
s h o u l d i n i t i a t e t h e p r o c e s s
o f s e l e c t i n g t h e p r i v a t e s e c t o r p a
r t n e r w h i c h c a n b e c o m p l e t e d o v e r a 4 m o n t h
p e r i o d
T h e c u
r r e n t p r o c u r e m e n t p l a n i s s p r e a d
o v e r 1 1 m o n t h s w h i c h c a n b e s
h o r t e n e d d e p e n d i n g o n t h e m a n n e r i n w h i c h B D A
m a k e s d e c i s i o n
s r e l a t i n g t o
a p p o i n
t m e n t o f T A a n d p r i v a t e d e v e l o p e r
A c t i v i t y
M 1
M 2
M 3
M 4
M 5
M 6
M 7
M 8 M
9
M 1 0
M 1 1
M 1 2
A p p o i n t m e t o f t r a n s a c t i o n a d v i s o r
D e t a i l e d t e c h n o - e c o n o m i c f e a s i b i l i t y a n d
b i d d o c u m e n t p r e p a r a t i o n
B i d p r
o c e s s m a n a g e m e n t
S e l e c t i o n o f p r e f e r r e d b i d d e r a n d f o r m a t i o n o f S P C
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B a n g a l o r e D e v e l o p m e n t A u t h o r i t y
1 1
A n n e x u r e 1 ndash C a s h - f l o w
s t a t e m e n t
R e v e n u e H e a d
S u b H e a d R a t e
U n i t
3 1 - M a r - 1 4
3 1 - M
a r - 1 7
3 1 - M a r - 2 2
3 1 - M a r - 2 7
3 1 - M a r - 3 2
3 1 - M a r - 3 7
3 1 - M a r - 4 2
3 1 - M a r - 4 7
3 1 - M
a r - 5 2
3 1 - M a r - 5 7
3 1 - M a r - 6 2
C o m m e
r c i a l S p a c e
O c c u p a
n c y
P e r c e n t a g
0
9 0
9 5
9 5
9 5
9 5
9 5
9 5
9 5
9 5
9 5
C o m m e
r c i a l s p a c e l e a s e d o u t
s q f t
-
7 2 0 6
9 0
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6
0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
D e p o s i t f o r L e a s e
( N o o f m o n t h s r e n t )
1 2
A v e r a g e
L e a s e R e n t a l s
7 0
R s p s f p e r m o n t h
E s c a l a t i o n
1 0
M a i n t e n
a n c e c h a r g e s
2 2 5
R s p s f p e r m o n t h
R e v e n u e f r o m
L e a s e R e n t a l
R s
L a k h s
-
8 8
6 3
1 5 0
6 8
2 4 2
6 6
3 9 0
8 1
6 2 9
4 1
1 0 1 3
6 7
1 6 3 2
5 3
2 6
2 9
2 0
4 2 3 4
3 5
6 8 1 9
4 7
R e v e n u e f r o m
M a i n t e n a n c e c h a r g e s
-
2 8 5
4 8 4
7 8 0
1 2
5 6
2 0
2 3
3 2
5 8
5 2
4 7
8 4
5 1
1 3 6
1 0
2 1 9
2 0
T o t a l R
e v e n u e
-
9 1 4 8
1 5 5 5 2
2 5 0 4 6
4 0 3 3 8
6 4 9 6 4
1 0 4 6 2 5
1 6 8 5 0 0
2 7
1 3 7 1
4 3 7 0 4 6
7 0 3 8 6 7
R e v e n
u e H e a d
S u b H e a d R a t e
U n i t
3 1 - M a r - 6
7
3 1 - M a r - 7 2
3 1 - M a r - 7 8
3 1 - M a r - 7 9
C o m m e r c i a l S p a c e
O c c u p a n c y
P e r c e n t a g
9 5
9 5
9 5
9 5
C o m m e r c i a l s p a c e l e a s e d o u t
s q f t
7 6 0 7 2
8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
D e p o s i t f o r L e a s e
( N o o f m o n t h s r e n t )
1 2
A v e r a g
e L e a s e R e n t a l s
7 0 R s p s f p e r m o n t h
E s c a l a
t i o n
1 0
M a i n t e
n a n c e c h a r g e s
2 2
5 R s p s f p e r m o n t h
R e v e n u
e f r o m
L e a s e R e n t a l
R s
L a k h s
1 0
9 8 2 8 2
1 7
6 8 7
9 4
3 1
3 3 5
2 7
3 4
4 6 8
8 0
R e v e n u
e f r o m
M a i n t e n a n c e c h a r g e s
3 5 3 0 2
5 6 8
5 4
1 0 0 7
2 1
1 1 0 7
9 3
T o t a l R e v e n u e
1 1 3 3 5 8 4
1 8 2 5 6 4 8
3 2 3 4 2 4 8
3 5 5 7 6 7 2
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[x]
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
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[y]
Disclaimer
CRISIL Risk and Infrastructure Solutions Limited (CRIS) has taken due care and caution in preparation of this Report for
Bangalore Development Authority which is under the purview of the Urban Development Department Government of
Karnataka This Report is based on the information documents provided by the Company andor information available publicly
andor obtained by CRIS from sources which it considers reliable CRIS does not guarantee the accuracy adequacy or
completeness of the information documents Report and is not responsible for any errors or omissions or for the results
obtained from the use of the same The Report and results stated therein are subject to change CRIS especially states that it
has no financial liability whatsoever to the Company users of this Report This Report is strictly confidential and should not be
reproduced or redistributed or communicated directly or indirectly in any form or published or copied in whole or in part
especially outside India for any purpose
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Registered Office ndash Mum
CRISIL House Central AvenueHiranandani Business ParkPowai Mumbai- 400 076Phone 91-22-3342 3000Fax 91-22-3342 3810
New Delhi
The Mira G-1 1st Floor Plot NoIshwar Nagar Mathura Road
New Delhi - 110 065 IndiaPhone 91-11-4250 510091-11-2693 0117 - 121Fax 91-11-2684 2213
Hyderabad
3rd Floor Uma ChambersPlot No 9amp10 Nagarjuna HillsNear Punjagutta Cross RoadHyderabad - 500 082Phone 91-40-40328200Fax 91-40-2335 7507
Bengaluru
W-101 Sunrise Chambers22 Ulsoor RoadBengaluru - 560 042Phone 91-80-2558 0899Fax 91-80-2559 4801
Ahmedabad
706 Venus AtlantisNear Reliance Petrol PumpPrahladnagarAhmedabad -Phone 91-79-4024 4500Fax 91-79-2755 9863
Visit us atwwwcrisilcom
ai
1 amp 2
About CRISIL Infrastructu
CRISIL Infrastructure Advisory
CRISIL Risk and Infrastructure
Limited a 100 subsidiary of
Indiarsquos leading Ratings Resear
Policy Advisory Company
CRISIL Infrastructure Advisory
premier advisor focusing on po
well as commercial and contra
the areas of transport energyinfrastructure We also provide
international firms planning inv
India Over a period of time C
Infrastructure Advisory has buil
position for itself in these doma
considered the preferred cons
governments multilateral agen
sector clients We have extend
operations beyond India and ar
other emerging markets in Afri
and South Asia
re Advisory
is a division of
Solutions
RISIL Limited ndash
ch Risk and
is Indiarsquos
licy issues as
tual issues in
nd urbansupport to
stments in
ISIL
t a unique
ins and is
ltant by
cies and private-
ed our
e present in
a Middle East
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
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Bangalore Development Authority
[6]
With ever increasing boundaries and gross domestic product of 59123 billion in FY 06-07 Bengaluru
has some well-recognized IT companies and numerous public sector heavy industries aerospace
telecommunications and defence organisations located within Bengaluru also has some well known
colleges and research institutes
Geography
With an average elevation from the sea level of 920 m and total area of 741 km2 Bengaluru is located
in the south-eastern part of Karnataka in the Mysore Plateau - a region of Deccan Plateau The city
has an uneven landscape of hills and valleys to the south and relatively more level plateau towards
the north
Because of its elevation the city enjoys a pleasant and equable climate throughout the year The city
is situated in the Bengaluru Urban district which is divided into four taluks - Bangalore North
Bangalore East Bangalore South and Anekal and covers a total geographical area of 2190 sq km
Bangalore District is surrounded by Kolar District to the northeast Tumkur District on the northwest
Mandya District on the southwest Chamarajanagar District on the south and neighbouring state of
Tamil Nadu on the southeast
Connectivity
Bangalore is well connected to other Indian cities by road rail and air transport The connectivity by
rail road and air is detailed in the sections below
Road
Bengaluru is located at the junction of National Highways 4 7 and 48 connecting to various important
cities in India including Chennai Hyderabad Kanyakumari Madurai Mangalore Mumbai Nagpur
Pune and Varanasi
Railways
Bengaluru has two major railway stations Bengaluru City railway station and Yeswantpur Junction
The city has a well maintained railway network connecting major cities of the country and is
connected to the rest of the country both by metre gauge and broad gauge rail services
Air
Bengaluru has an International Airport at Devanahalli and is well connected to all cities in India
Internationally Bengaluru is connected to European and Asian cities like Frankfurt Singapore Kuala
Lumpur London Dubai Paris Bangkok and Hong Kong
Major commercial areas
The following are the major commercial areas in and around Bangalore
Central Business District Seshadripuram Jayanagar JP Nagar Yeshwantapura
Eastern Suburb Marathalli-sarjapur ORR Sarjapur Road Whitefield and Brookfield
Secondary Business District Indiranagar JP Nagar RT Nagar Vijayanagar
Northern Suburb HRBR Layout Bellary Road Jakkur
Southern Suburb Mysore Road Hosur Road
West Suburb BEL Factory HMT Layout
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Bangalore Development Authority
[7]
33 Key issues
The recessionary trends in 2007 across the world had also adversely affected the entire real estate
market in Bengaluru All the three categories of residential commercial (office space) and retail had
experienced slump in market and the real estate market in several erstwhile prime locations of the citywere facing oversupply situation and a drastic fall in the capital as well as rental values
With the revival of the industry and economy the residential market is expected to witness a jump
across all the areas in Bengaluru as per CRISILrsquos analysis The eastern and southern areas are
estimated to emerge as up-scaled developments as these areas are expected to see maximum
supply in the next three years
Good quality developments have been the key feature of Bangalorersquos commercial developments The
boom in IT sector especially in South India has enabled the city to have a metropolitan culture which
brings along the urban demands like malls and multiplexes
Recently the market in Bangalore has stabilized to a large extent after the sudden jump in prices post
recession However this is cyclical in nature and the saturation of IT services has led to a scenario
where there would not be much increase in the lease rentals
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Bangalore Development Authorit
4 Project
41 Description of
It is proposed that for the redev
over to the developer on long
Finance Design Construction
period Ownership of the land wi
BUP area will be transferred b
proposed commercial develop
vendors
42 Components o
The project would be develope
basis The structure of the mode
Figure 4-1 Development struc
43 Description of
The site is located at Indiranaga
the main commercial centres in
Road in the North Old Airport
the East Indiranagar is located
famous for housing the Somes
and educational institutions like
y
the project
lopment of BDA Complex at Indiranagar the la
erm lease basis The selected developer woul
and Operation amp Maintenance of the project t
ll always be with BDA After the lease period th
ack to BDA free of cost We have assumed
ent shall be reserved for BDA for rehabilit
f the project
on a Design Build Finance Operate and Tra
l has been illustrated below
ture of the Commercial Complex
the site
r a suburb of Bangalore located about 4 km ea
the city This medium sized suburb is enclose
oad in the South Halasura in the West and Je
within a diameter of few kilometre radii from the
ara Temple several reputed hospitals like Amrj
r Ambedkar College KH Patel College etc
[8]
nd would be handed
d be responsible for
hroughout the lease
e land along with the
hat a portion of the
tion of the existing
sfer model on PPP
t of MG road one of
by the Old Madras
vanbheemanagar in
airport The place is
yoti Vijaya and ESI
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Bangalore Development Authority
[9]
The site is situated at a junction near a residential area and is frequented by elders and youngsters
alike The present building consists of Motor driving schools RTO office computer vendors and travel
agents There is a water tank situated in the site
Figure 4-2 BDA Complex at Indiranagar
44 Interaction with stakeholders
CRISIL conducted a series of interactions with the stakeholders namely the BDA officials Citizens
and the establishment owners The interactions revealed that the building has to undergo
redevelopment The condition of the BDA office is not up to the standards expected and the officials
complained about leaks and short circuits The establishment owners suggested that the building was
planned with less road facing establishments due to which they are not able to attract footfalls
45 Case studies
In order to generate revenues from the real estate value of the land in the ownership of the ULBrsquos
commercial projects have been developed on a PPP basis on these lands Typically under such
arrangements the ULB would have identified a site under its ownership where a property for
commercial use can be developed Commercial development would include the development of
shopping complexes markets bus terminals multi-level car parking townships etc
Under such an arrangement the ULB would require of the private developer to undertake
construction of a commercial complex on the land The land would be provided by the ULB to the
private operator on a lease basis The ULB would provide specifications on the nature and type of
commercial development required The private developer would need to bear all the capital costs
associated with the construction of the commercial complex Post construction of the commercial
complex as per the arrangement the private developer would either hand over the constructed
facility to the ULB or would sub-lease the property The private developer would be required to make
to the ULB an upfront payment or provide a share in the ULB revenues earned from sub-leasing the
properties
The following case study compiled by the Ministry of Urban Development Government of India
highlights the development of municipalurban lands on a PPP basis
Category Details
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Bangalore Development Authority
[10]
Category Details
Project Construction of Commercial Complex at Ranipura Market
Cost of
ProjectRs 1500 lakhs
Description
The land was allotted to the concessionaire to construct the Commercial Complex by
the Corporation
Corporation continues to own the land
After the concession period the built-up structure (Commercial Complex) will be
transferred to the Corporation by the concessionaire
The concessionaire was given the right to recover its investment from the premium
received for ldquoRight of Occupationrdquo of the constructed shops
At the time of award of concession it was estimated that a profit of Rs 200 lakh will
be accrued from the venture which will be shared by the concessionaire with the
Corporation
The Corporation is expected to receive a profit share of Rs 100 lakh from the
concessionaire
Source Compendium on Public Private Partnership in Urban Infrastructure Case Studies Ministry of Urban
Development Government of India in association with Confederation of Indian Industry (CII)
We have also studied another case wherein the development affordable housing units was structure
on a PPP basis by the Pimpri Chinchwad New Township Development Authority (PCNTDA)
451 Public private partnership in affordable housing under Jawaharlal
Nehru National Urban Renewal Mission (JNNURM)
The Pune metropolitan region comprising Pune and Pimpri Chinchwad cities is one of the fastest
growing urban agglomerations in India A major automobile and auto-ancillary hub and a well-known
international education destination it also ranks among the top IT destinations of India Besides the
region has many industrial clusters housing industries focused on FMCG engineering agro-based
technology
The Pimpri-Chinchwad New Town Develompent Authority (PCNTDA) a key development authority of
the PMR is responsible for development of peri-urban especially in its north In line with the
phenomenal growth of the region and its strident aspirations PCNTDA has envisioned the
development of an integrated township at Sector 12 spanning 53 hectares Given the success of the
Public Private Partnership (PPP) model in involving private sector participation for development based
projects PCNTDS proposed to develop the integrated township on PPP basis
With this objective PCNTDA appointed the consortium of CRISIL Risk and Infrastructure Solutions
Limited (CRIS) Omkar Associates and Creations as project development consultants for the
development of an eco-friendly affordable township at Bhosari Sector 12 CRISILrsquos role was to
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Bangalore Development Authority
[11]
undertake a detailed demand assessment financial feasibility project structuring and management of
the bid process
The concept
Keep in mind the PCNTDArsquos vision CRIS designed integrated township such that it compriseshousing untis for the poor affordable housing units for the general public a primary health care
centre a hospital and a school
As per the structure the Developer shall construct 5040 housing units under the Basic Services for
Urban Poor (BSUP) scheme of JNNURM PCNTDA shall transfer the amount of grant sanctioned for
developing these units under the JNNURM scheme to the developer The remaining project cost of
the BUSP units was to be financed by the developer
In addition to this the Developer shall also construct affordable housing units as per pre-specified
specifications and hand over to PCNTDA free of cost The developer shall also construction the
physical and social infrastructure for the integrated township thereby ensuring good road adequate
water supply an efficient sewerage system as well as schools and hospitals The project shall bedeveloped in a manner such that it has minimum possible impact on the surrounding environment and
is in harmony with nature To this end the developer shall undertake eco-friendly initiatives including
rain water harvesting use of solar power environment-friendly materials and vermin-composting
The project
The developer has to complete the BSUP housing units within 2 years and hand over to the PCNTDA
For the remaining portion of the land PCNTDA shall execute a lease deed for 99 years with the
developer The lease rights shall be granted to the developer in phases upon completion of
milestones as defined in the project agreement The main scope of work for the developer shall
include
Master planning for the entire 53 hectares of land and construction of common physical and
social infrastructure for the entire area
Development construction and marketing of 795 lakhs square meters of integrated real
estate space
Construction and handing over of 5040 housing units under the BSUP scheme of JNNURM
on a separate layout carved out of the said land PCNTDA will provide the developer the grant
sanctioned by the Government of India for these housing units
Successful selection of private developer
With the objective of undertaking this project on a PPP basis in a transparent and objective manner
PCNTDA launched a three-cover Request for Proposal in June 2009 The bidding parameter was theconstructed ldquoCarpet Areardquo in ldquosquare metersrdquo of affordable housing units that the bidder shall
construct and hand over free of cost to PCNTDA
The tender received good response from four interested bidders Of the four bidders two bidders
were adjudged technically and financially capable and short-listed for the final stage The bidder with
the highest construction carpet area offered to PCNTDA was selected The successful bidder quoted
a carpet area of 130599 square meters of affordable housing units
Thereby the PCNTDA derived a value of 7369 housing units (including 5040 BSUP units) a school
and a hospital for the BSUP units a school and hospital for the general public and development of
public amenities
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Bangalore Development Authority
[12]
Value addition to PCNTDA
In commercial terms PCNTDA saved (i) Rs 190 crores as the gap amount required to fund the BSUP
scheme (ii) Rs 210 crores of construction cost of affordable housing units and (iii) Rs 100 crores on
the development of physical and social infrastructure In addition to this PCNTDA shall receive anupfront payment of Rs 50 crores from the successful bidder The project structure also protects
PCNTDA from cost escalation risks valuation risks and engineering risks
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Bangalore Development Authorit
5 Market asse
51 Bangalore gro
The growth of Bangalore has be
from the growth in population in
to the economic opportunities it
Bangalore an obvious choice for
Bangalore has grown at averag
decades It is projected that B
explosive growth has meant th
pressure
Figure 5-1 Population growth
Source City Development Plan Ba
The city leads the country in
available However Bengaluru a
of projects under development a
983089983086983094983091 983089983086983096983097 983090983086983092
983088
983089983088
983090983088
983091983088
983092983088
983093983088
983094983088
983095983088
983096983088
983097983088
983089983097983088983089 983089983097983089983089 983089983097983090983089
983120 983151 983152 983157 983148 983137 983156 983145 983151 983150 983145 983150 983116
983137 983147 983144 983155
y
sment
th overview
en unprecedented in the past couple of decades
the last century Bangalore continues to attract t
offers This is also supported by a salubrious
not only businesses but also for people
compounded annual growth rate (CAGR) of 3
ngalorersquos population will cross the 10 million
at the infrastructure in Bangalore has been p
in Bangalore between 1901 and 2011
galore Development Authority and Census of India
ffice space with 738 million square feet of
lso has 22 per cent of the available space vacan
nd reduced demand
983091983086983089 983092983086983089983089983095983086983096983094
983089983090983086983088983094
983089983094983086983094983092
983090983097983086983090983090
983092
983089983097983091983089 983089983097983092983089 983089983097983093983089 983089983097983094983089 983089983097983095983089 983089983097983096983089 983089983097
[13]
This fact is laid bare
rongs of people due
eather which makes
58 in the last three
mark by 2021 This
t under tremendous
commercial capacity
with a large number
983086983091
983093983094983086983096983094
983096983092
983097983089 983090983088983088983089 983090983088983089983089
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Bangalore Development Authority
[14]
52 Demand projections
Bangalore is the largest commercial market and third largest residential market in India The city has
typically been preferred by home buyers because of its favorable socio-economic conditions and a
salubrious climate In recent years Bangalore has attracted a large influx of population engaged inthe thriving IT sector City residential demand is more end-user driven with moderate price
appreciation The average residential real estate price in the city is 20-25 lesser than in Delhi and
Mumbai In the recent National Housing Bank Residex the index indicating property prices across key
cities in India Bangalore witnessed a mere 1 YoY fall in residential prices in 2011-12 Mumbai saw
an 116 YoY jump in home prices while Delhi witnessed 358 YoY increase during 2011-12 The
city witnessed tremendous growth in terms of population and the number of companies setting up
offices there Thus the ongoing projects such as Bengaluru metro rail project various flyovers and
the under-pass construction activities in Outer Ring Road (ORR) CNR and BHEL circles would ease
the congestion and provide better connectivity for all commuters This will boost real estate demand in
and around Bangalore city
In 2011-12 Bangalorersquos commercial market exhibited resiliency with comparatively high demand
levels despite the discomfort in the market on account of global uncertainty Though commercial
property demand in Bangalore is largely dependent on ITITES sectors the share of manufacturing is
increasing at a faster pace and thereby giving further boost to office space demand According to real
estate consultancy firm Knight Frank the manufacturing sector witnessed a quantum leap as its share
of absorption increased from 3 in 4QCY10 to 23 in 4QCY11 The absorption of commercial space
has gone up from 5mn sq ftquarter in CY09 to 7mn sq ftquarter in CY11 thanks to sustained
demand for Bangalore commercial space which witnessed 43 CAGR in absorption level over CY09-
11 Subdued supply during the first two quarters of 2011 coupled with high absorption level has
substantially lowered the vacancy level in the city (bringing it down from 17 in CY10 to 12 in
CY11) With the expansion of existing operations in the IT sector and the entry of newer sectors dueto renewed optimism in the market we expect the level of absorption of office space to remain stable
Revised Master Plan-2015 for the BMA has been published This document gives the likely growth to
take place in various areas of the BMA The population of the BMA is expected to grow from 61 lakh
in 2001 to 122 lakh in 2025
The proposed growth rate and the ever changing urban scenario is bound to increase the commercial
space demand in the region The site at Indiranagar is situated at a junction and has two road facing
sides which makes it very attractive for commercial development The site is also huge in size and
can easily accommodate a mall
Hence in view of the above it can be safely recommended that the site would generate huge interest
within the developers
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Bangalore Development Authority
[15]
6 Project financials
The project costs have been largely derived from the costs indicated by the Bangalore Development
Authority (BDA)
61 Cost estimation
The estimated cost of development of the project is Rs 23931 lakhs The costs have been outlined
below
Table 6-1 Project Cost of the proposed development
Particular Amount inRs Lakhs
Construction Cost 19967
Land Development 793
Other Infrastructure 50
Total Hard Costs 20810
Contingencies 3121
Total Project Development Cost 23931
Apart from the above mentioned project development cost the Concessionaire would incur the
development premium and Interest during construction (IDC) cost
Particulars 25 years 33 Years 66 years
Upfront Premium (Rs Lakh) 965000 1230000 600000
IDC Cost (Rs Lakh) 315600 361500 259100
Revenue Share every year 15 15 15
Total Project Cost (Rs Lakhs) 36737 39846 33022
62 Revenue stream
The Revenues to the Developer would accrue from the revenue earned from the lease rentals and the
maintenance charges which the developer earns from the tenants The total revenue from both the
heads has been arrived at Rs 6720 Lakhs for the base year It has been assumed that the
occupancy of the commercial complex 80 in the base year and stabilizes to a maximum of 95towards the end of the concession period The average lease rentals have been assumed at Rs 70
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Bangalore Development Authority
[16]
per square feet and the maintenance charges have been assumed at Rs 225 per square feet Both
the revenues are escalating at the rate of 10 per annum The income statement for the developer
has been provided in Annexure 1
63 Viability assessment
The viability assessment has been carried out over two concession period ie 25 33 and 66 years
The debt to equity ratio has been assumed to be 121
The project level internal rate of return (IRR) IRR of equity and the net present value of the equity
have been worked out
Table 6-2 Viability assessment for BDA complex at Indiranagar
Concession Period Project IRR Equity IRR NPV of Equity
Upfront Premium
(Rs in Lakhs)
25 years 1777 2007 96 9650
33 years 1818 2006 108 12300
66 years 2101 2333 5285 6000
It is evident that the project is viable for the developer for all the 3 concession periods In case of the
25 year concession period it is estimated that the developer would pay BDA an estimated upfront
premium of Rs 9650 lakhs Similarly the developer would pay BDA an amount of Rs 12300 lakhsand Rs 6000 lakhs for the concession periods of 33 years and 66 years respectively
64 Ranking of options based on commercial viability
Having assessed the project for two concession periods of 25 33 and 66 years we are of the view
that the 25 year concession option will be more suitable since it allows the developer to make
reasonable returns on the projects and his own investments along with a sizeable upfront premium for
BDA BDA would be in a position to renew the contract or retender the project after 25 years which
may enable BDA to earn as per the prevailing market rates
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Bangalore Development Authority
[17]
7 Statutory amp legal framework
71 Legal amp regulatory framework
Development Control Regulations (DCR)
As per RMP ndash 2015 published by BDA the project site has been classified as ldquoCommercial Businessrdquo
As per the definitions of RMP-2015 Commercial Business Zone allows development of Commercial
and Corporate offices Retail Shopping Complexes Restaurants and Hotels Convention centres and
banquet halls financial institutions Cinema and multiplexes places of assembly exhibition centres
Entertainment and amusement centres and stores
Permissible land uses under Commercial (Business) Zone as per RMP-2015 of BDA
Main land use category C3
Other land uses permissible (as main land use) R I-3 T3 amp U4
If the road width is less than 120 m and plot area is less than 240 square metre then C2 I-2
R and U4 only are allowed
The plot size is 24000 square metre Presently it has 18m wide access road The applicable DCR for
the plot as per proposed road width is as follows
Table 7-1 Plot details of Indiranagar site
Sr No Particulars Description Unit
1 Land Use Commercial Business
2 Road Width 18 Metre
3 Permissible FAR 325
4Permissible ground
coverage50
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Bangalore Development Authority
[18]
8 Indicative environmental amp social impacts
81 Environmental impacts
The proposed development is in line with the layout of BDA Due to the reasonably large site area the
development will be on the higher side A set back of 50 is found to be acceptable for the site
however an Environmental Impact Assessment studies have to be undertaken for the sites Since
already a commercial complex is existent redevelopment of the complex would need demolition of
the existent structures Hence a suitable disposal of construction and debris has to be undertaken by
the developer Also a Green building can be developed to ensure minimal effect on nature
82 Social impactsDuring the construction period the existing establishments have to be shifted or compensated
temporarily Hence a clear resettlement plan has to be decided before the implementation of the
project It is envisaged that if due care is taken about the existing tenants the development would go
smoothly
83 Mitigation measures
It is necessary that the impacts are identified early and action plans are prepared for their mitigation in
advance For instance for environmental impacts the BDA may insist on the developer to use clean
and green building technologies
It is also necessary that the project development plan is also accompanied by a Relocation and
Rehabilitation plan which will layout detailed action points with the requisite intervening entity
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Bangalore Development Authority
[19]
9 Operating framework
91 Risks amp mitigation
The risk framework for this project has been outlined below
Table 9-1 Risk mitigation measures
Risk Category Risk implication Mitigation measure
Sponsor risk BDA scraps the project Termination payments in case of BDA scrapping the
project
Environment
risk
Adverse impact on
surrounding environment
Penalty clauses in case of default on
Concessionairersquos part
Environmental Impact Assessment to identify all
risks in advance
Political riskChange in government may
put project in jeopardy
Termination payments in case of project being
scrapped
Force
majeure riskProject is abandoned
Force majeure clauses in the concession
agreement
Operating riskThe operations of the
facility are stalled
Performance security clause in case of default on
Concessionairersquos part
Design risk Overdesign of the projectProject design to be finalized in mutual agreement
of concessionaire and BDA
Completion
risk
Completion of project is
delayed inconvenience to
citizens and tenants
Penalty clauses for time overrun in the concession
agreement
Cost overrun
risk
Project cost increases
beyond reasonable limits
Project cost increment ceiling to be specified in the
concession agreement Increase beyond this ceiling
to be borne by the developer No change in revenue
sharing
92 Indicative project structure
The best approach for such a large ticket project would be for the BDA to become a key actor in the
entire process of development The BDA may ask the private sector partner to form a Special
Purpose Company where the equity will be brought in by the private sector developer The designs
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Bangalore Development Authority
[20]
should be left to the developer and BDArsquos role would be in approving the same in accordance with the
Development Control Regulations
The SPC will develop and maintain Complex throughout the concession period The tenants would
pay the developer a sub-lease premium or lease rentals which will be escrowed in a separate accountand can be withdrawn based on the revenue sharing structure adopted
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Bangalore Development Authorit
10 Way ahead
101 Project develo
The key task for BDA is to ap
feasibility of the project Once t
the bid process
Figure 10-1 Project developm
The transaction advisor shall stralso prepare the relevant bid
management on behalf of BDA
102 Procurement
The foremost step for BDA is
feasibility The detailed financial
parameter Also an optimum str
bid documents would be prepar
process be conducted as a 2 sta
983105983152983152983151983145983150983156983149983141983150983156 983151983142 983156983154983137
983108983141983156983137983145983148983141983140 983142983141983137983155983145983138
983155983156983154983157983139983156983157983154983145983150983143
983120983154983141983152983137983154983137983156983145983151
983123983141983148983141983139
y
pment framework
oint a Transaction Advisor in order to conduc
e financial numbers are acceptable BDA BDA
nt framework
ucture the project upon completion of the feasibidocuments The transaction advisor shall un
nd will assist in appointment of the private secto
lan
to appoint a Transaction Advisor for the co
feasibility would determine the tentative revenue
cture would be arrived at Post the approval of
d for the selection of the developer It is recom
ge process involving Technical qualification and
983155983137983139983156983145983151983150 983137983140983158983145983155983151983154
983148983145983156983161 983155983156983157983140983145983141983155 983137983150983140 983152983154983151983146983141983139983156
983150 983151983142 983138983145983140 983140983151983139983157983149983141983150983156983155
983145983151983150 983151983142 983152983154983145983158983137983156983141 983155983141983139983156983151983154 983152983137983154983156983150983141983154
[21]
a detailed financial
should proceed with
ility studies and shallertake bid process
partner
nducting the project
for BDA and the bid
easibility Report the
mended that the Bid
inancial proposal
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B a n g a l o r e D e v e l o p m e n t A u t h o r i t y
B D A s h o u l d i n i t i a t e t h e p r o c e s s o f a p p o
i n t i n g a t r a n s a c t i o n a d v i s o r a t t h e
e a r l i e s t T h i s p r o c e s s c a n b e c o m p l e t e d i n 2 m o n t h s
O n c e t h e T A
i s i n p l a c e
t h e B D
A s h o u l d a l l o w
a t l e a s t 4 m o n t h s f o r t h e p r e p a r a t i o n o f f e a s i b i l i t y p r o j e c t s t r u c t u r i n g a n d b i d d o c u m e n
t s
O n c e t
h e b i d d o c u m e n t s a r e i n p l a c e t h
e B D A
s h o u l d i n i t i a t e t h e p r o c e s s
o f s e l e c t i n g t h e p r i v a t e s e c t o r p a
r t n e r w h i c h c a n b e c o m p l e t e d o v e r a 4 m o n t h
p e r i o d
T h e c u
r r e n t p r o c u r e m e n t p l a n i s s p r e a d
o v e r 1 1 m o n t h s w h i c h c a n b e s
h o r t e n e d d e p e n d i n g o n t h e m a n n e r i n w h i c h B D A
m a k e s d e c i s i o n
s r e l a t i n g t o
a p p o i n
t m e n t o f T A a n d p r i v a t e d e v e l o p e r
A c t i v i t y
M 1
M 2
M 3
M 4
M 5
M 6
M 7
M 8 M
9
M 1 0
M 1 1
M 1 2
A p p o i n t m e t o f t r a n s a c t i o n a d v i s o r
D e t a i l e d t e c h n o - e c o n o m i c f e a s i b i l i t y a n d
b i d d o c u m e n t p r e p a r a t i o n
B i d p r
o c e s s m a n a g e m e n t
S e l e c t i o n o f p r e f e r r e d b i d d e r a n d f o r m a t i o n o f S P C
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B a n g a l o r e D e v e l o p m e n t A u t h o r i t y
1 1
A n n e x u r e 1 ndash C a s h - f l o w
s t a t e m e n t
R e v e n u e H e a d
S u b H e a d R a t e
U n i t
3 1 - M a r - 1 4
3 1 - M
a r - 1 7
3 1 - M a r - 2 2
3 1 - M a r - 2 7
3 1 - M a r - 3 2
3 1 - M a r - 3 7
3 1 - M a r - 4 2
3 1 - M a r - 4 7
3 1 - M
a r - 5 2
3 1 - M a r - 5 7
3 1 - M a r - 6 2
C o m m e
r c i a l S p a c e
O c c u p a
n c y
P e r c e n t a g
0
9 0
9 5
9 5
9 5
9 5
9 5
9 5
9 5
9 5
9 5
C o m m e
r c i a l s p a c e l e a s e d o u t
s q f t
-
7 2 0 6
9 0
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6
0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
D e p o s i t f o r L e a s e
( N o o f m o n t h s r e n t )
1 2
A v e r a g e
L e a s e R e n t a l s
7 0
R s p s f p e r m o n t h
E s c a l a t i o n
1 0
M a i n t e n
a n c e c h a r g e s
2 2 5
R s p s f p e r m o n t h
R e v e n u e f r o m
L e a s e R e n t a l
R s
L a k h s
-
8 8
6 3
1 5 0
6 8
2 4 2
6 6
3 9 0
8 1
6 2 9
4 1
1 0 1 3
6 7
1 6 3 2
5 3
2 6
2 9
2 0
4 2 3 4
3 5
6 8 1 9
4 7
R e v e n u e f r o m
M a i n t e n a n c e c h a r g e s
-
2 8 5
4 8 4
7 8 0
1 2
5 6
2 0
2 3
3 2
5 8
5 2
4 7
8 4
5 1
1 3 6
1 0
2 1 9
2 0
T o t a l R
e v e n u e
-
9 1 4 8
1 5 5 5 2
2 5 0 4 6
4 0 3 3 8
6 4 9 6 4
1 0 4 6 2 5
1 6 8 5 0 0
2 7
1 3 7 1
4 3 7 0 4 6
7 0 3 8 6 7
R e v e n
u e H e a d
S u b H e a d R a t e
U n i t
3 1 - M a r - 6
7
3 1 - M a r - 7 2
3 1 - M a r - 7 8
3 1 - M a r - 7 9
C o m m e r c i a l S p a c e
O c c u p a n c y
P e r c e n t a g
9 5
9 5
9 5
9 5
C o m m e r c i a l s p a c e l e a s e d o u t
s q f t
7 6 0 7 2
8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
D e p o s i t f o r L e a s e
( N o o f m o n t h s r e n t )
1 2
A v e r a g
e L e a s e R e n t a l s
7 0 R s p s f p e r m o n t h
E s c a l a
t i o n
1 0
M a i n t e
n a n c e c h a r g e s
2 2
5 R s p s f p e r m o n t h
R e v e n u
e f r o m
L e a s e R e n t a l
R s
L a k h s
1 0
9 8 2 8 2
1 7
6 8 7
9 4
3 1
3 3 5
2 7
3 4
4 6 8
8 0
R e v e n u
e f r o m
M a i n t e n a n c e c h a r g e s
3 5 3 0 2
5 6 8
5 4
1 0 0 7
2 1
1 1 0 7
9 3
T o t a l R e v e n u e
1 1 3 3 5 8 4
1 8 2 5 6 4 8
3 2 3 4 2 4 8
3 5 5 7 6 7 2
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[x]
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[y]
Disclaimer
CRISIL Risk and Infrastructure Solutions Limited (CRIS) has taken due care and caution in preparation of this Report for
Bangalore Development Authority which is under the purview of the Urban Development Department Government of
Karnataka This Report is based on the information documents provided by the Company andor information available publicly
andor obtained by CRIS from sources which it considers reliable CRIS does not guarantee the accuracy adequacy or
completeness of the information documents Report and is not responsible for any errors or omissions or for the results
obtained from the use of the same The Report and results stated therein are subject to change CRIS especially states that it
has no financial liability whatsoever to the Company users of this Report This Report is strictly confidential and should not be
reproduced or redistributed or communicated directly or indirectly in any form or published or copied in whole or in part
especially outside India for any purpose
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Policy Advisory Company
CRISIL Infrastructure Advisory
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a Middle East
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
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Bangalore Development Authority
[7]
33 Key issues
The recessionary trends in 2007 across the world had also adversely affected the entire real estate
market in Bengaluru All the three categories of residential commercial (office space) and retail had
experienced slump in market and the real estate market in several erstwhile prime locations of the citywere facing oversupply situation and a drastic fall in the capital as well as rental values
With the revival of the industry and economy the residential market is expected to witness a jump
across all the areas in Bengaluru as per CRISILrsquos analysis The eastern and southern areas are
estimated to emerge as up-scaled developments as these areas are expected to see maximum
supply in the next three years
Good quality developments have been the key feature of Bangalorersquos commercial developments The
boom in IT sector especially in South India has enabled the city to have a metropolitan culture which
brings along the urban demands like malls and multiplexes
Recently the market in Bangalore has stabilized to a large extent after the sudden jump in prices post
recession However this is cyclical in nature and the saturation of IT services has led to a scenario
where there would not be much increase in the lease rentals
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Bangalore Development Authorit
4 Project
41 Description of
It is proposed that for the redev
over to the developer on long
Finance Design Construction
period Ownership of the land wi
BUP area will be transferred b
proposed commercial develop
vendors
42 Components o
The project would be develope
basis The structure of the mode
Figure 4-1 Development struc
43 Description of
The site is located at Indiranaga
the main commercial centres in
Road in the North Old Airport
the East Indiranagar is located
famous for housing the Somes
and educational institutions like
y
the project
lopment of BDA Complex at Indiranagar the la
erm lease basis The selected developer woul
and Operation amp Maintenance of the project t
ll always be with BDA After the lease period th
ack to BDA free of cost We have assumed
ent shall be reserved for BDA for rehabilit
f the project
on a Design Build Finance Operate and Tra
l has been illustrated below
ture of the Commercial Complex
the site
r a suburb of Bangalore located about 4 km ea
the city This medium sized suburb is enclose
oad in the South Halasura in the West and Je
within a diameter of few kilometre radii from the
ara Temple several reputed hospitals like Amrj
r Ambedkar College KH Patel College etc
[8]
nd would be handed
d be responsible for
hroughout the lease
e land along with the
hat a portion of the
tion of the existing
sfer model on PPP
t of MG road one of
by the Old Madras
vanbheemanagar in
airport The place is
yoti Vijaya and ESI
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Bangalore Development Authority
[9]
The site is situated at a junction near a residential area and is frequented by elders and youngsters
alike The present building consists of Motor driving schools RTO office computer vendors and travel
agents There is a water tank situated in the site
Figure 4-2 BDA Complex at Indiranagar
44 Interaction with stakeholders
CRISIL conducted a series of interactions with the stakeholders namely the BDA officials Citizens
and the establishment owners The interactions revealed that the building has to undergo
redevelopment The condition of the BDA office is not up to the standards expected and the officials
complained about leaks and short circuits The establishment owners suggested that the building was
planned with less road facing establishments due to which they are not able to attract footfalls
45 Case studies
In order to generate revenues from the real estate value of the land in the ownership of the ULBrsquos
commercial projects have been developed on a PPP basis on these lands Typically under such
arrangements the ULB would have identified a site under its ownership where a property for
commercial use can be developed Commercial development would include the development of
shopping complexes markets bus terminals multi-level car parking townships etc
Under such an arrangement the ULB would require of the private developer to undertake
construction of a commercial complex on the land The land would be provided by the ULB to the
private operator on a lease basis The ULB would provide specifications on the nature and type of
commercial development required The private developer would need to bear all the capital costs
associated with the construction of the commercial complex Post construction of the commercial
complex as per the arrangement the private developer would either hand over the constructed
facility to the ULB or would sub-lease the property The private developer would be required to make
to the ULB an upfront payment or provide a share in the ULB revenues earned from sub-leasing the
properties
The following case study compiled by the Ministry of Urban Development Government of India
highlights the development of municipalurban lands on a PPP basis
Category Details
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Bangalore Development Authority
[10]
Category Details
Project Construction of Commercial Complex at Ranipura Market
Cost of
ProjectRs 1500 lakhs
Description
The land was allotted to the concessionaire to construct the Commercial Complex by
the Corporation
Corporation continues to own the land
After the concession period the built-up structure (Commercial Complex) will be
transferred to the Corporation by the concessionaire
The concessionaire was given the right to recover its investment from the premium
received for ldquoRight of Occupationrdquo of the constructed shops
At the time of award of concession it was estimated that a profit of Rs 200 lakh will
be accrued from the venture which will be shared by the concessionaire with the
Corporation
The Corporation is expected to receive a profit share of Rs 100 lakh from the
concessionaire
Source Compendium on Public Private Partnership in Urban Infrastructure Case Studies Ministry of Urban
Development Government of India in association with Confederation of Indian Industry (CII)
We have also studied another case wherein the development affordable housing units was structure
on a PPP basis by the Pimpri Chinchwad New Township Development Authority (PCNTDA)
451 Public private partnership in affordable housing under Jawaharlal
Nehru National Urban Renewal Mission (JNNURM)
The Pune metropolitan region comprising Pune and Pimpri Chinchwad cities is one of the fastest
growing urban agglomerations in India A major automobile and auto-ancillary hub and a well-known
international education destination it also ranks among the top IT destinations of India Besides the
region has many industrial clusters housing industries focused on FMCG engineering agro-based
technology
The Pimpri-Chinchwad New Town Develompent Authority (PCNTDA) a key development authority of
the PMR is responsible for development of peri-urban especially in its north In line with the
phenomenal growth of the region and its strident aspirations PCNTDA has envisioned the
development of an integrated township at Sector 12 spanning 53 hectares Given the success of the
Public Private Partnership (PPP) model in involving private sector participation for development based
projects PCNTDS proposed to develop the integrated township on PPP basis
With this objective PCNTDA appointed the consortium of CRISIL Risk and Infrastructure Solutions
Limited (CRIS) Omkar Associates and Creations as project development consultants for the
development of an eco-friendly affordable township at Bhosari Sector 12 CRISILrsquos role was to
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Bangalore Development Authority
[11]
undertake a detailed demand assessment financial feasibility project structuring and management of
the bid process
The concept
Keep in mind the PCNTDArsquos vision CRIS designed integrated township such that it compriseshousing untis for the poor affordable housing units for the general public a primary health care
centre a hospital and a school
As per the structure the Developer shall construct 5040 housing units under the Basic Services for
Urban Poor (BSUP) scheme of JNNURM PCNTDA shall transfer the amount of grant sanctioned for
developing these units under the JNNURM scheme to the developer The remaining project cost of
the BUSP units was to be financed by the developer
In addition to this the Developer shall also construct affordable housing units as per pre-specified
specifications and hand over to PCNTDA free of cost The developer shall also construction the
physical and social infrastructure for the integrated township thereby ensuring good road adequate
water supply an efficient sewerage system as well as schools and hospitals The project shall bedeveloped in a manner such that it has minimum possible impact on the surrounding environment and
is in harmony with nature To this end the developer shall undertake eco-friendly initiatives including
rain water harvesting use of solar power environment-friendly materials and vermin-composting
The project
The developer has to complete the BSUP housing units within 2 years and hand over to the PCNTDA
For the remaining portion of the land PCNTDA shall execute a lease deed for 99 years with the
developer The lease rights shall be granted to the developer in phases upon completion of
milestones as defined in the project agreement The main scope of work for the developer shall
include
Master planning for the entire 53 hectares of land and construction of common physical and
social infrastructure for the entire area
Development construction and marketing of 795 lakhs square meters of integrated real
estate space
Construction and handing over of 5040 housing units under the BSUP scheme of JNNURM
on a separate layout carved out of the said land PCNTDA will provide the developer the grant
sanctioned by the Government of India for these housing units
Successful selection of private developer
With the objective of undertaking this project on a PPP basis in a transparent and objective manner
PCNTDA launched a three-cover Request for Proposal in June 2009 The bidding parameter was theconstructed ldquoCarpet Areardquo in ldquosquare metersrdquo of affordable housing units that the bidder shall
construct and hand over free of cost to PCNTDA
The tender received good response from four interested bidders Of the four bidders two bidders
were adjudged technically and financially capable and short-listed for the final stage The bidder with
the highest construction carpet area offered to PCNTDA was selected The successful bidder quoted
a carpet area of 130599 square meters of affordable housing units
Thereby the PCNTDA derived a value of 7369 housing units (including 5040 BSUP units) a school
and a hospital for the BSUP units a school and hospital for the general public and development of
public amenities
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Bangalore Development Authority
[12]
Value addition to PCNTDA
In commercial terms PCNTDA saved (i) Rs 190 crores as the gap amount required to fund the BSUP
scheme (ii) Rs 210 crores of construction cost of affordable housing units and (iii) Rs 100 crores on
the development of physical and social infrastructure In addition to this PCNTDA shall receive anupfront payment of Rs 50 crores from the successful bidder The project structure also protects
PCNTDA from cost escalation risks valuation risks and engineering risks
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Bangalore Development Authorit
5 Market asse
51 Bangalore gro
The growth of Bangalore has be
from the growth in population in
to the economic opportunities it
Bangalore an obvious choice for
Bangalore has grown at averag
decades It is projected that B
explosive growth has meant th
pressure
Figure 5-1 Population growth
Source City Development Plan Ba
The city leads the country in
available However Bengaluru a
of projects under development a
983089983086983094983091 983089983086983096983097 983090983086983092
983088
983089983088
983090983088
983091983088
983092983088
983093983088
983094983088
983095983088
983096983088
983097983088
983089983097983088983089 983089983097983089983089 983089983097983090983089
983120 983151 983152 983157 983148 983137 983156 983145 983151 983150 983145 983150 983116
983137 983147 983144 983155
y
sment
th overview
en unprecedented in the past couple of decades
the last century Bangalore continues to attract t
offers This is also supported by a salubrious
not only businesses but also for people
compounded annual growth rate (CAGR) of 3
ngalorersquos population will cross the 10 million
at the infrastructure in Bangalore has been p
in Bangalore between 1901 and 2011
galore Development Authority and Census of India
ffice space with 738 million square feet of
lso has 22 per cent of the available space vacan
nd reduced demand
983091983086983089 983092983086983089983089983095983086983096983094
983089983090983086983088983094
983089983094983086983094983092
983090983097983086983090983090
983092
983089983097983091983089 983089983097983092983089 983089983097983093983089 983089983097983094983089 983089983097983095983089 983089983097983096983089 983089983097
[13]
This fact is laid bare
rongs of people due
eather which makes
58 in the last three
mark by 2021 This
t under tremendous
commercial capacity
with a large number
983086983091
983093983094983086983096983094
983096983092
983097983089 983090983088983088983089 983090983088983089983089
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Bangalore Development Authority
[14]
52 Demand projections
Bangalore is the largest commercial market and third largest residential market in India The city has
typically been preferred by home buyers because of its favorable socio-economic conditions and a
salubrious climate In recent years Bangalore has attracted a large influx of population engaged inthe thriving IT sector City residential demand is more end-user driven with moderate price
appreciation The average residential real estate price in the city is 20-25 lesser than in Delhi and
Mumbai In the recent National Housing Bank Residex the index indicating property prices across key
cities in India Bangalore witnessed a mere 1 YoY fall in residential prices in 2011-12 Mumbai saw
an 116 YoY jump in home prices while Delhi witnessed 358 YoY increase during 2011-12 The
city witnessed tremendous growth in terms of population and the number of companies setting up
offices there Thus the ongoing projects such as Bengaluru metro rail project various flyovers and
the under-pass construction activities in Outer Ring Road (ORR) CNR and BHEL circles would ease
the congestion and provide better connectivity for all commuters This will boost real estate demand in
and around Bangalore city
In 2011-12 Bangalorersquos commercial market exhibited resiliency with comparatively high demand
levels despite the discomfort in the market on account of global uncertainty Though commercial
property demand in Bangalore is largely dependent on ITITES sectors the share of manufacturing is
increasing at a faster pace and thereby giving further boost to office space demand According to real
estate consultancy firm Knight Frank the manufacturing sector witnessed a quantum leap as its share
of absorption increased from 3 in 4QCY10 to 23 in 4QCY11 The absorption of commercial space
has gone up from 5mn sq ftquarter in CY09 to 7mn sq ftquarter in CY11 thanks to sustained
demand for Bangalore commercial space which witnessed 43 CAGR in absorption level over CY09-
11 Subdued supply during the first two quarters of 2011 coupled with high absorption level has
substantially lowered the vacancy level in the city (bringing it down from 17 in CY10 to 12 in
CY11) With the expansion of existing operations in the IT sector and the entry of newer sectors dueto renewed optimism in the market we expect the level of absorption of office space to remain stable
Revised Master Plan-2015 for the BMA has been published This document gives the likely growth to
take place in various areas of the BMA The population of the BMA is expected to grow from 61 lakh
in 2001 to 122 lakh in 2025
The proposed growth rate and the ever changing urban scenario is bound to increase the commercial
space demand in the region The site at Indiranagar is situated at a junction and has two road facing
sides which makes it very attractive for commercial development The site is also huge in size and
can easily accommodate a mall
Hence in view of the above it can be safely recommended that the site would generate huge interest
within the developers
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Bangalore Development Authority
[15]
6 Project financials
The project costs have been largely derived from the costs indicated by the Bangalore Development
Authority (BDA)
61 Cost estimation
The estimated cost of development of the project is Rs 23931 lakhs The costs have been outlined
below
Table 6-1 Project Cost of the proposed development
Particular Amount inRs Lakhs
Construction Cost 19967
Land Development 793
Other Infrastructure 50
Total Hard Costs 20810
Contingencies 3121
Total Project Development Cost 23931
Apart from the above mentioned project development cost the Concessionaire would incur the
development premium and Interest during construction (IDC) cost
Particulars 25 years 33 Years 66 years
Upfront Premium (Rs Lakh) 965000 1230000 600000
IDC Cost (Rs Lakh) 315600 361500 259100
Revenue Share every year 15 15 15
Total Project Cost (Rs Lakhs) 36737 39846 33022
62 Revenue stream
The Revenues to the Developer would accrue from the revenue earned from the lease rentals and the
maintenance charges which the developer earns from the tenants The total revenue from both the
heads has been arrived at Rs 6720 Lakhs for the base year It has been assumed that the
occupancy of the commercial complex 80 in the base year and stabilizes to a maximum of 95towards the end of the concession period The average lease rentals have been assumed at Rs 70
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Bangalore Development Authority
[16]
per square feet and the maintenance charges have been assumed at Rs 225 per square feet Both
the revenues are escalating at the rate of 10 per annum The income statement for the developer
has been provided in Annexure 1
63 Viability assessment
The viability assessment has been carried out over two concession period ie 25 33 and 66 years
The debt to equity ratio has been assumed to be 121
The project level internal rate of return (IRR) IRR of equity and the net present value of the equity
have been worked out
Table 6-2 Viability assessment for BDA complex at Indiranagar
Concession Period Project IRR Equity IRR NPV of Equity
Upfront Premium
(Rs in Lakhs)
25 years 1777 2007 96 9650
33 years 1818 2006 108 12300
66 years 2101 2333 5285 6000
It is evident that the project is viable for the developer for all the 3 concession periods In case of the
25 year concession period it is estimated that the developer would pay BDA an estimated upfront
premium of Rs 9650 lakhs Similarly the developer would pay BDA an amount of Rs 12300 lakhsand Rs 6000 lakhs for the concession periods of 33 years and 66 years respectively
64 Ranking of options based on commercial viability
Having assessed the project for two concession periods of 25 33 and 66 years we are of the view
that the 25 year concession option will be more suitable since it allows the developer to make
reasonable returns on the projects and his own investments along with a sizeable upfront premium for
BDA BDA would be in a position to renew the contract or retender the project after 25 years which
may enable BDA to earn as per the prevailing market rates
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Bangalore Development Authority
[17]
7 Statutory amp legal framework
71 Legal amp regulatory framework
Development Control Regulations (DCR)
As per RMP ndash 2015 published by BDA the project site has been classified as ldquoCommercial Businessrdquo
As per the definitions of RMP-2015 Commercial Business Zone allows development of Commercial
and Corporate offices Retail Shopping Complexes Restaurants and Hotels Convention centres and
banquet halls financial institutions Cinema and multiplexes places of assembly exhibition centres
Entertainment and amusement centres and stores
Permissible land uses under Commercial (Business) Zone as per RMP-2015 of BDA
Main land use category C3
Other land uses permissible (as main land use) R I-3 T3 amp U4
If the road width is less than 120 m and plot area is less than 240 square metre then C2 I-2
R and U4 only are allowed
The plot size is 24000 square metre Presently it has 18m wide access road The applicable DCR for
the plot as per proposed road width is as follows
Table 7-1 Plot details of Indiranagar site
Sr No Particulars Description Unit
1 Land Use Commercial Business
2 Road Width 18 Metre
3 Permissible FAR 325
4Permissible ground
coverage50
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Bangalore Development Authority
[18]
8 Indicative environmental amp social impacts
81 Environmental impacts
The proposed development is in line with the layout of BDA Due to the reasonably large site area the
development will be on the higher side A set back of 50 is found to be acceptable for the site
however an Environmental Impact Assessment studies have to be undertaken for the sites Since
already a commercial complex is existent redevelopment of the complex would need demolition of
the existent structures Hence a suitable disposal of construction and debris has to be undertaken by
the developer Also a Green building can be developed to ensure minimal effect on nature
82 Social impactsDuring the construction period the existing establishments have to be shifted or compensated
temporarily Hence a clear resettlement plan has to be decided before the implementation of the
project It is envisaged that if due care is taken about the existing tenants the development would go
smoothly
83 Mitigation measures
It is necessary that the impacts are identified early and action plans are prepared for their mitigation in
advance For instance for environmental impacts the BDA may insist on the developer to use clean
and green building technologies
It is also necessary that the project development plan is also accompanied by a Relocation and
Rehabilitation plan which will layout detailed action points with the requisite intervening entity
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Bangalore Development Authority
[19]
9 Operating framework
91 Risks amp mitigation
The risk framework for this project has been outlined below
Table 9-1 Risk mitigation measures
Risk Category Risk implication Mitigation measure
Sponsor risk BDA scraps the project Termination payments in case of BDA scrapping the
project
Environment
risk
Adverse impact on
surrounding environment
Penalty clauses in case of default on
Concessionairersquos part
Environmental Impact Assessment to identify all
risks in advance
Political riskChange in government may
put project in jeopardy
Termination payments in case of project being
scrapped
Force
majeure riskProject is abandoned
Force majeure clauses in the concession
agreement
Operating riskThe operations of the
facility are stalled
Performance security clause in case of default on
Concessionairersquos part
Design risk Overdesign of the projectProject design to be finalized in mutual agreement
of concessionaire and BDA
Completion
risk
Completion of project is
delayed inconvenience to
citizens and tenants
Penalty clauses for time overrun in the concession
agreement
Cost overrun
risk
Project cost increases
beyond reasonable limits
Project cost increment ceiling to be specified in the
concession agreement Increase beyond this ceiling
to be borne by the developer No change in revenue
sharing
92 Indicative project structure
The best approach for such a large ticket project would be for the BDA to become a key actor in the
entire process of development The BDA may ask the private sector partner to form a Special
Purpose Company where the equity will be brought in by the private sector developer The designs
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Bangalore Development Authority
[20]
should be left to the developer and BDArsquos role would be in approving the same in accordance with the
Development Control Regulations
The SPC will develop and maintain Complex throughout the concession period The tenants would
pay the developer a sub-lease premium or lease rentals which will be escrowed in a separate accountand can be withdrawn based on the revenue sharing structure adopted
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Bangalore Development Authorit
10 Way ahead
101 Project develo
The key task for BDA is to ap
feasibility of the project Once t
the bid process
Figure 10-1 Project developm
The transaction advisor shall stralso prepare the relevant bid
management on behalf of BDA
102 Procurement
The foremost step for BDA is
feasibility The detailed financial
parameter Also an optimum str
bid documents would be prepar
process be conducted as a 2 sta
983105983152983152983151983145983150983156983149983141983150983156 983151983142 983156983154983137
983108983141983156983137983145983148983141983140 983142983141983137983155983145983138
983155983156983154983157983139983156983157983154983145983150983143
983120983154983141983152983137983154983137983156983145983151
983123983141983148983141983139
y
pment framework
oint a Transaction Advisor in order to conduc
e financial numbers are acceptable BDA BDA
nt framework
ucture the project upon completion of the feasibidocuments The transaction advisor shall un
nd will assist in appointment of the private secto
lan
to appoint a Transaction Advisor for the co
feasibility would determine the tentative revenue
cture would be arrived at Post the approval of
d for the selection of the developer It is recom
ge process involving Technical qualification and
983155983137983139983156983145983151983150 983137983140983158983145983155983151983154
983148983145983156983161 983155983156983157983140983145983141983155 983137983150983140 983152983154983151983146983141983139983156
983150 983151983142 983138983145983140 983140983151983139983157983149983141983150983156983155
983145983151983150 983151983142 983152983154983145983158983137983156983141 983155983141983139983156983151983154 983152983137983154983156983150983141983154
[21]
a detailed financial
should proceed with
ility studies and shallertake bid process
partner
nducting the project
for BDA and the bid
easibility Report the
mended that the Bid
inancial proposal
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B a n g a l o r e D e v e l o p m e n t A u t h o r i t y
B D A s h o u l d i n i t i a t e t h e p r o c e s s o f a p p o
i n t i n g a t r a n s a c t i o n a d v i s o r a t t h e
e a r l i e s t T h i s p r o c e s s c a n b e c o m p l e t e d i n 2 m o n t h s
O n c e t h e T A
i s i n p l a c e
t h e B D
A s h o u l d a l l o w
a t l e a s t 4 m o n t h s f o r t h e p r e p a r a t i o n o f f e a s i b i l i t y p r o j e c t s t r u c t u r i n g a n d b i d d o c u m e n
t s
O n c e t
h e b i d d o c u m e n t s a r e i n p l a c e t h
e B D A
s h o u l d i n i t i a t e t h e p r o c e s s
o f s e l e c t i n g t h e p r i v a t e s e c t o r p a
r t n e r w h i c h c a n b e c o m p l e t e d o v e r a 4 m o n t h
p e r i o d
T h e c u
r r e n t p r o c u r e m e n t p l a n i s s p r e a d
o v e r 1 1 m o n t h s w h i c h c a n b e s
h o r t e n e d d e p e n d i n g o n t h e m a n n e r i n w h i c h B D A
m a k e s d e c i s i o n
s r e l a t i n g t o
a p p o i n
t m e n t o f T A a n d p r i v a t e d e v e l o p e r
A c t i v i t y
M 1
M 2
M 3
M 4
M 5
M 6
M 7
M 8 M
9
M 1 0
M 1 1
M 1 2
A p p o i n t m e t o f t r a n s a c t i o n a d v i s o r
D e t a i l e d t e c h n o - e c o n o m i c f e a s i b i l i t y a n d
b i d d o c u m e n t p r e p a r a t i o n
B i d p r
o c e s s m a n a g e m e n t
S e l e c t i o n o f p r e f e r r e d b i d d e r a n d f o r m a t i o n o f S P C
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B a n g a l o r e D e v e l o p m e n t A u t h o r i t y
1 1
A n n e x u r e 1 ndash C a s h - f l o w
s t a t e m e n t
R e v e n u e H e a d
S u b H e a d R a t e
U n i t
3 1 - M a r - 1 4
3 1 - M
a r - 1 7
3 1 - M a r - 2 2
3 1 - M a r - 2 7
3 1 - M a r - 3 2
3 1 - M a r - 3 7
3 1 - M a r - 4 2
3 1 - M a r - 4 7
3 1 - M
a r - 5 2
3 1 - M a r - 5 7
3 1 - M a r - 6 2
C o m m e
r c i a l S p a c e
O c c u p a
n c y
P e r c e n t a g
0
9 0
9 5
9 5
9 5
9 5
9 5
9 5
9 5
9 5
9 5
C o m m e
r c i a l s p a c e l e a s e d o u t
s q f t
-
7 2 0 6
9 0
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6
0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
D e p o s i t f o r L e a s e
( N o o f m o n t h s r e n t )
1 2
A v e r a g e
L e a s e R e n t a l s
7 0
R s p s f p e r m o n t h
E s c a l a t i o n
1 0
M a i n t e n
a n c e c h a r g e s
2 2 5
R s p s f p e r m o n t h
R e v e n u e f r o m
L e a s e R e n t a l
R s
L a k h s
-
8 8
6 3
1 5 0
6 8
2 4 2
6 6
3 9 0
8 1
6 2 9
4 1
1 0 1 3
6 7
1 6 3 2
5 3
2 6
2 9
2 0
4 2 3 4
3 5
6 8 1 9
4 7
R e v e n u e f r o m
M a i n t e n a n c e c h a r g e s
-
2 8 5
4 8 4
7 8 0
1 2
5 6
2 0
2 3
3 2
5 8
5 2
4 7
8 4
5 1
1 3 6
1 0
2 1 9
2 0
T o t a l R
e v e n u e
-
9 1 4 8
1 5 5 5 2
2 5 0 4 6
4 0 3 3 8
6 4 9 6 4
1 0 4 6 2 5
1 6 8 5 0 0
2 7
1 3 7 1
4 3 7 0 4 6
7 0 3 8 6 7
R e v e n
u e H e a d
S u b H e a d R a t e
U n i t
3 1 - M a r - 6
7
3 1 - M a r - 7 2
3 1 - M a r - 7 8
3 1 - M a r - 7 9
C o m m e r c i a l S p a c e
O c c u p a n c y
P e r c e n t a g
9 5
9 5
9 5
9 5
C o m m e r c i a l s p a c e l e a s e d o u t
s q f t
7 6 0 7 2
8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
D e p o s i t f o r L e a s e
( N o o f m o n t h s r e n t )
1 2
A v e r a g
e L e a s e R e n t a l s
7 0 R s p s f p e r m o n t h
E s c a l a
t i o n
1 0
M a i n t e
n a n c e c h a r g e s
2 2
5 R s p s f p e r m o n t h
R e v e n u
e f r o m
L e a s e R e n t a l
R s
L a k h s
1 0
9 8 2 8 2
1 7
6 8 7
9 4
3 1
3 3 5
2 7
3 4
4 6 8
8 0
R e v e n u
e f r o m
M a i n t e n a n c e c h a r g e s
3 5 3 0 2
5 6 8
5 4
1 0 0 7
2 1
1 1 0 7
9 3
T o t a l R e v e n u e
1 1 3 3 5 8 4
1 8 2 5 6 4 8
3 2 3 4 2 4 8
3 5 5 7 6 7 2
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
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[x]
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
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[y]
Disclaimer
CRISIL Risk and Infrastructure Solutions Limited (CRIS) has taken due care and caution in preparation of this Report for
Bangalore Development Authority which is under the purview of the Urban Development Department Government of
Karnataka This Report is based on the information documents provided by the Company andor information available publicly
andor obtained by CRIS from sources which it considers reliable CRIS does not guarantee the accuracy adequacy or
completeness of the information documents Report and is not responsible for any errors or omissions or for the results
obtained from the use of the same The Report and results stated therein are subject to change CRIS especially states that it
has no financial liability whatsoever to the Company users of this Report This Report is strictly confidential and should not be
reproduced or redistributed or communicated directly or indirectly in any form or published or copied in whole or in part
especially outside India for any purpose
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
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Registered Office ndash Mum
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New Delhi - 110 065 IndiaPhone 91-11-4250 510091-11-2693 0117 - 121Fax 91-11-2684 2213
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3rd Floor Uma ChambersPlot No 9amp10 Nagarjuna HillsNear Punjagutta Cross RoadHyderabad - 500 082Phone 91-40-40328200Fax 91-40-2335 7507
Bengaluru
W-101 Sunrise Chambers22 Ulsoor RoadBengaluru - 560 042Phone 91-80-2558 0899Fax 91-80-2559 4801
Ahmedabad
706 Venus AtlantisNear Reliance Petrol PumpPrahladnagarAhmedabad -Phone 91-79-4024 4500Fax 91-79-2755 9863
Visit us atwwwcrisilcom
ai
1 amp 2
About CRISIL Infrastructu
CRISIL Infrastructure Advisory
CRISIL Risk and Infrastructure
Limited a 100 subsidiary of
Indiarsquos leading Ratings Resear
Policy Advisory Company
CRISIL Infrastructure Advisory
premier advisor focusing on po
well as commercial and contra
the areas of transport energyinfrastructure We also provide
international firms planning inv
India Over a period of time C
Infrastructure Advisory has buil
position for itself in these doma
considered the preferred cons
governments multilateral agen
sector clients We have extend
operations beyond India and ar
other emerging markets in Afri
and South Asia
re Advisory
is a division of
Solutions
RISIL Limited ndash
ch Risk and
is Indiarsquos
licy issues as
tual issues in
nd urbansupport to
stments in
ISIL
t a unique
ins and is
ltant by
cies and private-
ed our
e present in
a Middle East
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
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Bangalore Development Authorit
4 Project
41 Description of
It is proposed that for the redev
over to the developer on long
Finance Design Construction
period Ownership of the land wi
BUP area will be transferred b
proposed commercial develop
vendors
42 Components o
The project would be develope
basis The structure of the mode
Figure 4-1 Development struc
43 Description of
The site is located at Indiranaga
the main commercial centres in
Road in the North Old Airport
the East Indiranagar is located
famous for housing the Somes
and educational institutions like
y
the project
lopment of BDA Complex at Indiranagar the la
erm lease basis The selected developer woul
and Operation amp Maintenance of the project t
ll always be with BDA After the lease period th
ack to BDA free of cost We have assumed
ent shall be reserved for BDA for rehabilit
f the project
on a Design Build Finance Operate and Tra
l has been illustrated below
ture of the Commercial Complex
the site
r a suburb of Bangalore located about 4 km ea
the city This medium sized suburb is enclose
oad in the South Halasura in the West and Je
within a diameter of few kilometre radii from the
ara Temple several reputed hospitals like Amrj
r Ambedkar College KH Patel College etc
[8]
nd would be handed
d be responsible for
hroughout the lease
e land along with the
hat a portion of the
tion of the existing
sfer model on PPP
t of MG road one of
by the Old Madras
vanbheemanagar in
airport The place is
yoti Vijaya and ESI
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
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Bangalore Development Authority
[9]
The site is situated at a junction near a residential area and is frequented by elders and youngsters
alike The present building consists of Motor driving schools RTO office computer vendors and travel
agents There is a water tank situated in the site
Figure 4-2 BDA Complex at Indiranagar
44 Interaction with stakeholders
CRISIL conducted a series of interactions with the stakeholders namely the BDA officials Citizens
and the establishment owners The interactions revealed that the building has to undergo
redevelopment The condition of the BDA office is not up to the standards expected and the officials
complained about leaks and short circuits The establishment owners suggested that the building was
planned with less road facing establishments due to which they are not able to attract footfalls
45 Case studies
In order to generate revenues from the real estate value of the land in the ownership of the ULBrsquos
commercial projects have been developed on a PPP basis on these lands Typically under such
arrangements the ULB would have identified a site under its ownership where a property for
commercial use can be developed Commercial development would include the development of
shopping complexes markets bus terminals multi-level car parking townships etc
Under such an arrangement the ULB would require of the private developer to undertake
construction of a commercial complex on the land The land would be provided by the ULB to the
private operator on a lease basis The ULB would provide specifications on the nature and type of
commercial development required The private developer would need to bear all the capital costs
associated with the construction of the commercial complex Post construction of the commercial
complex as per the arrangement the private developer would either hand over the constructed
facility to the ULB or would sub-lease the property The private developer would be required to make
to the ULB an upfront payment or provide a share in the ULB revenues earned from sub-leasing the
properties
The following case study compiled by the Ministry of Urban Development Government of India
highlights the development of municipalurban lands on a PPP basis
Category Details
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Bangalore Development Authority
[10]
Category Details
Project Construction of Commercial Complex at Ranipura Market
Cost of
ProjectRs 1500 lakhs
Description
The land was allotted to the concessionaire to construct the Commercial Complex by
the Corporation
Corporation continues to own the land
After the concession period the built-up structure (Commercial Complex) will be
transferred to the Corporation by the concessionaire
The concessionaire was given the right to recover its investment from the premium
received for ldquoRight of Occupationrdquo of the constructed shops
At the time of award of concession it was estimated that a profit of Rs 200 lakh will
be accrued from the venture which will be shared by the concessionaire with the
Corporation
The Corporation is expected to receive a profit share of Rs 100 lakh from the
concessionaire
Source Compendium on Public Private Partnership in Urban Infrastructure Case Studies Ministry of Urban
Development Government of India in association with Confederation of Indian Industry (CII)
We have also studied another case wherein the development affordable housing units was structure
on a PPP basis by the Pimpri Chinchwad New Township Development Authority (PCNTDA)
451 Public private partnership in affordable housing under Jawaharlal
Nehru National Urban Renewal Mission (JNNURM)
The Pune metropolitan region comprising Pune and Pimpri Chinchwad cities is one of the fastest
growing urban agglomerations in India A major automobile and auto-ancillary hub and a well-known
international education destination it also ranks among the top IT destinations of India Besides the
region has many industrial clusters housing industries focused on FMCG engineering agro-based
technology
The Pimpri-Chinchwad New Town Develompent Authority (PCNTDA) a key development authority of
the PMR is responsible for development of peri-urban especially in its north In line with the
phenomenal growth of the region and its strident aspirations PCNTDA has envisioned the
development of an integrated township at Sector 12 spanning 53 hectares Given the success of the
Public Private Partnership (PPP) model in involving private sector participation for development based
projects PCNTDS proposed to develop the integrated township on PPP basis
With this objective PCNTDA appointed the consortium of CRISIL Risk and Infrastructure Solutions
Limited (CRIS) Omkar Associates and Creations as project development consultants for the
development of an eco-friendly affordable township at Bhosari Sector 12 CRISILrsquos role was to
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Bangalore Development Authority
[11]
undertake a detailed demand assessment financial feasibility project structuring and management of
the bid process
The concept
Keep in mind the PCNTDArsquos vision CRIS designed integrated township such that it compriseshousing untis for the poor affordable housing units for the general public a primary health care
centre a hospital and a school
As per the structure the Developer shall construct 5040 housing units under the Basic Services for
Urban Poor (BSUP) scheme of JNNURM PCNTDA shall transfer the amount of grant sanctioned for
developing these units under the JNNURM scheme to the developer The remaining project cost of
the BUSP units was to be financed by the developer
In addition to this the Developer shall also construct affordable housing units as per pre-specified
specifications and hand over to PCNTDA free of cost The developer shall also construction the
physical and social infrastructure for the integrated township thereby ensuring good road adequate
water supply an efficient sewerage system as well as schools and hospitals The project shall bedeveloped in a manner such that it has minimum possible impact on the surrounding environment and
is in harmony with nature To this end the developer shall undertake eco-friendly initiatives including
rain water harvesting use of solar power environment-friendly materials and vermin-composting
The project
The developer has to complete the BSUP housing units within 2 years and hand over to the PCNTDA
For the remaining portion of the land PCNTDA shall execute a lease deed for 99 years with the
developer The lease rights shall be granted to the developer in phases upon completion of
milestones as defined in the project agreement The main scope of work for the developer shall
include
Master planning for the entire 53 hectares of land and construction of common physical and
social infrastructure for the entire area
Development construction and marketing of 795 lakhs square meters of integrated real
estate space
Construction and handing over of 5040 housing units under the BSUP scheme of JNNURM
on a separate layout carved out of the said land PCNTDA will provide the developer the grant
sanctioned by the Government of India for these housing units
Successful selection of private developer
With the objective of undertaking this project on a PPP basis in a transparent and objective manner
PCNTDA launched a three-cover Request for Proposal in June 2009 The bidding parameter was theconstructed ldquoCarpet Areardquo in ldquosquare metersrdquo of affordable housing units that the bidder shall
construct and hand over free of cost to PCNTDA
The tender received good response from four interested bidders Of the four bidders two bidders
were adjudged technically and financially capable and short-listed for the final stage The bidder with
the highest construction carpet area offered to PCNTDA was selected The successful bidder quoted
a carpet area of 130599 square meters of affordable housing units
Thereby the PCNTDA derived a value of 7369 housing units (including 5040 BSUP units) a school
and a hospital for the BSUP units a school and hospital for the general public and development of
public amenities
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Bangalore Development Authority
[12]
Value addition to PCNTDA
In commercial terms PCNTDA saved (i) Rs 190 crores as the gap amount required to fund the BSUP
scheme (ii) Rs 210 crores of construction cost of affordable housing units and (iii) Rs 100 crores on
the development of physical and social infrastructure In addition to this PCNTDA shall receive anupfront payment of Rs 50 crores from the successful bidder The project structure also protects
PCNTDA from cost escalation risks valuation risks and engineering risks
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Bangalore Development Authorit
5 Market asse
51 Bangalore gro
The growth of Bangalore has be
from the growth in population in
to the economic opportunities it
Bangalore an obvious choice for
Bangalore has grown at averag
decades It is projected that B
explosive growth has meant th
pressure
Figure 5-1 Population growth
Source City Development Plan Ba
The city leads the country in
available However Bengaluru a
of projects under development a
983089983086983094983091 983089983086983096983097 983090983086983092
983088
983089983088
983090983088
983091983088
983092983088
983093983088
983094983088
983095983088
983096983088
983097983088
983089983097983088983089 983089983097983089983089 983089983097983090983089
983120 983151 983152 983157 983148 983137 983156 983145 983151 983150 983145 983150 983116
983137 983147 983144 983155
y
sment
th overview
en unprecedented in the past couple of decades
the last century Bangalore continues to attract t
offers This is also supported by a salubrious
not only businesses but also for people
compounded annual growth rate (CAGR) of 3
ngalorersquos population will cross the 10 million
at the infrastructure in Bangalore has been p
in Bangalore between 1901 and 2011
galore Development Authority and Census of India
ffice space with 738 million square feet of
lso has 22 per cent of the available space vacan
nd reduced demand
983091983086983089 983092983086983089983089983095983086983096983094
983089983090983086983088983094
983089983094983086983094983092
983090983097983086983090983090
983092
983089983097983091983089 983089983097983092983089 983089983097983093983089 983089983097983094983089 983089983097983095983089 983089983097983096983089 983089983097
[13]
This fact is laid bare
rongs of people due
eather which makes
58 in the last three
mark by 2021 This
t under tremendous
commercial capacity
with a large number
983086983091
983093983094983086983096983094
983096983092
983097983089 983090983088983088983089 983090983088983089983089
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Bangalore Development Authority
[14]
52 Demand projections
Bangalore is the largest commercial market and third largest residential market in India The city has
typically been preferred by home buyers because of its favorable socio-economic conditions and a
salubrious climate In recent years Bangalore has attracted a large influx of population engaged inthe thriving IT sector City residential demand is more end-user driven with moderate price
appreciation The average residential real estate price in the city is 20-25 lesser than in Delhi and
Mumbai In the recent National Housing Bank Residex the index indicating property prices across key
cities in India Bangalore witnessed a mere 1 YoY fall in residential prices in 2011-12 Mumbai saw
an 116 YoY jump in home prices while Delhi witnessed 358 YoY increase during 2011-12 The
city witnessed tremendous growth in terms of population and the number of companies setting up
offices there Thus the ongoing projects such as Bengaluru metro rail project various flyovers and
the under-pass construction activities in Outer Ring Road (ORR) CNR and BHEL circles would ease
the congestion and provide better connectivity for all commuters This will boost real estate demand in
and around Bangalore city
In 2011-12 Bangalorersquos commercial market exhibited resiliency with comparatively high demand
levels despite the discomfort in the market on account of global uncertainty Though commercial
property demand in Bangalore is largely dependent on ITITES sectors the share of manufacturing is
increasing at a faster pace and thereby giving further boost to office space demand According to real
estate consultancy firm Knight Frank the manufacturing sector witnessed a quantum leap as its share
of absorption increased from 3 in 4QCY10 to 23 in 4QCY11 The absorption of commercial space
has gone up from 5mn sq ftquarter in CY09 to 7mn sq ftquarter in CY11 thanks to sustained
demand for Bangalore commercial space which witnessed 43 CAGR in absorption level over CY09-
11 Subdued supply during the first two quarters of 2011 coupled with high absorption level has
substantially lowered the vacancy level in the city (bringing it down from 17 in CY10 to 12 in
CY11) With the expansion of existing operations in the IT sector and the entry of newer sectors dueto renewed optimism in the market we expect the level of absorption of office space to remain stable
Revised Master Plan-2015 for the BMA has been published This document gives the likely growth to
take place in various areas of the BMA The population of the BMA is expected to grow from 61 lakh
in 2001 to 122 lakh in 2025
The proposed growth rate and the ever changing urban scenario is bound to increase the commercial
space demand in the region The site at Indiranagar is situated at a junction and has two road facing
sides which makes it very attractive for commercial development The site is also huge in size and
can easily accommodate a mall
Hence in view of the above it can be safely recommended that the site would generate huge interest
within the developers
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Bangalore Development Authority
[15]
6 Project financials
The project costs have been largely derived from the costs indicated by the Bangalore Development
Authority (BDA)
61 Cost estimation
The estimated cost of development of the project is Rs 23931 lakhs The costs have been outlined
below
Table 6-1 Project Cost of the proposed development
Particular Amount inRs Lakhs
Construction Cost 19967
Land Development 793
Other Infrastructure 50
Total Hard Costs 20810
Contingencies 3121
Total Project Development Cost 23931
Apart from the above mentioned project development cost the Concessionaire would incur the
development premium and Interest during construction (IDC) cost
Particulars 25 years 33 Years 66 years
Upfront Premium (Rs Lakh) 965000 1230000 600000
IDC Cost (Rs Lakh) 315600 361500 259100
Revenue Share every year 15 15 15
Total Project Cost (Rs Lakhs) 36737 39846 33022
62 Revenue stream
The Revenues to the Developer would accrue from the revenue earned from the lease rentals and the
maintenance charges which the developer earns from the tenants The total revenue from both the
heads has been arrived at Rs 6720 Lakhs for the base year It has been assumed that the
occupancy of the commercial complex 80 in the base year and stabilizes to a maximum of 95towards the end of the concession period The average lease rentals have been assumed at Rs 70
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Bangalore Development Authority
[16]
per square feet and the maintenance charges have been assumed at Rs 225 per square feet Both
the revenues are escalating at the rate of 10 per annum The income statement for the developer
has been provided in Annexure 1
63 Viability assessment
The viability assessment has been carried out over two concession period ie 25 33 and 66 years
The debt to equity ratio has been assumed to be 121
The project level internal rate of return (IRR) IRR of equity and the net present value of the equity
have been worked out
Table 6-2 Viability assessment for BDA complex at Indiranagar
Concession Period Project IRR Equity IRR NPV of Equity
Upfront Premium
(Rs in Lakhs)
25 years 1777 2007 96 9650
33 years 1818 2006 108 12300
66 years 2101 2333 5285 6000
It is evident that the project is viable for the developer for all the 3 concession periods In case of the
25 year concession period it is estimated that the developer would pay BDA an estimated upfront
premium of Rs 9650 lakhs Similarly the developer would pay BDA an amount of Rs 12300 lakhsand Rs 6000 lakhs for the concession periods of 33 years and 66 years respectively
64 Ranking of options based on commercial viability
Having assessed the project for two concession periods of 25 33 and 66 years we are of the view
that the 25 year concession option will be more suitable since it allows the developer to make
reasonable returns on the projects and his own investments along with a sizeable upfront premium for
BDA BDA would be in a position to renew the contract or retender the project after 25 years which
may enable BDA to earn as per the prevailing market rates
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Bangalore Development Authority
[17]
7 Statutory amp legal framework
71 Legal amp regulatory framework
Development Control Regulations (DCR)
As per RMP ndash 2015 published by BDA the project site has been classified as ldquoCommercial Businessrdquo
As per the definitions of RMP-2015 Commercial Business Zone allows development of Commercial
and Corporate offices Retail Shopping Complexes Restaurants and Hotels Convention centres and
banquet halls financial institutions Cinema and multiplexes places of assembly exhibition centres
Entertainment and amusement centres and stores
Permissible land uses under Commercial (Business) Zone as per RMP-2015 of BDA
Main land use category C3
Other land uses permissible (as main land use) R I-3 T3 amp U4
If the road width is less than 120 m and plot area is less than 240 square metre then C2 I-2
R and U4 only are allowed
The plot size is 24000 square metre Presently it has 18m wide access road The applicable DCR for
the plot as per proposed road width is as follows
Table 7-1 Plot details of Indiranagar site
Sr No Particulars Description Unit
1 Land Use Commercial Business
2 Road Width 18 Metre
3 Permissible FAR 325
4Permissible ground
coverage50
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Bangalore Development Authority
[18]
8 Indicative environmental amp social impacts
81 Environmental impacts
The proposed development is in line with the layout of BDA Due to the reasonably large site area the
development will be on the higher side A set back of 50 is found to be acceptable for the site
however an Environmental Impact Assessment studies have to be undertaken for the sites Since
already a commercial complex is existent redevelopment of the complex would need demolition of
the existent structures Hence a suitable disposal of construction and debris has to be undertaken by
the developer Also a Green building can be developed to ensure minimal effect on nature
82 Social impactsDuring the construction period the existing establishments have to be shifted or compensated
temporarily Hence a clear resettlement plan has to be decided before the implementation of the
project It is envisaged that if due care is taken about the existing tenants the development would go
smoothly
83 Mitigation measures
It is necessary that the impacts are identified early and action plans are prepared for their mitigation in
advance For instance for environmental impacts the BDA may insist on the developer to use clean
and green building technologies
It is also necessary that the project development plan is also accompanied by a Relocation and
Rehabilitation plan which will layout detailed action points with the requisite intervening entity
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Bangalore Development Authority
[19]
9 Operating framework
91 Risks amp mitigation
The risk framework for this project has been outlined below
Table 9-1 Risk mitigation measures
Risk Category Risk implication Mitigation measure
Sponsor risk BDA scraps the project Termination payments in case of BDA scrapping the
project
Environment
risk
Adverse impact on
surrounding environment
Penalty clauses in case of default on
Concessionairersquos part
Environmental Impact Assessment to identify all
risks in advance
Political riskChange in government may
put project in jeopardy
Termination payments in case of project being
scrapped
Force
majeure riskProject is abandoned
Force majeure clauses in the concession
agreement
Operating riskThe operations of the
facility are stalled
Performance security clause in case of default on
Concessionairersquos part
Design risk Overdesign of the projectProject design to be finalized in mutual agreement
of concessionaire and BDA
Completion
risk
Completion of project is
delayed inconvenience to
citizens and tenants
Penalty clauses for time overrun in the concession
agreement
Cost overrun
risk
Project cost increases
beyond reasonable limits
Project cost increment ceiling to be specified in the
concession agreement Increase beyond this ceiling
to be borne by the developer No change in revenue
sharing
92 Indicative project structure
The best approach for such a large ticket project would be for the BDA to become a key actor in the
entire process of development The BDA may ask the private sector partner to form a Special
Purpose Company where the equity will be brought in by the private sector developer The designs
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
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Bangalore Development Authority
[20]
should be left to the developer and BDArsquos role would be in approving the same in accordance with the
Development Control Regulations
The SPC will develop and maintain Complex throughout the concession period The tenants would
pay the developer a sub-lease premium or lease rentals which will be escrowed in a separate accountand can be withdrawn based on the revenue sharing structure adopted
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
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Bangalore Development Authorit
10 Way ahead
101 Project develo
The key task for BDA is to ap
feasibility of the project Once t
the bid process
Figure 10-1 Project developm
The transaction advisor shall stralso prepare the relevant bid
management on behalf of BDA
102 Procurement
The foremost step for BDA is
feasibility The detailed financial
parameter Also an optimum str
bid documents would be prepar
process be conducted as a 2 sta
983105983152983152983151983145983150983156983149983141983150983156 983151983142 983156983154983137
983108983141983156983137983145983148983141983140 983142983141983137983155983145983138
983155983156983154983157983139983156983157983154983145983150983143
983120983154983141983152983137983154983137983156983145983151
983123983141983148983141983139
y
pment framework
oint a Transaction Advisor in order to conduc
e financial numbers are acceptable BDA BDA
nt framework
ucture the project upon completion of the feasibidocuments The transaction advisor shall un
nd will assist in appointment of the private secto
lan
to appoint a Transaction Advisor for the co
feasibility would determine the tentative revenue
cture would be arrived at Post the approval of
d for the selection of the developer It is recom
ge process involving Technical qualification and
983155983137983139983156983145983151983150 983137983140983158983145983155983151983154
983148983145983156983161 983155983156983157983140983145983141983155 983137983150983140 983152983154983151983146983141983139983156
983150 983151983142 983138983145983140 983140983151983139983157983149983141983150983156983155
983145983151983150 983151983142 983152983154983145983158983137983156983141 983155983141983139983156983151983154 983152983137983154983156983150983141983154
[21]
a detailed financial
should proceed with
ility studies and shallertake bid process
partner
nducting the project
for BDA and the bid
easibility Report the
mended that the Bid
inancial proposal
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
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B a n g a l o r e D e v e l o p m e n t A u t h o r i t y
B D A s h o u l d i n i t i a t e t h e p r o c e s s o f a p p o
i n t i n g a t r a n s a c t i o n a d v i s o r a t t h e
e a r l i e s t T h i s p r o c e s s c a n b e c o m p l e t e d i n 2 m o n t h s
O n c e t h e T A
i s i n p l a c e
t h e B D
A s h o u l d a l l o w
a t l e a s t 4 m o n t h s f o r t h e p r e p a r a t i o n o f f e a s i b i l i t y p r o j e c t s t r u c t u r i n g a n d b i d d o c u m e n
t s
O n c e t
h e b i d d o c u m e n t s a r e i n p l a c e t h
e B D A
s h o u l d i n i t i a t e t h e p r o c e s s
o f s e l e c t i n g t h e p r i v a t e s e c t o r p a
r t n e r w h i c h c a n b e c o m p l e t e d o v e r a 4 m o n t h
p e r i o d
T h e c u
r r e n t p r o c u r e m e n t p l a n i s s p r e a d
o v e r 1 1 m o n t h s w h i c h c a n b e s
h o r t e n e d d e p e n d i n g o n t h e m a n n e r i n w h i c h B D A
m a k e s d e c i s i o n
s r e l a t i n g t o
a p p o i n
t m e n t o f T A a n d p r i v a t e d e v e l o p e r
A c t i v i t y
M 1
M 2
M 3
M 4
M 5
M 6
M 7
M 8 M
9
M 1 0
M 1 1
M 1 2
A p p o i n t m e t o f t r a n s a c t i o n a d v i s o r
D e t a i l e d t e c h n o - e c o n o m i c f e a s i b i l i t y a n d
b i d d o c u m e n t p r e p a r a t i o n
B i d p r
o c e s s m a n a g e m e n t
S e l e c t i o n o f p r e f e r r e d b i d d e r a n d f o r m a t i o n o f S P C
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
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B a n g a l o r e D e v e l o p m e n t A u t h o r i t y
1 1
A n n e x u r e 1 ndash C a s h - f l o w
s t a t e m e n t
R e v e n u e H e a d
S u b H e a d R a t e
U n i t
3 1 - M a r - 1 4
3 1 - M
a r - 1 7
3 1 - M a r - 2 2
3 1 - M a r - 2 7
3 1 - M a r - 3 2
3 1 - M a r - 3 7
3 1 - M a r - 4 2
3 1 - M a r - 4 7
3 1 - M
a r - 5 2
3 1 - M a r - 5 7
3 1 - M a r - 6 2
C o m m e
r c i a l S p a c e
O c c u p a
n c y
P e r c e n t a g
0
9 0
9 5
9 5
9 5
9 5
9 5
9 5
9 5
9 5
9 5
C o m m e
r c i a l s p a c e l e a s e d o u t
s q f t
-
7 2 0 6
9 0
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6
0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
D e p o s i t f o r L e a s e
( N o o f m o n t h s r e n t )
1 2
A v e r a g e
L e a s e R e n t a l s
7 0
R s p s f p e r m o n t h
E s c a l a t i o n
1 0
M a i n t e n
a n c e c h a r g e s
2 2 5
R s p s f p e r m o n t h
R e v e n u e f r o m
L e a s e R e n t a l
R s
L a k h s
-
8 8
6 3
1 5 0
6 8
2 4 2
6 6
3 9 0
8 1
6 2 9
4 1
1 0 1 3
6 7
1 6 3 2
5 3
2 6
2 9
2 0
4 2 3 4
3 5
6 8 1 9
4 7
R e v e n u e f r o m
M a i n t e n a n c e c h a r g e s
-
2 8 5
4 8 4
7 8 0
1 2
5 6
2 0
2 3
3 2
5 8
5 2
4 7
8 4
5 1
1 3 6
1 0
2 1 9
2 0
T o t a l R
e v e n u e
-
9 1 4 8
1 5 5 5 2
2 5 0 4 6
4 0 3 3 8
6 4 9 6 4
1 0 4 6 2 5
1 6 8 5 0 0
2 7
1 3 7 1
4 3 7 0 4 6
7 0 3 8 6 7
R e v e n
u e H e a d
S u b H e a d R a t e
U n i t
3 1 - M a r - 6
7
3 1 - M a r - 7 2
3 1 - M a r - 7 8
3 1 - M a r - 7 9
C o m m e r c i a l S p a c e
O c c u p a n c y
P e r c e n t a g
9 5
9 5
9 5
9 5
C o m m e r c i a l s p a c e l e a s e d o u t
s q f t
7 6 0 7 2
8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
D e p o s i t f o r L e a s e
( N o o f m o n t h s r e n t )
1 2
A v e r a g
e L e a s e R e n t a l s
7 0 R s p s f p e r m o n t h
E s c a l a
t i o n
1 0
M a i n t e
n a n c e c h a r g e s
2 2
5 R s p s f p e r m o n t h
R e v e n u
e f r o m
L e a s e R e n t a l
R s
L a k h s
1 0
9 8 2 8 2
1 7
6 8 7
9 4
3 1
3 3 5
2 7
3 4
4 6 8
8 0
R e v e n u
e f r o m
M a i n t e n a n c e c h a r g e s
3 5 3 0 2
5 6 8
5 4
1 0 0 7
2 1
1 1 0 7
9 3
T o t a l R e v e n u e
1 1 3 3 5 8 4
1 8 2 5 6 4 8
3 2 3 4 2 4 8
3 5 5 7 6 7 2
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
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[x]
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
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[y]
Disclaimer
CRISIL Risk and Infrastructure Solutions Limited (CRIS) has taken due care and caution in preparation of this Report for
Bangalore Development Authority which is under the purview of the Urban Development Department Government of
Karnataka This Report is based on the information documents provided by the Company andor information available publicly
andor obtained by CRIS from sources which it considers reliable CRIS does not guarantee the accuracy adequacy or
completeness of the information documents Report and is not responsible for any errors or omissions or for the results
obtained from the use of the same The Report and results stated therein are subject to change CRIS especially states that it
has no financial liability whatsoever to the Company users of this Report This Report is strictly confidential and should not be
reproduced or redistributed or communicated directly or indirectly in any form or published or copied in whole or in part
especially outside India for any purpose
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Registered Office ndash Mum
CRISIL House Central AvenueHiranandani Business ParkPowai Mumbai- 400 076Phone 91-22-3342 3000Fax 91-22-3342 3810
New Delhi
The Mira G-1 1st Floor Plot NoIshwar Nagar Mathura Road
New Delhi - 110 065 IndiaPhone 91-11-4250 510091-11-2693 0117 - 121Fax 91-11-2684 2213
Hyderabad
3rd Floor Uma ChambersPlot No 9amp10 Nagarjuna HillsNear Punjagutta Cross RoadHyderabad - 500 082Phone 91-40-40328200Fax 91-40-2335 7507
Bengaluru
W-101 Sunrise Chambers22 Ulsoor RoadBengaluru - 560 042Phone 91-80-2558 0899Fax 91-80-2559 4801
Ahmedabad
706 Venus AtlantisNear Reliance Petrol PumpPrahladnagarAhmedabad -Phone 91-79-4024 4500Fax 91-79-2755 9863
Visit us atwwwcrisilcom
ai
1 amp 2
About CRISIL Infrastructu
CRISIL Infrastructure Advisory
CRISIL Risk and Infrastructure
Limited a 100 subsidiary of
Indiarsquos leading Ratings Resear
Policy Advisory Company
CRISIL Infrastructure Advisory
premier advisor focusing on po
well as commercial and contra
the areas of transport energyinfrastructure We also provide
international firms planning inv
India Over a period of time C
Infrastructure Advisory has buil
position for itself in these doma
considered the preferred cons
governments multilateral agen
sector clients We have extend
operations beyond India and ar
other emerging markets in Afri
and South Asia
re Advisory
is a division of
Solutions
RISIL Limited ndash
ch Risk and
is Indiarsquos
licy issues as
tual issues in
nd urbansupport to
stments in
ISIL
t a unique
ins and is
ltant by
cies and private-
ed our
e present in
a Middle East
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
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Bangalore Development Authority
[9]
The site is situated at a junction near a residential area and is frequented by elders and youngsters
alike The present building consists of Motor driving schools RTO office computer vendors and travel
agents There is a water tank situated in the site
Figure 4-2 BDA Complex at Indiranagar
44 Interaction with stakeholders
CRISIL conducted a series of interactions with the stakeholders namely the BDA officials Citizens
and the establishment owners The interactions revealed that the building has to undergo
redevelopment The condition of the BDA office is not up to the standards expected and the officials
complained about leaks and short circuits The establishment owners suggested that the building was
planned with less road facing establishments due to which they are not able to attract footfalls
45 Case studies
In order to generate revenues from the real estate value of the land in the ownership of the ULBrsquos
commercial projects have been developed on a PPP basis on these lands Typically under such
arrangements the ULB would have identified a site under its ownership where a property for
commercial use can be developed Commercial development would include the development of
shopping complexes markets bus terminals multi-level car parking townships etc
Under such an arrangement the ULB would require of the private developer to undertake
construction of a commercial complex on the land The land would be provided by the ULB to the
private operator on a lease basis The ULB would provide specifications on the nature and type of
commercial development required The private developer would need to bear all the capital costs
associated with the construction of the commercial complex Post construction of the commercial
complex as per the arrangement the private developer would either hand over the constructed
facility to the ULB or would sub-lease the property The private developer would be required to make
to the ULB an upfront payment or provide a share in the ULB revenues earned from sub-leasing the
properties
The following case study compiled by the Ministry of Urban Development Government of India
highlights the development of municipalurban lands on a PPP basis
Category Details
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Bangalore Development Authority
[10]
Category Details
Project Construction of Commercial Complex at Ranipura Market
Cost of
ProjectRs 1500 lakhs
Description
The land was allotted to the concessionaire to construct the Commercial Complex by
the Corporation
Corporation continues to own the land
After the concession period the built-up structure (Commercial Complex) will be
transferred to the Corporation by the concessionaire
The concessionaire was given the right to recover its investment from the premium
received for ldquoRight of Occupationrdquo of the constructed shops
At the time of award of concession it was estimated that a profit of Rs 200 lakh will
be accrued from the venture which will be shared by the concessionaire with the
Corporation
The Corporation is expected to receive a profit share of Rs 100 lakh from the
concessionaire
Source Compendium on Public Private Partnership in Urban Infrastructure Case Studies Ministry of Urban
Development Government of India in association with Confederation of Indian Industry (CII)
We have also studied another case wherein the development affordable housing units was structure
on a PPP basis by the Pimpri Chinchwad New Township Development Authority (PCNTDA)
451 Public private partnership in affordable housing under Jawaharlal
Nehru National Urban Renewal Mission (JNNURM)
The Pune metropolitan region comprising Pune and Pimpri Chinchwad cities is one of the fastest
growing urban agglomerations in India A major automobile and auto-ancillary hub and a well-known
international education destination it also ranks among the top IT destinations of India Besides the
region has many industrial clusters housing industries focused on FMCG engineering agro-based
technology
The Pimpri-Chinchwad New Town Develompent Authority (PCNTDA) a key development authority of
the PMR is responsible for development of peri-urban especially in its north In line with the
phenomenal growth of the region and its strident aspirations PCNTDA has envisioned the
development of an integrated township at Sector 12 spanning 53 hectares Given the success of the
Public Private Partnership (PPP) model in involving private sector participation for development based
projects PCNTDS proposed to develop the integrated township on PPP basis
With this objective PCNTDA appointed the consortium of CRISIL Risk and Infrastructure Solutions
Limited (CRIS) Omkar Associates and Creations as project development consultants for the
development of an eco-friendly affordable township at Bhosari Sector 12 CRISILrsquos role was to
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Bangalore Development Authority
[11]
undertake a detailed demand assessment financial feasibility project structuring and management of
the bid process
The concept
Keep in mind the PCNTDArsquos vision CRIS designed integrated township such that it compriseshousing untis for the poor affordable housing units for the general public a primary health care
centre a hospital and a school
As per the structure the Developer shall construct 5040 housing units under the Basic Services for
Urban Poor (BSUP) scheme of JNNURM PCNTDA shall transfer the amount of grant sanctioned for
developing these units under the JNNURM scheme to the developer The remaining project cost of
the BUSP units was to be financed by the developer
In addition to this the Developer shall also construct affordable housing units as per pre-specified
specifications and hand over to PCNTDA free of cost The developer shall also construction the
physical and social infrastructure for the integrated township thereby ensuring good road adequate
water supply an efficient sewerage system as well as schools and hospitals The project shall bedeveloped in a manner such that it has minimum possible impact on the surrounding environment and
is in harmony with nature To this end the developer shall undertake eco-friendly initiatives including
rain water harvesting use of solar power environment-friendly materials and vermin-composting
The project
The developer has to complete the BSUP housing units within 2 years and hand over to the PCNTDA
For the remaining portion of the land PCNTDA shall execute a lease deed for 99 years with the
developer The lease rights shall be granted to the developer in phases upon completion of
milestones as defined in the project agreement The main scope of work for the developer shall
include
Master planning for the entire 53 hectares of land and construction of common physical and
social infrastructure for the entire area
Development construction and marketing of 795 lakhs square meters of integrated real
estate space
Construction and handing over of 5040 housing units under the BSUP scheme of JNNURM
on a separate layout carved out of the said land PCNTDA will provide the developer the grant
sanctioned by the Government of India for these housing units
Successful selection of private developer
With the objective of undertaking this project on a PPP basis in a transparent and objective manner
PCNTDA launched a three-cover Request for Proposal in June 2009 The bidding parameter was theconstructed ldquoCarpet Areardquo in ldquosquare metersrdquo of affordable housing units that the bidder shall
construct and hand over free of cost to PCNTDA
The tender received good response from four interested bidders Of the four bidders two bidders
were adjudged technically and financially capable and short-listed for the final stage The bidder with
the highest construction carpet area offered to PCNTDA was selected The successful bidder quoted
a carpet area of 130599 square meters of affordable housing units
Thereby the PCNTDA derived a value of 7369 housing units (including 5040 BSUP units) a school
and a hospital for the BSUP units a school and hospital for the general public and development of
public amenities
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Bangalore Development Authority
[12]
Value addition to PCNTDA
In commercial terms PCNTDA saved (i) Rs 190 crores as the gap amount required to fund the BSUP
scheme (ii) Rs 210 crores of construction cost of affordable housing units and (iii) Rs 100 crores on
the development of physical and social infrastructure In addition to this PCNTDA shall receive anupfront payment of Rs 50 crores from the successful bidder The project structure also protects
PCNTDA from cost escalation risks valuation risks and engineering risks
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Bangalore Development Authorit
5 Market asse
51 Bangalore gro
The growth of Bangalore has be
from the growth in population in
to the economic opportunities it
Bangalore an obvious choice for
Bangalore has grown at averag
decades It is projected that B
explosive growth has meant th
pressure
Figure 5-1 Population growth
Source City Development Plan Ba
The city leads the country in
available However Bengaluru a
of projects under development a
983089983086983094983091 983089983086983096983097 983090983086983092
983088
983089983088
983090983088
983091983088
983092983088
983093983088
983094983088
983095983088
983096983088
983097983088
983089983097983088983089 983089983097983089983089 983089983097983090983089
983120 983151 983152 983157 983148 983137 983156 983145 983151 983150 983145 983150 983116
983137 983147 983144 983155
y
sment
th overview
en unprecedented in the past couple of decades
the last century Bangalore continues to attract t
offers This is also supported by a salubrious
not only businesses but also for people
compounded annual growth rate (CAGR) of 3
ngalorersquos population will cross the 10 million
at the infrastructure in Bangalore has been p
in Bangalore between 1901 and 2011
galore Development Authority and Census of India
ffice space with 738 million square feet of
lso has 22 per cent of the available space vacan
nd reduced demand
983091983086983089 983092983086983089983089983095983086983096983094
983089983090983086983088983094
983089983094983086983094983092
983090983097983086983090983090
983092
983089983097983091983089 983089983097983092983089 983089983097983093983089 983089983097983094983089 983089983097983095983089 983089983097983096983089 983089983097
[13]
This fact is laid bare
rongs of people due
eather which makes
58 in the last three
mark by 2021 This
t under tremendous
commercial capacity
with a large number
983086983091
983093983094983086983096983094
983096983092
983097983089 983090983088983088983089 983090983088983089983089
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
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Bangalore Development Authority
[14]
52 Demand projections
Bangalore is the largest commercial market and third largest residential market in India The city has
typically been preferred by home buyers because of its favorable socio-economic conditions and a
salubrious climate In recent years Bangalore has attracted a large influx of population engaged inthe thriving IT sector City residential demand is more end-user driven with moderate price
appreciation The average residential real estate price in the city is 20-25 lesser than in Delhi and
Mumbai In the recent National Housing Bank Residex the index indicating property prices across key
cities in India Bangalore witnessed a mere 1 YoY fall in residential prices in 2011-12 Mumbai saw
an 116 YoY jump in home prices while Delhi witnessed 358 YoY increase during 2011-12 The
city witnessed tremendous growth in terms of population and the number of companies setting up
offices there Thus the ongoing projects such as Bengaluru metro rail project various flyovers and
the under-pass construction activities in Outer Ring Road (ORR) CNR and BHEL circles would ease
the congestion and provide better connectivity for all commuters This will boost real estate demand in
and around Bangalore city
In 2011-12 Bangalorersquos commercial market exhibited resiliency with comparatively high demand
levels despite the discomfort in the market on account of global uncertainty Though commercial
property demand in Bangalore is largely dependent on ITITES sectors the share of manufacturing is
increasing at a faster pace and thereby giving further boost to office space demand According to real
estate consultancy firm Knight Frank the manufacturing sector witnessed a quantum leap as its share
of absorption increased from 3 in 4QCY10 to 23 in 4QCY11 The absorption of commercial space
has gone up from 5mn sq ftquarter in CY09 to 7mn sq ftquarter in CY11 thanks to sustained
demand for Bangalore commercial space which witnessed 43 CAGR in absorption level over CY09-
11 Subdued supply during the first two quarters of 2011 coupled with high absorption level has
substantially lowered the vacancy level in the city (bringing it down from 17 in CY10 to 12 in
CY11) With the expansion of existing operations in the IT sector and the entry of newer sectors dueto renewed optimism in the market we expect the level of absorption of office space to remain stable
Revised Master Plan-2015 for the BMA has been published This document gives the likely growth to
take place in various areas of the BMA The population of the BMA is expected to grow from 61 lakh
in 2001 to 122 lakh in 2025
The proposed growth rate and the ever changing urban scenario is bound to increase the commercial
space demand in the region The site at Indiranagar is situated at a junction and has two road facing
sides which makes it very attractive for commercial development The site is also huge in size and
can easily accommodate a mall
Hence in view of the above it can be safely recommended that the site would generate huge interest
within the developers
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Bangalore Development Authority
[15]
6 Project financials
The project costs have been largely derived from the costs indicated by the Bangalore Development
Authority (BDA)
61 Cost estimation
The estimated cost of development of the project is Rs 23931 lakhs The costs have been outlined
below
Table 6-1 Project Cost of the proposed development
Particular Amount inRs Lakhs
Construction Cost 19967
Land Development 793
Other Infrastructure 50
Total Hard Costs 20810
Contingencies 3121
Total Project Development Cost 23931
Apart from the above mentioned project development cost the Concessionaire would incur the
development premium and Interest during construction (IDC) cost
Particulars 25 years 33 Years 66 years
Upfront Premium (Rs Lakh) 965000 1230000 600000
IDC Cost (Rs Lakh) 315600 361500 259100
Revenue Share every year 15 15 15
Total Project Cost (Rs Lakhs) 36737 39846 33022
62 Revenue stream
The Revenues to the Developer would accrue from the revenue earned from the lease rentals and the
maintenance charges which the developer earns from the tenants The total revenue from both the
heads has been arrived at Rs 6720 Lakhs for the base year It has been assumed that the
occupancy of the commercial complex 80 in the base year and stabilizes to a maximum of 95towards the end of the concession period The average lease rentals have been assumed at Rs 70
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
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Bangalore Development Authority
[16]
per square feet and the maintenance charges have been assumed at Rs 225 per square feet Both
the revenues are escalating at the rate of 10 per annum The income statement for the developer
has been provided in Annexure 1
63 Viability assessment
The viability assessment has been carried out over two concession period ie 25 33 and 66 years
The debt to equity ratio has been assumed to be 121
The project level internal rate of return (IRR) IRR of equity and the net present value of the equity
have been worked out
Table 6-2 Viability assessment for BDA complex at Indiranagar
Concession Period Project IRR Equity IRR NPV of Equity
Upfront Premium
(Rs in Lakhs)
25 years 1777 2007 96 9650
33 years 1818 2006 108 12300
66 years 2101 2333 5285 6000
It is evident that the project is viable for the developer for all the 3 concession periods In case of the
25 year concession period it is estimated that the developer would pay BDA an estimated upfront
premium of Rs 9650 lakhs Similarly the developer would pay BDA an amount of Rs 12300 lakhsand Rs 6000 lakhs for the concession periods of 33 years and 66 years respectively
64 Ranking of options based on commercial viability
Having assessed the project for two concession periods of 25 33 and 66 years we are of the view
that the 25 year concession option will be more suitable since it allows the developer to make
reasonable returns on the projects and his own investments along with a sizeable upfront premium for
BDA BDA would be in a position to renew the contract or retender the project after 25 years which
may enable BDA to earn as per the prevailing market rates
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
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Bangalore Development Authority
[17]
7 Statutory amp legal framework
71 Legal amp regulatory framework
Development Control Regulations (DCR)
As per RMP ndash 2015 published by BDA the project site has been classified as ldquoCommercial Businessrdquo
As per the definitions of RMP-2015 Commercial Business Zone allows development of Commercial
and Corporate offices Retail Shopping Complexes Restaurants and Hotels Convention centres and
banquet halls financial institutions Cinema and multiplexes places of assembly exhibition centres
Entertainment and amusement centres and stores
Permissible land uses under Commercial (Business) Zone as per RMP-2015 of BDA
Main land use category C3
Other land uses permissible (as main land use) R I-3 T3 amp U4
If the road width is less than 120 m and plot area is less than 240 square metre then C2 I-2
R and U4 only are allowed
The plot size is 24000 square metre Presently it has 18m wide access road The applicable DCR for
the plot as per proposed road width is as follows
Table 7-1 Plot details of Indiranagar site
Sr No Particulars Description Unit
1 Land Use Commercial Business
2 Road Width 18 Metre
3 Permissible FAR 325
4Permissible ground
coverage50
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Bangalore Development Authority
[18]
8 Indicative environmental amp social impacts
81 Environmental impacts
The proposed development is in line with the layout of BDA Due to the reasonably large site area the
development will be on the higher side A set back of 50 is found to be acceptable for the site
however an Environmental Impact Assessment studies have to be undertaken for the sites Since
already a commercial complex is existent redevelopment of the complex would need demolition of
the existent structures Hence a suitable disposal of construction and debris has to be undertaken by
the developer Also a Green building can be developed to ensure minimal effect on nature
82 Social impactsDuring the construction period the existing establishments have to be shifted or compensated
temporarily Hence a clear resettlement plan has to be decided before the implementation of the
project It is envisaged that if due care is taken about the existing tenants the development would go
smoothly
83 Mitigation measures
It is necessary that the impacts are identified early and action plans are prepared for their mitigation in
advance For instance for environmental impacts the BDA may insist on the developer to use clean
and green building technologies
It is also necessary that the project development plan is also accompanied by a Relocation and
Rehabilitation plan which will layout detailed action points with the requisite intervening entity
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
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Bangalore Development Authority
[19]
9 Operating framework
91 Risks amp mitigation
The risk framework for this project has been outlined below
Table 9-1 Risk mitigation measures
Risk Category Risk implication Mitigation measure
Sponsor risk BDA scraps the project Termination payments in case of BDA scrapping the
project
Environment
risk
Adverse impact on
surrounding environment
Penalty clauses in case of default on
Concessionairersquos part
Environmental Impact Assessment to identify all
risks in advance
Political riskChange in government may
put project in jeopardy
Termination payments in case of project being
scrapped
Force
majeure riskProject is abandoned
Force majeure clauses in the concession
agreement
Operating riskThe operations of the
facility are stalled
Performance security clause in case of default on
Concessionairersquos part
Design risk Overdesign of the projectProject design to be finalized in mutual agreement
of concessionaire and BDA
Completion
risk
Completion of project is
delayed inconvenience to
citizens and tenants
Penalty clauses for time overrun in the concession
agreement
Cost overrun
risk
Project cost increases
beyond reasonable limits
Project cost increment ceiling to be specified in the
concession agreement Increase beyond this ceiling
to be borne by the developer No change in revenue
sharing
92 Indicative project structure
The best approach for such a large ticket project would be for the BDA to become a key actor in the
entire process of development The BDA may ask the private sector partner to form a Special
Purpose Company where the equity will be brought in by the private sector developer The designs
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Bangalore Development Authority
[20]
should be left to the developer and BDArsquos role would be in approving the same in accordance with the
Development Control Regulations
The SPC will develop and maintain Complex throughout the concession period The tenants would
pay the developer a sub-lease premium or lease rentals which will be escrowed in a separate accountand can be withdrawn based on the revenue sharing structure adopted
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Bangalore Development Authorit
10 Way ahead
101 Project develo
The key task for BDA is to ap
feasibility of the project Once t
the bid process
Figure 10-1 Project developm
The transaction advisor shall stralso prepare the relevant bid
management on behalf of BDA
102 Procurement
The foremost step for BDA is
feasibility The detailed financial
parameter Also an optimum str
bid documents would be prepar
process be conducted as a 2 sta
983105983152983152983151983145983150983156983149983141983150983156 983151983142 983156983154983137
983108983141983156983137983145983148983141983140 983142983141983137983155983145983138
983155983156983154983157983139983156983157983154983145983150983143
983120983154983141983152983137983154983137983156983145983151
983123983141983148983141983139
y
pment framework
oint a Transaction Advisor in order to conduc
e financial numbers are acceptable BDA BDA
nt framework
ucture the project upon completion of the feasibidocuments The transaction advisor shall un
nd will assist in appointment of the private secto
lan
to appoint a Transaction Advisor for the co
feasibility would determine the tentative revenue
cture would be arrived at Post the approval of
d for the selection of the developer It is recom
ge process involving Technical qualification and
983155983137983139983156983145983151983150 983137983140983158983145983155983151983154
983148983145983156983161 983155983156983157983140983145983141983155 983137983150983140 983152983154983151983146983141983139983156
983150 983151983142 983138983145983140 983140983151983139983157983149983141983150983156983155
983145983151983150 983151983142 983152983154983145983158983137983156983141 983155983141983139983156983151983154 983152983137983154983156983150983141983154
[21]
a detailed financial
should proceed with
ility studies and shallertake bid process
partner
nducting the project
for BDA and the bid
easibility Report the
mended that the Bid
inancial proposal
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B a n g a l o r e D e v e l o p m e n t A u t h o r i t y
B D A s h o u l d i n i t i a t e t h e p r o c e s s o f a p p o
i n t i n g a t r a n s a c t i o n a d v i s o r a t t h e
e a r l i e s t T h i s p r o c e s s c a n b e c o m p l e t e d i n 2 m o n t h s
O n c e t h e T A
i s i n p l a c e
t h e B D
A s h o u l d a l l o w
a t l e a s t 4 m o n t h s f o r t h e p r e p a r a t i o n o f f e a s i b i l i t y p r o j e c t s t r u c t u r i n g a n d b i d d o c u m e n
t s
O n c e t
h e b i d d o c u m e n t s a r e i n p l a c e t h
e B D A
s h o u l d i n i t i a t e t h e p r o c e s s
o f s e l e c t i n g t h e p r i v a t e s e c t o r p a
r t n e r w h i c h c a n b e c o m p l e t e d o v e r a 4 m o n t h
p e r i o d
T h e c u
r r e n t p r o c u r e m e n t p l a n i s s p r e a d
o v e r 1 1 m o n t h s w h i c h c a n b e s
h o r t e n e d d e p e n d i n g o n t h e m a n n e r i n w h i c h B D A
m a k e s d e c i s i o n
s r e l a t i n g t o
a p p o i n
t m e n t o f T A a n d p r i v a t e d e v e l o p e r
A c t i v i t y
M 1
M 2
M 3
M 4
M 5
M 6
M 7
M 8 M
9
M 1 0
M 1 1
M 1 2
A p p o i n t m e t o f t r a n s a c t i o n a d v i s o r
D e t a i l e d t e c h n o - e c o n o m i c f e a s i b i l i t y a n d
b i d d o c u m e n t p r e p a r a t i o n
B i d p r
o c e s s m a n a g e m e n t
S e l e c t i o n o f p r e f e r r e d b i d d e r a n d f o r m a t i o n o f S P C
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B a n g a l o r e D e v e l o p m e n t A u t h o r i t y
1 1
A n n e x u r e 1 ndash C a s h - f l o w
s t a t e m e n t
R e v e n u e H e a d
S u b H e a d R a t e
U n i t
3 1 - M a r - 1 4
3 1 - M
a r - 1 7
3 1 - M a r - 2 2
3 1 - M a r - 2 7
3 1 - M a r - 3 2
3 1 - M a r - 3 7
3 1 - M a r - 4 2
3 1 - M a r - 4 7
3 1 - M
a r - 5 2
3 1 - M a r - 5 7
3 1 - M a r - 6 2
C o m m e
r c i a l S p a c e
O c c u p a
n c y
P e r c e n t a g
0
9 0
9 5
9 5
9 5
9 5
9 5
9 5
9 5
9 5
9 5
C o m m e
r c i a l s p a c e l e a s e d o u t
s q f t
-
7 2 0 6
9 0
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6
0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
D e p o s i t f o r L e a s e
( N o o f m o n t h s r e n t )
1 2
A v e r a g e
L e a s e R e n t a l s
7 0
R s p s f p e r m o n t h
E s c a l a t i o n
1 0
M a i n t e n
a n c e c h a r g e s
2 2 5
R s p s f p e r m o n t h
R e v e n u e f r o m
L e a s e R e n t a l
R s
L a k h s
-
8 8
6 3
1 5 0
6 8
2 4 2
6 6
3 9 0
8 1
6 2 9
4 1
1 0 1 3
6 7
1 6 3 2
5 3
2 6
2 9
2 0
4 2 3 4
3 5
6 8 1 9
4 7
R e v e n u e f r o m
M a i n t e n a n c e c h a r g e s
-
2 8 5
4 8 4
7 8 0
1 2
5 6
2 0
2 3
3 2
5 8
5 2
4 7
8 4
5 1
1 3 6
1 0
2 1 9
2 0
T o t a l R
e v e n u e
-
9 1 4 8
1 5 5 5 2
2 5 0 4 6
4 0 3 3 8
6 4 9 6 4
1 0 4 6 2 5
1 6 8 5 0 0
2 7
1 3 7 1
4 3 7 0 4 6
7 0 3 8 6 7
R e v e n
u e H e a d
S u b H e a d R a t e
U n i t
3 1 - M a r - 6
7
3 1 - M a r - 7 2
3 1 - M a r - 7 8
3 1 - M a r - 7 9
C o m m e r c i a l S p a c e
O c c u p a n c y
P e r c e n t a g
9 5
9 5
9 5
9 5
C o m m e r c i a l s p a c e l e a s e d o u t
s q f t
7 6 0 7 2
8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
D e p o s i t f o r L e a s e
( N o o f m o n t h s r e n t )
1 2
A v e r a g
e L e a s e R e n t a l s
7 0 R s p s f p e r m o n t h
E s c a l a
t i o n
1 0
M a i n t e
n a n c e c h a r g e s
2 2
5 R s p s f p e r m o n t h
R e v e n u
e f r o m
L e a s e R e n t a l
R s
L a k h s
1 0
9 8 2 8 2
1 7
6 8 7
9 4
3 1
3 3 5
2 7
3 4
4 6 8
8 0
R e v e n u
e f r o m
M a i n t e n a n c e c h a r g e s
3 5 3 0 2
5 6 8
5 4
1 0 0 7
2 1
1 1 0 7
9 3
T o t a l R e v e n u e
1 1 3 3 5 8 4
1 8 2 5 6 4 8
3 2 3 4 2 4 8
3 5 5 7 6 7 2
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[x]
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
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[y]
Disclaimer
CRISIL Risk and Infrastructure Solutions Limited (CRIS) has taken due care and caution in preparation of this Report for
Bangalore Development Authority which is under the purview of the Urban Development Department Government of
Karnataka This Report is based on the information documents provided by the Company andor information available publicly
andor obtained by CRIS from sources which it considers reliable CRIS does not guarantee the accuracy adequacy or
completeness of the information documents Report and is not responsible for any errors or omissions or for the results
obtained from the use of the same The Report and results stated therein are subject to change CRIS especially states that it
has no financial liability whatsoever to the Company users of this Report This Report is strictly confidential and should not be
reproduced or redistributed or communicated directly or indirectly in any form or published or copied in whole or in part
especially outside India for any purpose
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Registered Office ndash Mum
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The Mira G-1 1st Floor Plot NoIshwar Nagar Mathura Road
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3rd Floor Uma ChambersPlot No 9amp10 Nagarjuna HillsNear Punjagutta Cross RoadHyderabad - 500 082Phone 91-40-40328200Fax 91-40-2335 7507
Bengaluru
W-101 Sunrise Chambers22 Ulsoor RoadBengaluru - 560 042Phone 91-80-2558 0899Fax 91-80-2559 4801
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706 Venus AtlantisNear Reliance Petrol PumpPrahladnagarAhmedabad -Phone 91-79-4024 4500Fax 91-79-2755 9863
Visit us atwwwcrisilcom
ai
1 amp 2
About CRISIL Infrastructu
CRISIL Infrastructure Advisory
CRISIL Risk and Infrastructure
Limited a 100 subsidiary of
Indiarsquos leading Ratings Resear
Policy Advisory Company
CRISIL Infrastructure Advisory
premier advisor focusing on po
well as commercial and contra
the areas of transport energyinfrastructure We also provide
international firms planning inv
India Over a period of time C
Infrastructure Advisory has buil
position for itself in these doma
considered the preferred cons
governments multilateral agen
sector clients We have extend
operations beyond India and ar
other emerging markets in Afri
and South Asia
re Advisory
is a division of
Solutions
RISIL Limited ndash
ch Risk and
is Indiarsquos
licy issues as
tual issues in
nd urbansupport to
stments in
ISIL
t a unique
ins and is
ltant by
cies and private-
ed our
e present in
a Middle East
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Bangalore Development Authority
[10]
Category Details
Project Construction of Commercial Complex at Ranipura Market
Cost of
ProjectRs 1500 lakhs
Description
The land was allotted to the concessionaire to construct the Commercial Complex by
the Corporation
Corporation continues to own the land
After the concession period the built-up structure (Commercial Complex) will be
transferred to the Corporation by the concessionaire
The concessionaire was given the right to recover its investment from the premium
received for ldquoRight of Occupationrdquo of the constructed shops
At the time of award of concession it was estimated that a profit of Rs 200 lakh will
be accrued from the venture which will be shared by the concessionaire with the
Corporation
The Corporation is expected to receive a profit share of Rs 100 lakh from the
concessionaire
Source Compendium on Public Private Partnership in Urban Infrastructure Case Studies Ministry of Urban
Development Government of India in association with Confederation of Indian Industry (CII)
We have also studied another case wherein the development affordable housing units was structure
on a PPP basis by the Pimpri Chinchwad New Township Development Authority (PCNTDA)
451 Public private partnership in affordable housing under Jawaharlal
Nehru National Urban Renewal Mission (JNNURM)
The Pune metropolitan region comprising Pune and Pimpri Chinchwad cities is one of the fastest
growing urban agglomerations in India A major automobile and auto-ancillary hub and a well-known
international education destination it also ranks among the top IT destinations of India Besides the
region has many industrial clusters housing industries focused on FMCG engineering agro-based
technology
The Pimpri-Chinchwad New Town Develompent Authority (PCNTDA) a key development authority of
the PMR is responsible for development of peri-urban especially in its north In line with the
phenomenal growth of the region and its strident aspirations PCNTDA has envisioned the
development of an integrated township at Sector 12 spanning 53 hectares Given the success of the
Public Private Partnership (PPP) model in involving private sector participation for development based
projects PCNTDS proposed to develop the integrated township on PPP basis
With this objective PCNTDA appointed the consortium of CRISIL Risk and Infrastructure Solutions
Limited (CRIS) Omkar Associates and Creations as project development consultants for the
development of an eco-friendly affordable township at Bhosari Sector 12 CRISILrsquos role was to
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Bangalore Development Authority
[11]
undertake a detailed demand assessment financial feasibility project structuring and management of
the bid process
The concept
Keep in mind the PCNTDArsquos vision CRIS designed integrated township such that it compriseshousing untis for the poor affordable housing units for the general public a primary health care
centre a hospital and a school
As per the structure the Developer shall construct 5040 housing units under the Basic Services for
Urban Poor (BSUP) scheme of JNNURM PCNTDA shall transfer the amount of grant sanctioned for
developing these units under the JNNURM scheme to the developer The remaining project cost of
the BUSP units was to be financed by the developer
In addition to this the Developer shall also construct affordable housing units as per pre-specified
specifications and hand over to PCNTDA free of cost The developer shall also construction the
physical and social infrastructure for the integrated township thereby ensuring good road adequate
water supply an efficient sewerage system as well as schools and hospitals The project shall bedeveloped in a manner such that it has minimum possible impact on the surrounding environment and
is in harmony with nature To this end the developer shall undertake eco-friendly initiatives including
rain water harvesting use of solar power environment-friendly materials and vermin-composting
The project
The developer has to complete the BSUP housing units within 2 years and hand over to the PCNTDA
For the remaining portion of the land PCNTDA shall execute a lease deed for 99 years with the
developer The lease rights shall be granted to the developer in phases upon completion of
milestones as defined in the project agreement The main scope of work for the developer shall
include
Master planning for the entire 53 hectares of land and construction of common physical and
social infrastructure for the entire area
Development construction and marketing of 795 lakhs square meters of integrated real
estate space
Construction and handing over of 5040 housing units under the BSUP scheme of JNNURM
on a separate layout carved out of the said land PCNTDA will provide the developer the grant
sanctioned by the Government of India for these housing units
Successful selection of private developer
With the objective of undertaking this project on a PPP basis in a transparent and objective manner
PCNTDA launched a three-cover Request for Proposal in June 2009 The bidding parameter was theconstructed ldquoCarpet Areardquo in ldquosquare metersrdquo of affordable housing units that the bidder shall
construct and hand over free of cost to PCNTDA
The tender received good response from four interested bidders Of the four bidders two bidders
were adjudged technically and financially capable and short-listed for the final stage The bidder with
the highest construction carpet area offered to PCNTDA was selected The successful bidder quoted
a carpet area of 130599 square meters of affordable housing units
Thereby the PCNTDA derived a value of 7369 housing units (including 5040 BSUP units) a school
and a hospital for the BSUP units a school and hospital for the general public and development of
public amenities
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Bangalore Development Authority
[12]
Value addition to PCNTDA
In commercial terms PCNTDA saved (i) Rs 190 crores as the gap amount required to fund the BSUP
scheme (ii) Rs 210 crores of construction cost of affordable housing units and (iii) Rs 100 crores on
the development of physical and social infrastructure In addition to this PCNTDA shall receive anupfront payment of Rs 50 crores from the successful bidder The project structure also protects
PCNTDA from cost escalation risks valuation risks and engineering risks
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Bangalore Development Authorit
5 Market asse
51 Bangalore gro
The growth of Bangalore has be
from the growth in population in
to the economic opportunities it
Bangalore an obvious choice for
Bangalore has grown at averag
decades It is projected that B
explosive growth has meant th
pressure
Figure 5-1 Population growth
Source City Development Plan Ba
The city leads the country in
available However Bengaluru a
of projects under development a
983089983086983094983091 983089983086983096983097 983090983086983092
983088
983089983088
983090983088
983091983088
983092983088
983093983088
983094983088
983095983088
983096983088
983097983088
983089983097983088983089 983089983097983089983089 983089983097983090983089
983120 983151 983152 983157 983148 983137 983156 983145 983151 983150 983145 983150 983116
983137 983147 983144 983155
y
sment
th overview
en unprecedented in the past couple of decades
the last century Bangalore continues to attract t
offers This is also supported by a salubrious
not only businesses but also for people
compounded annual growth rate (CAGR) of 3
ngalorersquos population will cross the 10 million
at the infrastructure in Bangalore has been p
in Bangalore between 1901 and 2011
galore Development Authority and Census of India
ffice space with 738 million square feet of
lso has 22 per cent of the available space vacan
nd reduced demand
983091983086983089 983092983086983089983089983095983086983096983094
983089983090983086983088983094
983089983094983086983094983092
983090983097983086983090983090
983092
983089983097983091983089 983089983097983092983089 983089983097983093983089 983089983097983094983089 983089983097983095983089 983089983097983096983089 983089983097
[13]
This fact is laid bare
rongs of people due
eather which makes
58 in the last three
mark by 2021 This
t under tremendous
commercial capacity
with a large number
983086983091
983093983094983086983096983094
983096983092
983097983089 983090983088983088983089 983090983088983089983089
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
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Bangalore Development Authority
[14]
52 Demand projections
Bangalore is the largest commercial market and third largest residential market in India The city has
typically been preferred by home buyers because of its favorable socio-economic conditions and a
salubrious climate In recent years Bangalore has attracted a large influx of population engaged inthe thriving IT sector City residential demand is more end-user driven with moderate price
appreciation The average residential real estate price in the city is 20-25 lesser than in Delhi and
Mumbai In the recent National Housing Bank Residex the index indicating property prices across key
cities in India Bangalore witnessed a mere 1 YoY fall in residential prices in 2011-12 Mumbai saw
an 116 YoY jump in home prices while Delhi witnessed 358 YoY increase during 2011-12 The
city witnessed tremendous growth in terms of population and the number of companies setting up
offices there Thus the ongoing projects such as Bengaluru metro rail project various flyovers and
the under-pass construction activities in Outer Ring Road (ORR) CNR and BHEL circles would ease
the congestion and provide better connectivity for all commuters This will boost real estate demand in
and around Bangalore city
In 2011-12 Bangalorersquos commercial market exhibited resiliency with comparatively high demand
levels despite the discomfort in the market on account of global uncertainty Though commercial
property demand in Bangalore is largely dependent on ITITES sectors the share of manufacturing is
increasing at a faster pace and thereby giving further boost to office space demand According to real
estate consultancy firm Knight Frank the manufacturing sector witnessed a quantum leap as its share
of absorption increased from 3 in 4QCY10 to 23 in 4QCY11 The absorption of commercial space
has gone up from 5mn sq ftquarter in CY09 to 7mn sq ftquarter in CY11 thanks to sustained
demand for Bangalore commercial space which witnessed 43 CAGR in absorption level over CY09-
11 Subdued supply during the first two quarters of 2011 coupled with high absorption level has
substantially lowered the vacancy level in the city (bringing it down from 17 in CY10 to 12 in
CY11) With the expansion of existing operations in the IT sector and the entry of newer sectors dueto renewed optimism in the market we expect the level of absorption of office space to remain stable
Revised Master Plan-2015 for the BMA has been published This document gives the likely growth to
take place in various areas of the BMA The population of the BMA is expected to grow from 61 lakh
in 2001 to 122 lakh in 2025
The proposed growth rate and the ever changing urban scenario is bound to increase the commercial
space demand in the region The site at Indiranagar is situated at a junction and has two road facing
sides which makes it very attractive for commercial development The site is also huge in size and
can easily accommodate a mall
Hence in view of the above it can be safely recommended that the site would generate huge interest
within the developers
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Bangalore Development Authority
[15]
6 Project financials
The project costs have been largely derived from the costs indicated by the Bangalore Development
Authority (BDA)
61 Cost estimation
The estimated cost of development of the project is Rs 23931 lakhs The costs have been outlined
below
Table 6-1 Project Cost of the proposed development
Particular Amount inRs Lakhs
Construction Cost 19967
Land Development 793
Other Infrastructure 50
Total Hard Costs 20810
Contingencies 3121
Total Project Development Cost 23931
Apart from the above mentioned project development cost the Concessionaire would incur the
development premium and Interest during construction (IDC) cost
Particulars 25 years 33 Years 66 years
Upfront Premium (Rs Lakh) 965000 1230000 600000
IDC Cost (Rs Lakh) 315600 361500 259100
Revenue Share every year 15 15 15
Total Project Cost (Rs Lakhs) 36737 39846 33022
62 Revenue stream
The Revenues to the Developer would accrue from the revenue earned from the lease rentals and the
maintenance charges which the developer earns from the tenants The total revenue from both the
heads has been arrived at Rs 6720 Lakhs for the base year It has been assumed that the
occupancy of the commercial complex 80 in the base year and stabilizes to a maximum of 95towards the end of the concession period The average lease rentals have been assumed at Rs 70
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Bangalore Development Authority
[16]
per square feet and the maintenance charges have been assumed at Rs 225 per square feet Both
the revenues are escalating at the rate of 10 per annum The income statement for the developer
has been provided in Annexure 1
63 Viability assessment
The viability assessment has been carried out over two concession period ie 25 33 and 66 years
The debt to equity ratio has been assumed to be 121
The project level internal rate of return (IRR) IRR of equity and the net present value of the equity
have been worked out
Table 6-2 Viability assessment for BDA complex at Indiranagar
Concession Period Project IRR Equity IRR NPV of Equity
Upfront Premium
(Rs in Lakhs)
25 years 1777 2007 96 9650
33 years 1818 2006 108 12300
66 years 2101 2333 5285 6000
It is evident that the project is viable for the developer for all the 3 concession periods In case of the
25 year concession period it is estimated that the developer would pay BDA an estimated upfront
premium of Rs 9650 lakhs Similarly the developer would pay BDA an amount of Rs 12300 lakhsand Rs 6000 lakhs for the concession periods of 33 years and 66 years respectively
64 Ranking of options based on commercial viability
Having assessed the project for two concession periods of 25 33 and 66 years we are of the view
that the 25 year concession option will be more suitable since it allows the developer to make
reasonable returns on the projects and his own investments along with a sizeable upfront premium for
BDA BDA would be in a position to renew the contract or retender the project after 25 years which
may enable BDA to earn as per the prevailing market rates
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Bangalore Development Authority
[17]
7 Statutory amp legal framework
71 Legal amp regulatory framework
Development Control Regulations (DCR)
As per RMP ndash 2015 published by BDA the project site has been classified as ldquoCommercial Businessrdquo
As per the definitions of RMP-2015 Commercial Business Zone allows development of Commercial
and Corporate offices Retail Shopping Complexes Restaurants and Hotels Convention centres and
banquet halls financial institutions Cinema and multiplexes places of assembly exhibition centres
Entertainment and amusement centres and stores
Permissible land uses under Commercial (Business) Zone as per RMP-2015 of BDA
Main land use category C3
Other land uses permissible (as main land use) R I-3 T3 amp U4
If the road width is less than 120 m and plot area is less than 240 square metre then C2 I-2
R and U4 only are allowed
The plot size is 24000 square metre Presently it has 18m wide access road The applicable DCR for
the plot as per proposed road width is as follows
Table 7-1 Plot details of Indiranagar site
Sr No Particulars Description Unit
1 Land Use Commercial Business
2 Road Width 18 Metre
3 Permissible FAR 325
4Permissible ground
coverage50
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Bangalore Development Authority
[18]
8 Indicative environmental amp social impacts
81 Environmental impacts
The proposed development is in line with the layout of BDA Due to the reasonably large site area the
development will be on the higher side A set back of 50 is found to be acceptable for the site
however an Environmental Impact Assessment studies have to be undertaken for the sites Since
already a commercial complex is existent redevelopment of the complex would need demolition of
the existent structures Hence a suitable disposal of construction and debris has to be undertaken by
the developer Also a Green building can be developed to ensure minimal effect on nature
82 Social impactsDuring the construction period the existing establishments have to be shifted or compensated
temporarily Hence a clear resettlement plan has to be decided before the implementation of the
project It is envisaged that if due care is taken about the existing tenants the development would go
smoothly
83 Mitigation measures
It is necessary that the impacts are identified early and action plans are prepared for their mitigation in
advance For instance for environmental impacts the BDA may insist on the developer to use clean
and green building technologies
It is also necessary that the project development plan is also accompanied by a Relocation and
Rehabilitation plan which will layout detailed action points with the requisite intervening entity
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Bangalore Development Authority
[19]
9 Operating framework
91 Risks amp mitigation
The risk framework for this project has been outlined below
Table 9-1 Risk mitigation measures
Risk Category Risk implication Mitigation measure
Sponsor risk BDA scraps the project Termination payments in case of BDA scrapping the
project
Environment
risk
Adverse impact on
surrounding environment
Penalty clauses in case of default on
Concessionairersquos part
Environmental Impact Assessment to identify all
risks in advance
Political riskChange in government may
put project in jeopardy
Termination payments in case of project being
scrapped
Force
majeure riskProject is abandoned
Force majeure clauses in the concession
agreement
Operating riskThe operations of the
facility are stalled
Performance security clause in case of default on
Concessionairersquos part
Design risk Overdesign of the projectProject design to be finalized in mutual agreement
of concessionaire and BDA
Completion
risk
Completion of project is
delayed inconvenience to
citizens and tenants
Penalty clauses for time overrun in the concession
agreement
Cost overrun
risk
Project cost increases
beyond reasonable limits
Project cost increment ceiling to be specified in the
concession agreement Increase beyond this ceiling
to be borne by the developer No change in revenue
sharing
92 Indicative project structure
The best approach for such a large ticket project would be for the BDA to become a key actor in the
entire process of development The BDA may ask the private sector partner to form a Special
Purpose Company where the equity will be brought in by the private sector developer The designs
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Bangalore Development Authority
[20]
should be left to the developer and BDArsquos role would be in approving the same in accordance with the
Development Control Regulations
The SPC will develop and maintain Complex throughout the concession period The tenants would
pay the developer a sub-lease premium or lease rentals which will be escrowed in a separate accountand can be withdrawn based on the revenue sharing structure adopted
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Bangalore Development Authorit
10 Way ahead
101 Project develo
The key task for BDA is to ap
feasibility of the project Once t
the bid process
Figure 10-1 Project developm
The transaction advisor shall stralso prepare the relevant bid
management on behalf of BDA
102 Procurement
The foremost step for BDA is
feasibility The detailed financial
parameter Also an optimum str
bid documents would be prepar
process be conducted as a 2 sta
983105983152983152983151983145983150983156983149983141983150983156 983151983142 983156983154983137
983108983141983156983137983145983148983141983140 983142983141983137983155983145983138
983155983156983154983157983139983156983157983154983145983150983143
983120983154983141983152983137983154983137983156983145983151
983123983141983148983141983139
y
pment framework
oint a Transaction Advisor in order to conduc
e financial numbers are acceptable BDA BDA
nt framework
ucture the project upon completion of the feasibidocuments The transaction advisor shall un
nd will assist in appointment of the private secto
lan
to appoint a Transaction Advisor for the co
feasibility would determine the tentative revenue
cture would be arrived at Post the approval of
d for the selection of the developer It is recom
ge process involving Technical qualification and
983155983137983139983156983145983151983150 983137983140983158983145983155983151983154
983148983145983156983161 983155983156983157983140983145983141983155 983137983150983140 983152983154983151983146983141983139983156
983150 983151983142 983138983145983140 983140983151983139983157983149983141983150983156983155
983145983151983150 983151983142 983152983154983145983158983137983156983141 983155983141983139983156983151983154 983152983137983154983156983150983141983154
[21]
a detailed financial
should proceed with
ility studies and shallertake bid process
partner
nducting the project
for BDA and the bid
easibility Report the
mended that the Bid
inancial proposal
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B a n g a l o r e D e v e l o p m e n t A u t h o r i t y
B D A s h o u l d i n i t i a t e t h e p r o c e s s o f a p p o
i n t i n g a t r a n s a c t i o n a d v i s o r a t t h e
e a r l i e s t T h i s p r o c e s s c a n b e c o m p l e t e d i n 2 m o n t h s
O n c e t h e T A
i s i n p l a c e
t h e B D
A s h o u l d a l l o w
a t l e a s t 4 m o n t h s f o r t h e p r e p a r a t i o n o f f e a s i b i l i t y p r o j e c t s t r u c t u r i n g a n d b i d d o c u m e n
t s
O n c e t
h e b i d d o c u m e n t s a r e i n p l a c e t h
e B D A
s h o u l d i n i t i a t e t h e p r o c e s s
o f s e l e c t i n g t h e p r i v a t e s e c t o r p a
r t n e r w h i c h c a n b e c o m p l e t e d o v e r a 4 m o n t h
p e r i o d
T h e c u
r r e n t p r o c u r e m e n t p l a n i s s p r e a d
o v e r 1 1 m o n t h s w h i c h c a n b e s
h o r t e n e d d e p e n d i n g o n t h e m a n n e r i n w h i c h B D A
m a k e s d e c i s i o n
s r e l a t i n g t o
a p p o i n
t m e n t o f T A a n d p r i v a t e d e v e l o p e r
A c t i v i t y
M 1
M 2
M 3
M 4
M 5
M 6
M 7
M 8 M
9
M 1 0
M 1 1
M 1 2
A p p o i n t m e t o f t r a n s a c t i o n a d v i s o r
D e t a i l e d t e c h n o - e c o n o m i c f e a s i b i l i t y a n d
b i d d o c u m e n t p r e p a r a t i o n
B i d p r
o c e s s m a n a g e m e n t
S e l e c t i o n o f p r e f e r r e d b i d d e r a n d f o r m a t i o n o f S P C
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B a n g a l o r e D e v e l o p m e n t A u t h o r i t y
1 1
A n n e x u r e 1 ndash C a s h - f l o w
s t a t e m e n t
R e v e n u e H e a d
S u b H e a d R a t e
U n i t
3 1 - M a r - 1 4
3 1 - M
a r - 1 7
3 1 - M a r - 2 2
3 1 - M a r - 2 7
3 1 - M a r - 3 2
3 1 - M a r - 3 7
3 1 - M a r - 4 2
3 1 - M a r - 4 7
3 1 - M
a r - 5 2
3 1 - M a r - 5 7
3 1 - M a r - 6 2
C o m m e
r c i a l S p a c e
O c c u p a
n c y
P e r c e n t a g
0
9 0
9 5
9 5
9 5
9 5
9 5
9 5
9 5
9 5
9 5
C o m m e
r c i a l s p a c e l e a s e d o u t
s q f t
-
7 2 0 6
9 0
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6
0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
D e p o s i t f o r L e a s e
( N o o f m o n t h s r e n t )
1 2
A v e r a g e
L e a s e R e n t a l s
7 0
R s p s f p e r m o n t h
E s c a l a t i o n
1 0
M a i n t e n
a n c e c h a r g e s
2 2 5
R s p s f p e r m o n t h
R e v e n u e f r o m
L e a s e R e n t a l
R s
L a k h s
-
8 8
6 3
1 5 0
6 8
2 4 2
6 6
3 9 0
8 1
6 2 9
4 1
1 0 1 3
6 7
1 6 3 2
5 3
2 6
2 9
2 0
4 2 3 4
3 5
6 8 1 9
4 7
R e v e n u e f r o m
M a i n t e n a n c e c h a r g e s
-
2 8 5
4 8 4
7 8 0
1 2
5 6
2 0
2 3
3 2
5 8
5 2
4 7
8 4
5 1
1 3 6
1 0
2 1 9
2 0
T o t a l R
e v e n u e
-
9 1 4 8
1 5 5 5 2
2 5 0 4 6
4 0 3 3 8
6 4 9 6 4
1 0 4 6 2 5
1 6 8 5 0 0
2 7
1 3 7 1
4 3 7 0 4 6
7 0 3 8 6 7
R e v e n
u e H e a d
S u b H e a d R a t e
U n i t
3 1 - M a r - 6
7
3 1 - M a r - 7 2
3 1 - M a r - 7 8
3 1 - M a r - 7 9
C o m m e r c i a l S p a c e
O c c u p a n c y
P e r c e n t a g
9 5
9 5
9 5
9 5
C o m m e r c i a l s p a c e l e a s e d o u t
s q f t
7 6 0 7 2
8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
D e p o s i t f o r L e a s e
( N o o f m o n t h s r e n t )
1 2
A v e r a g
e L e a s e R e n t a l s
7 0 R s p s f p e r m o n t h
E s c a l a
t i o n
1 0
M a i n t e
n a n c e c h a r g e s
2 2
5 R s p s f p e r m o n t h
R e v e n u
e f r o m
L e a s e R e n t a l
R s
L a k h s
1 0
9 8 2 8 2
1 7
6 8 7
9 4
3 1
3 3 5
2 7
3 4
4 6 8
8 0
R e v e n u
e f r o m
M a i n t e n a n c e c h a r g e s
3 5 3 0 2
5 6 8
5 4
1 0 0 7
2 1
1 1 0 7
9 3
T o t a l R e v e n u e
1 1 3 3 5 8 4
1 8 2 5 6 4 8
3 2 3 4 2 4 8
3 5 5 7 6 7 2
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[x]
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[y]
Disclaimer
CRISIL Risk and Infrastructure Solutions Limited (CRIS) has taken due care and caution in preparation of this Report for
Bangalore Development Authority which is under the purview of the Urban Development Department Government of
Karnataka This Report is based on the information documents provided by the Company andor information available publicly
andor obtained by CRIS from sources which it considers reliable CRIS does not guarantee the accuracy adequacy or
completeness of the information documents Report and is not responsible for any errors or omissions or for the results
obtained from the use of the same The Report and results stated therein are subject to change CRIS especially states that it
has no financial liability whatsoever to the Company users of this Report This Report is strictly confidential and should not be
reproduced or redistributed or communicated directly or indirectly in any form or published or copied in whole or in part
especially outside India for any purpose
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Visit us atwwwcrisilcom
ai
1 amp 2
About CRISIL Infrastructu
CRISIL Infrastructure Advisory
CRISIL Risk and Infrastructure
Limited a 100 subsidiary of
Indiarsquos leading Ratings Resear
Policy Advisory Company
CRISIL Infrastructure Advisory
premier advisor focusing on po
well as commercial and contra
the areas of transport energyinfrastructure We also provide
international firms planning inv
India Over a period of time C
Infrastructure Advisory has buil
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sector clients We have extend
operations beyond India and ar
other emerging markets in Afri
and South Asia
re Advisory
is a division of
Solutions
RISIL Limited ndash
ch Risk and
is Indiarsquos
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tual issues in
nd urbansupport to
stments in
ISIL
t a unique
ins and is
ltant by
cies and private-
ed our
e present in
a Middle East
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Bangalore Development Authority
[11]
undertake a detailed demand assessment financial feasibility project structuring and management of
the bid process
The concept
Keep in mind the PCNTDArsquos vision CRIS designed integrated township such that it compriseshousing untis for the poor affordable housing units for the general public a primary health care
centre a hospital and a school
As per the structure the Developer shall construct 5040 housing units under the Basic Services for
Urban Poor (BSUP) scheme of JNNURM PCNTDA shall transfer the amount of grant sanctioned for
developing these units under the JNNURM scheme to the developer The remaining project cost of
the BUSP units was to be financed by the developer
In addition to this the Developer shall also construct affordable housing units as per pre-specified
specifications and hand over to PCNTDA free of cost The developer shall also construction the
physical and social infrastructure for the integrated township thereby ensuring good road adequate
water supply an efficient sewerage system as well as schools and hospitals The project shall bedeveloped in a manner such that it has minimum possible impact on the surrounding environment and
is in harmony with nature To this end the developer shall undertake eco-friendly initiatives including
rain water harvesting use of solar power environment-friendly materials and vermin-composting
The project
The developer has to complete the BSUP housing units within 2 years and hand over to the PCNTDA
For the remaining portion of the land PCNTDA shall execute a lease deed for 99 years with the
developer The lease rights shall be granted to the developer in phases upon completion of
milestones as defined in the project agreement The main scope of work for the developer shall
include
Master planning for the entire 53 hectares of land and construction of common physical and
social infrastructure for the entire area
Development construction and marketing of 795 lakhs square meters of integrated real
estate space
Construction and handing over of 5040 housing units under the BSUP scheme of JNNURM
on a separate layout carved out of the said land PCNTDA will provide the developer the grant
sanctioned by the Government of India for these housing units
Successful selection of private developer
With the objective of undertaking this project on a PPP basis in a transparent and objective manner
PCNTDA launched a three-cover Request for Proposal in June 2009 The bidding parameter was theconstructed ldquoCarpet Areardquo in ldquosquare metersrdquo of affordable housing units that the bidder shall
construct and hand over free of cost to PCNTDA
The tender received good response from four interested bidders Of the four bidders two bidders
were adjudged technically and financially capable and short-listed for the final stage The bidder with
the highest construction carpet area offered to PCNTDA was selected The successful bidder quoted
a carpet area of 130599 square meters of affordable housing units
Thereby the PCNTDA derived a value of 7369 housing units (including 5040 BSUP units) a school
and a hospital for the BSUP units a school and hospital for the general public and development of
public amenities
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Bangalore Development Authority
[12]
Value addition to PCNTDA
In commercial terms PCNTDA saved (i) Rs 190 crores as the gap amount required to fund the BSUP
scheme (ii) Rs 210 crores of construction cost of affordable housing units and (iii) Rs 100 crores on
the development of physical and social infrastructure In addition to this PCNTDA shall receive anupfront payment of Rs 50 crores from the successful bidder The project structure also protects
PCNTDA from cost escalation risks valuation risks and engineering risks
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Bangalore Development Authorit
5 Market asse
51 Bangalore gro
The growth of Bangalore has be
from the growth in population in
to the economic opportunities it
Bangalore an obvious choice for
Bangalore has grown at averag
decades It is projected that B
explosive growth has meant th
pressure
Figure 5-1 Population growth
Source City Development Plan Ba
The city leads the country in
available However Bengaluru a
of projects under development a
983089983086983094983091 983089983086983096983097 983090983086983092
983088
983089983088
983090983088
983091983088
983092983088
983093983088
983094983088
983095983088
983096983088
983097983088
983089983097983088983089 983089983097983089983089 983089983097983090983089
983120 983151 983152 983157 983148 983137 983156 983145 983151 983150 983145 983150 983116
983137 983147 983144 983155
y
sment
th overview
en unprecedented in the past couple of decades
the last century Bangalore continues to attract t
offers This is also supported by a salubrious
not only businesses but also for people
compounded annual growth rate (CAGR) of 3
ngalorersquos population will cross the 10 million
at the infrastructure in Bangalore has been p
in Bangalore between 1901 and 2011
galore Development Authority and Census of India
ffice space with 738 million square feet of
lso has 22 per cent of the available space vacan
nd reduced demand
983091983086983089 983092983086983089983089983095983086983096983094
983089983090983086983088983094
983089983094983086983094983092
983090983097983086983090983090
983092
983089983097983091983089 983089983097983092983089 983089983097983093983089 983089983097983094983089 983089983097983095983089 983089983097983096983089 983089983097
[13]
This fact is laid bare
rongs of people due
eather which makes
58 in the last three
mark by 2021 This
t under tremendous
commercial capacity
with a large number
983086983091
983093983094983086983096983094
983096983092
983097983089 983090983088983088983089 983090983088983089983089
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Bangalore Development Authority
[14]
52 Demand projections
Bangalore is the largest commercial market and third largest residential market in India The city has
typically been preferred by home buyers because of its favorable socio-economic conditions and a
salubrious climate In recent years Bangalore has attracted a large influx of population engaged inthe thriving IT sector City residential demand is more end-user driven with moderate price
appreciation The average residential real estate price in the city is 20-25 lesser than in Delhi and
Mumbai In the recent National Housing Bank Residex the index indicating property prices across key
cities in India Bangalore witnessed a mere 1 YoY fall in residential prices in 2011-12 Mumbai saw
an 116 YoY jump in home prices while Delhi witnessed 358 YoY increase during 2011-12 The
city witnessed tremendous growth in terms of population and the number of companies setting up
offices there Thus the ongoing projects such as Bengaluru metro rail project various flyovers and
the under-pass construction activities in Outer Ring Road (ORR) CNR and BHEL circles would ease
the congestion and provide better connectivity for all commuters This will boost real estate demand in
and around Bangalore city
In 2011-12 Bangalorersquos commercial market exhibited resiliency with comparatively high demand
levels despite the discomfort in the market on account of global uncertainty Though commercial
property demand in Bangalore is largely dependent on ITITES sectors the share of manufacturing is
increasing at a faster pace and thereby giving further boost to office space demand According to real
estate consultancy firm Knight Frank the manufacturing sector witnessed a quantum leap as its share
of absorption increased from 3 in 4QCY10 to 23 in 4QCY11 The absorption of commercial space
has gone up from 5mn sq ftquarter in CY09 to 7mn sq ftquarter in CY11 thanks to sustained
demand for Bangalore commercial space which witnessed 43 CAGR in absorption level over CY09-
11 Subdued supply during the first two quarters of 2011 coupled with high absorption level has
substantially lowered the vacancy level in the city (bringing it down from 17 in CY10 to 12 in
CY11) With the expansion of existing operations in the IT sector and the entry of newer sectors dueto renewed optimism in the market we expect the level of absorption of office space to remain stable
Revised Master Plan-2015 for the BMA has been published This document gives the likely growth to
take place in various areas of the BMA The population of the BMA is expected to grow from 61 lakh
in 2001 to 122 lakh in 2025
The proposed growth rate and the ever changing urban scenario is bound to increase the commercial
space demand in the region The site at Indiranagar is situated at a junction and has two road facing
sides which makes it very attractive for commercial development The site is also huge in size and
can easily accommodate a mall
Hence in view of the above it can be safely recommended that the site would generate huge interest
within the developers
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Bangalore Development Authority
[15]
6 Project financials
The project costs have been largely derived from the costs indicated by the Bangalore Development
Authority (BDA)
61 Cost estimation
The estimated cost of development of the project is Rs 23931 lakhs The costs have been outlined
below
Table 6-1 Project Cost of the proposed development
Particular Amount inRs Lakhs
Construction Cost 19967
Land Development 793
Other Infrastructure 50
Total Hard Costs 20810
Contingencies 3121
Total Project Development Cost 23931
Apart from the above mentioned project development cost the Concessionaire would incur the
development premium and Interest during construction (IDC) cost
Particulars 25 years 33 Years 66 years
Upfront Premium (Rs Lakh) 965000 1230000 600000
IDC Cost (Rs Lakh) 315600 361500 259100
Revenue Share every year 15 15 15
Total Project Cost (Rs Lakhs) 36737 39846 33022
62 Revenue stream
The Revenues to the Developer would accrue from the revenue earned from the lease rentals and the
maintenance charges which the developer earns from the tenants The total revenue from both the
heads has been arrived at Rs 6720 Lakhs for the base year It has been assumed that the
occupancy of the commercial complex 80 in the base year and stabilizes to a maximum of 95towards the end of the concession period The average lease rentals have been assumed at Rs 70
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Bangalore Development Authority
[16]
per square feet and the maintenance charges have been assumed at Rs 225 per square feet Both
the revenues are escalating at the rate of 10 per annum The income statement for the developer
has been provided in Annexure 1
63 Viability assessment
The viability assessment has been carried out over two concession period ie 25 33 and 66 years
The debt to equity ratio has been assumed to be 121
The project level internal rate of return (IRR) IRR of equity and the net present value of the equity
have been worked out
Table 6-2 Viability assessment for BDA complex at Indiranagar
Concession Period Project IRR Equity IRR NPV of Equity
Upfront Premium
(Rs in Lakhs)
25 years 1777 2007 96 9650
33 years 1818 2006 108 12300
66 years 2101 2333 5285 6000
It is evident that the project is viable for the developer for all the 3 concession periods In case of the
25 year concession period it is estimated that the developer would pay BDA an estimated upfront
premium of Rs 9650 lakhs Similarly the developer would pay BDA an amount of Rs 12300 lakhsand Rs 6000 lakhs for the concession periods of 33 years and 66 years respectively
64 Ranking of options based on commercial viability
Having assessed the project for two concession periods of 25 33 and 66 years we are of the view
that the 25 year concession option will be more suitable since it allows the developer to make
reasonable returns on the projects and his own investments along with a sizeable upfront premium for
BDA BDA would be in a position to renew the contract or retender the project after 25 years which
may enable BDA to earn as per the prevailing market rates
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Bangalore Development Authority
[17]
7 Statutory amp legal framework
71 Legal amp regulatory framework
Development Control Regulations (DCR)
As per RMP ndash 2015 published by BDA the project site has been classified as ldquoCommercial Businessrdquo
As per the definitions of RMP-2015 Commercial Business Zone allows development of Commercial
and Corporate offices Retail Shopping Complexes Restaurants and Hotels Convention centres and
banquet halls financial institutions Cinema and multiplexes places of assembly exhibition centres
Entertainment and amusement centres and stores
Permissible land uses under Commercial (Business) Zone as per RMP-2015 of BDA
Main land use category C3
Other land uses permissible (as main land use) R I-3 T3 amp U4
If the road width is less than 120 m and plot area is less than 240 square metre then C2 I-2
R and U4 only are allowed
The plot size is 24000 square metre Presently it has 18m wide access road The applicable DCR for
the plot as per proposed road width is as follows
Table 7-1 Plot details of Indiranagar site
Sr No Particulars Description Unit
1 Land Use Commercial Business
2 Road Width 18 Metre
3 Permissible FAR 325
4Permissible ground
coverage50
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Bangalore Development Authority
[18]
8 Indicative environmental amp social impacts
81 Environmental impacts
The proposed development is in line with the layout of BDA Due to the reasonably large site area the
development will be on the higher side A set back of 50 is found to be acceptable for the site
however an Environmental Impact Assessment studies have to be undertaken for the sites Since
already a commercial complex is existent redevelopment of the complex would need demolition of
the existent structures Hence a suitable disposal of construction and debris has to be undertaken by
the developer Also a Green building can be developed to ensure minimal effect on nature
82 Social impactsDuring the construction period the existing establishments have to be shifted or compensated
temporarily Hence a clear resettlement plan has to be decided before the implementation of the
project It is envisaged that if due care is taken about the existing tenants the development would go
smoothly
83 Mitigation measures
It is necessary that the impacts are identified early and action plans are prepared for their mitigation in
advance For instance for environmental impacts the BDA may insist on the developer to use clean
and green building technologies
It is also necessary that the project development plan is also accompanied by a Relocation and
Rehabilitation plan which will layout detailed action points with the requisite intervening entity
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Bangalore Development Authority
[19]
9 Operating framework
91 Risks amp mitigation
The risk framework for this project has been outlined below
Table 9-1 Risk mitigation measures
Risk Category Risk implication Mitigation measure
Sponsor risk BDA scraps the project Termination payments in case of BDA scrapping the
project
Environment
risk
Adverse impact on
surrounding environment
Penalty clauses in case of default on
Concessionairersquos part
Environmental Impact Assessment to identify all
risks in advance
Political riskChange in government may
put project in jeopardy
Termination payments in case of project being
scrapped
Force
majeure riskProject is abandoned
Force majeure clauses in the concession
agreement
Operating riskThe operations of the
facility are stalled
Performance security clause in case of default on
Concessionairersquos part
Design risk Overdesign of the projectProject design to be finalized in mutual agreement
of concessionaire and BDA
Completion
risk
Completion of project is
delayed inconvenience to
citizens and tenants
Penalty clauses for time overrun in the concession
agreement
Cost overrun
risk
Project cost increases
beyond reasonable limits
Project cost increment ceiling to be specified in the
concession agreement Increase beyond this ceiling
to be borne by the developer No change in revenue
sharing
92 Indicative project structure
The best approach for such a large ticket project would be for the BDA to become a key actor in the
entire process of development The BDA may ask the private sector partner to form a Special
Purpose Company where the equity will be brought in by the private sector developer The designs
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Bangalore Development Authority
[20]
should be left to the developer and BDArsquos role would be in approving the same in accordance with the
Development Control Regulations
The SPC will develop and maintain Complex throughout the concession period The tenants would
pay the developer a sub-lease premium or lease rentals which will be escrowed in a separate accountand can be withdrawn based on the revenue sharing structure adopted
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Bangalore Development Authorit
10 Way ahead
101 Project develo
The key task for BDA is to ap
feasibility of the project Once t
the bid process
Figure 10-1 Project developm
The transaction advisor shall stralso prepare the relevant bid
management on behalf of BDA
102 Procurement
The foremost step for BDA is
feasibility The detailed financial
parameter Also an optimum str
bid documents would be prepar
process be conducted as a 2 sta
983105983152983152983151983145983150983156983149983141983150983156 983151983142 983156983154983137
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983155983156983154983157983139983156983157983154983145983150983143
983120983154983141983152983137983154983137983156983145983151
983123983141983148983141983139
y
pment framework
oint a Transaction Advisor in order to conduc
e financial numbers are acceptable BDA BDA
nt framework
ucture the project upon completion of the feasibidocuments The transaction advisor shall un
nd will assist in appointment of the private secto
lan
to appoint a Transaction Advisor for the co
feasibility would determine the tentative revenue
cture would be arrived at Post the approval of
d for the selection of the developer It is recom
ge process involving Technical qualification and
983155983137983139983156983145983151983150 983137983140983158983145983155983151983154
983148983145983156983161 983155983156983157983140983145983141983155 983137983150983140 983152983154983151983146983141983139983156
983150 983151983142 983138983145983140 983140983151983139983157983149983141983150983156983155
983145983151983150 983151983142 983152983154983145983158983137983156983141 983155983141983139983156983151983154 983152983137983154983156983150983141983154
[21]
a detailed financial
should proceed with
ility studies and shallertake bid process
partner
nducting the project
for BDA and the bid
easibility Report the
mended that the Bid
inancial proposal
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B a n g a l o r e D e v e l o p m e n t A u t h o r i t y
B D A s h o u l d i n i t i a t e t h e p r o c e s s o f a p p o
i n t i n g a t r a n s a c t i o n a d v i s o r a t t h e
e a r l i e s t T h i s p r o c e s s c a n b e c o m p l e t e d i n 2 m o n t h s
O n c e t h e T A
i s i n p l a c e
t h e B D
A s h o u l d a l l o w
a t l e a s t 4 m o n t h s f o r t h e p r e p a r a t i o n o f f e a s i b i l i t y p r o j e c t s t r u c t u r i n g a n d b i d d o c u m e n
t s
O n c e t
h e b i d d o c u m e n t s a r e i n p l a c e t h
e B D A
s h o u l d i n i t i a t e t h e p r o c e s s
o f s e l e c t i n g t h e p r i v a t e s e c t o r p a
r t n e r w h i c h c a n b e c o m p l e t e d o v e r a 4 m o n t h
p e r i o d
T h e c u
r r e n t p r o c u r e m e n t p l a n i s s p r e a d
o v e r 1 1 m o n t h s w h i c h c a n b e s
h o r t e n e d d e p e n d i n g o n t h e m a n n e r i n w h i c h B D A
m a k e s d e c i s i o n
s r e l a t i n g t o
a p p o i n
t m e n t o f T A a n d p r i v a t e d e v e l o p e r
A c t i v i t y
M 1
M 2
M 3
M 4
M 5
M 6
M 7
M 8 M
9
M 1 0
M 1 1
M 1 2
A p p o i n t m e t o f t r a n s a c t i o n a d v i s o r
D e t a i l e d t e c h n o - e c o n o m i c f e a s i b i l i t y a n d
b i d d o c u m e n t p r e p a r a t i o n
B i d p r
o c e s s m a n a g e m e n t
S e l e c t i o n o f p r e f e r r e d b i d d e r a n d f o r m a t i o n o f S P C
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B a n g a l o r e D e v e l o p m e n t A u t h o r i t y
1 1
A n n e x u r e 1 ndash C a s h - f l o w
s t a t e m e n t
R e v e n u e H e a d
S u b H e a d R a t e
U n i t
3 1 - M a r - 1 4
3 1 - M
a r - 1 7
3 1 - M a r - 2 2
3 1 - M a r - 2 7
3 1 - M a r - 3 2
3 1 - M a r - 3 7
3 1 - M a r - 4 2
3 1 - M a r - 4 7
3 1 - M
a r - 5 2
3 1 - M a r - 5 7
3 1 - M a r - 6 2
C o m m e
r c i a l S p a c e
O c c u p a
n c y
P e r c e n t a g
0
9 0
9 5
9 5
9 5
9 5
9 5
9 5
9 5
9 5
9 5
C o m m e
r c i a l s p a c e l e a s e d o u t
s q f t
-
7 2 0 6
9 0
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6
0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
D e p o s i t f o r L e a s e
( N o o f m o n t h s r e n t )
1 2
A v e r a g e
L e a s e R e n t a l s
7 0
R s p s f p e r m o n t h
E s c a l a t i o n
1 0
M a i n t e n
a n c e c h a r g e s
2 2 5
R s p s f p e r m o n t h
R e v e n u e f r o m
L e a s e R e n t a l
R s
L a k h s
-
8 8
6 3
1 5 0
6 8
2 4 2
6 6
3 9 0
8 1
6 2 9
4 1
1 0 1 3
6 7
1 6 3 2
5 3
2 6
2 9
2 0
4 2 3 4
3 5
6 8 1 9
4 7
R e v e n u e f r o m
M a i n t e n a n c e c h a r g e s
-
2 8 5
4 8 4
7 8 0
1 2
5 6
2 0
2 3
3 2
5 8
5 2
4 7
8 4
5 1
1 3 6
1 0
2 1 9
2 0
T o t a l R
e v e n u e
-
9 1 4 8
1 5 5 5 2
2 5 0 4 6
4 0 3 3 8
6 4 9 6 4
1 0 4 6 2 5
1 6 8 5 0 0
2 7
1 3 7 1
4 3 7 0 4 6
7 0 3 8 6 7
R e v e n
u e H e a d
S u b H e a d R a t e
U n i t
3 1 - M a r - 6
7
3 1 - M a r - 7 2
3 1 - M a r - 7 8
3 1 - M a r - 7 9
C o m m e r c i a l S p a c e
O c c u p a n c y
P e r c e n t a g
9 5
9 5
9 5
9 5
C o m m e r c i a l s p a c e l e a s e d o u t
s q f t
7 6 0 7 2
8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
D e p o s i t f o r L e a s e
( N o o f m o n t h s r e n t )
1 2
A v e r a g
e L e a s e R e n t a l s
7 0 R s p s f p e r m o n t h
E s c a l a
t i o n
1 0
M a i n t e
n a n c e c h a r g e s
2 2
5 R s p s f p e r m o n t h
R e v e n u
e f r o m
L e a s e R e n t a l
R s
L a k h s
1 0
9 8 2 8 2
1 7
6 8 7
9 4
3 1
3 3 5
2 7
3 4
4 6 8
8 0
R e v e n u
e f r o m
M a i n t e n a n c e c h a r g e s
3 5 3 0 2
5 6 8
5 4
1 0 0 7
2 1
1 1 0 7
9 3
T o t a l R e v e n u e
1 1 3 3 5 8 4
1 8 2 5 6 4 8
3 2 3 4 2 4 8
3 5 5 7 6 7 2
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[x]
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[y]
Disclaimer
CRISIL Risk and Infrastructure Solutions Limited (CRIS) has taken due care and caution in preparation of this Report for
Bangalore Development Authority which is under the purview of the Urban Development Department Government of
Karnataka This Report is based on the information documents provided by the Company andor information available publicly
andor obtained by CRIS from sources which it considers reliable CRIS does not guarantee the accuracy adequacy or
completeness of the information documents Report and is not responsible for any errors or omissions or for the results
obtained from the use of the same The Report and results stated therein are subject to change CRIS especially states that it
has no financial liability whatsoever to the Company users of this Report This Report is strictly confidential and should not be
reproduced or redistributed or communicated directly or indirectly in any form or published or copied in whole or in part
especially outside India for any purpose
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ai
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About CRISIL Infrastructu
CRISIL Infrastructure Advisory
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Limited a 100 subsidiary of
Indiarsquos leading Ratings Resear
Policy Advisory Company
CRISIL Infrastructure Advisory
premier advisor focusing on po
well as commercial and contra
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international firms planning inv
India Over a period of time C
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ltant by
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e present in
a Middle East
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Bangalore Development Authority
[12]
Value addition to PCNTDA
In commercial terms PCNTDA saved (i) Rs 190 crores as the gap amount required to fund the BSUP
scheme (ii) Rs 210 crores of construction cost of affordable housing units and (iii) Rs 100 crores on
the development of physical and social infrastructure In addition to this PCNTDA shall receive anupfront payment of Rs 50 crores from the successful bidder The project structure also protects
PCNTDA from cost escalation risks valuation risks and engineering risks
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Bangalore Development Authorit
5 Market asse
51 Bangalore gro
The growth of Bangalore has be
from the growth in population in
to the economic opportunities it
Bangalore an obvious choice for
Bangalore has grown at averag
decades It is projected that B
explosive growth has meant th
pressure
Figure 5-1 Population growth
Source City Development Plan Ba
The city leads the country in
available However Bengaluru a
of projects under development a
983089983086983094983091 983089983086983096983097 983090983086983092
983088
983089983088
983090983088
983091983088
983092983088
983093983088
983094983088
983095983088
983096983088
983097983088
983089983097983088983089 983089983097983089983089 983089983097983090983089
983120 983151 983152 983157 983148 983137 983156 983145 983151 983150 983145 983150 983116
983137 983147 983144 983155
y
sment
th overview
en unprecedented in the past couple of decades
the last century Bangalore continues to attract t
offers This is also supported by a salubrious
not only businesses but also for people
compounded annual growth rate (CAGR) of 3
ngalorersquos population will cross the 10 million
at the infrastructure in Bangalore has been p
in Bangalore between 1901 and 2011
galore Development Authority and Census of India
ffice space with 738 million square feet of
lso has 22 per cent of the available space vacan
nd reduced demand
983091983086983089 983092983086983089983089983095983086983096983094
983089983090983086983088983094
983089983094983086983094983092
983090983097983086983090983090
983092
983089983097983091983089 983089983097983092983089 983089983097983093983089 983089983097983094983089 983089983097983095983089 983089983097983096983089 983089983097
[13]
This fact is laid bare
rongs of people due
eather which makes
58 in the last three
mark by 2021 This
t under tremendous
commercial capacity
with a large number
983086983091
983093983094983086983096983094
983096983092
983097983089 983090983088983088983089 983090983088983089983089
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
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Bangalore Development Authority
[14]
52 Demand projections
Bangalore is the largest commercial market and third largest residential market in India The city has
typically been preferred by home buyers because of its favorable socio-economic conditions and a
salubrious climate In recent years Bangalore has attracted a large influx of population engaged inthe thriving IT sector City residential demand is more end-user driven with moderate price
appreciation The average residential real estate price in the city is 20-25 lesser than in Delhi and
Mumbai In the recent National Housing Bank Residex the index indicating property prices across key
cities in India Bangalore witnessed a mere 1 YoY fall in residential prices in 2011-12 Mumbai saw
an 116 YoY jump in home prices while Delhi witnessed 358 YoY increase during 2011-12 The
city witnessed tremendous growth in terms of population and the number of companies setting up
offices there Thus the ongoing projects such as Bengaluru metro rail project various flyovers and
the under-pass construction activities in Outer Ring Road (ORR) CNR and BHEL circles would ease
the congestion and provide better connectivity for all commuters This will boost real estate demand in
and around Bangalore city
In 2011-12 Bangalorersquos commercial market exhibited resiliency with comparatively high demand
levels despite the discomfort in the market on account of global uncertainty Though commercial
property demand in Bangalore is largely dependent on ITITES sectors the share of manufacturing is
increasing at a faster pace and thereby giving further boost to office space demand According to real
estate consultancy firm Knight Frank the manufacturing sector witnessed a quantum leap as its share
of absorption increased from 3 in 4QCY10 to 23 in 4QCY11 The absorption of commercial space
has gone up from 5mn sq ftquarter in CY09 to 7mn sq ftquarter in CY11 thanks to sustained
demand for Bangalore commercial space which witnessed 43 CAGR in absorption level over CY09-
11 Subdued supply during the first two quarters of 2011 coupled with high absorption level has
substantially lowered the vacancy level in the city (bringing it down from 17 in CY10 to 12 in
CY11) With the expansion of existing operations in the IT sector and the entry of newer sectors dueto renewed optimism in the market we expect the level of absorption of office space to remain stable
Revised Master Plan-2015 for the BMA has been published This document gives the likely growth to
take place in various areas of the BMA The population of the BMA is expected to grow from 61 lakh
in 2001 to 122 lakh in 2025
The proposed growth rate and the ever changing urban scenario is bound to increase the commercial
space demand in the region The site at Indiranagar is situated at a junction and has two road facing
sides which makes it very attractive for commercial development The site is also huge in size and
can easily accommodate a mall
Hence in view of the above it can be safely recommended that the site would generate huge interest
within the developers
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Bangalore Development Authority
[15]
6 Project financials
The project costs have been largely derived from the costs indicated by the Bangalore Development
Authority (BDA)
61 Cost estimation
The estimated cost of development of the project is Rs 23931 lakhs The costs have been outlined
below
Table 6-1 Project Cost of the proposed development
Particular Amount inRs Lakhs
Construction Cost 19967
Land Development 793
Other Infrastructure 50
Total Hard Costs 20810
Contingencies 3121
Total Project Development Cost 23931
Apart from the above mentioned project development cost the Concessionaire would incur the
development premium and Interest during construction (IDC) cost
Particulars 25 years 33 Years 66 years
Upfront Premium (Rs Lakh) 965000 1230000 600000
IDC Cost (Rs Lakh) 315600 361500 259100
Revenue Share every year 15 15 15
Total Project Cost (Rs Lakhs) 36737 39846 33022
62 Revenue stream
The Revenues to the Developer would accrue from the revenue earned from the lease rentals and the
maintenance charges which the developer earns from the tenants The total revenue from both the
heads has been arrived at Rs 6720 Lakhs for the base year It has been assumed that the
occupancy of the commercial complex 80 in the base year and stabilizes to a maximum of 95towards the end of the concession period The average lease rentals have been assumed at Rs 70
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Bangalore Development Authority
[16]
per square feet and the maintenance charges have been assumed at Rs 225 per square feet Both
the revenues are escalating at the rate of 10 per annum The income statement for the developer
has been provided in Annexure 1
63 Viability assessment
The viability assessment has been carried out over two concession period ie 25 33 and 66 years
The debt to equity ratio has been assumed to be 121
The project level internal rate of return (IRR) IRR of equity and the net present value of the equity
have been worked out
Table 6-2 Viability assessment for BDA complex at Indiranagar
Concession Period Project IRR Equity IRR NPV of Equity
Upfront Premium
(Rs in Lakhs)
25 years 1777 2007 96 9650
33 years 1818 2006 108 12300
66 years 2101 2333 5285 6000
It is evident that the project is viable for the developer for all the 3 concession periods In case of the
25 year concession period it is estimated that the developer would pay BDA an estimated upfront
premium of Rs 9650 lakhs Similarly the developer would pay BDA an amount of Rs 12300 lakhsand Rs 6000 lakhs for the concession periods of 33 years and 66 years respectively
64 Ranking of options based on commercial viability
Having assessed the project for two concession periods of 25 33 and 66 years we are of the view
that the 25 year concession option will be more suitable since it allows the developer to make
reasonable returns on the projects and his own investments along with a sizeable upfront premium for
BDA BDA would be in a position to renew the contract or retender the project after 25 years which
may enable BDA to earn as per the prevailing market rates
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Bangalore Development Authority
[17]
7 Statutory amp legal framework
71 Legal amp regulatory framework
Development Control Regulations (DCR)
As per RMP ndash 2015 published by BDA the project site has been classified as ldquoCommercial Businessrdquo
As per the definitions of RMP-2015 Commercial Business Zone allows development of Commercial
and Corporate offices Retail Shopping Complexes Restaurants and Hotels Convention centres and
banquet halls financial institutions Cinema and multiplexes places of assembly exhibition centres
Entertainment and amusement centres and stores
Permissible land uses under Commercial (Business) Zone as per RMP-2015 of BDA
Main land use category C3
Other land uses permissible (as main land use) R I-3 T3 amp U4
If the road width is less than 120 m and plot area is less than 240 square metre then C2 I-2
R and U4 only are allowed
The plot size is 24000 square metre Presently it has 18m wide access road The applicable DCR for
the plot as per proposed road width is as follows
Table 7-1 Plot details of Indiranagar site
Sr No Particulars Description Unit
1 Land Use Commercial Business
2 Road Width 18 Metre
3 Permissible FAR 325
4Permissible ground
coverage50
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Bangalore Development Authority
[18]
8 Indicative environmental amp social impacts
81 Environmental impacts
The proposed development is in line with the layout of BDA Due to the reasonably large site area the
development will be on the higher side A set back of 50 is found to be acceptable for the site
however an Environmental Impact Assessment studies have to be undertaken for the sites Since
already a commercial complex is existent redevelopment of the complex would need demolition of
the existent structures Hence a suitable disposal of construction and debris has to be undertaken by
the developer Also a Green building can be developed to ensure minimal effect on nature
82 Social impactsDuring the construction period the existing establishments have to be shifted or compensated
temporarily Hence a clear resettlement plan has to be decided before the implementation of the
project It is envisaged that if due care is taken about the existing tenants the development would go
smoothly
83 Mitigation measures
It is necessary that the impacts are identified early and action plans are prepared for their mitigation in
advance For instance for environmental impacts the BDA may insist on the developer to use clean
and green building technologies
It is also necessary that the project development plan is also accompanied by a Relocation and
Rehabilitation plan which will layout detailed action points with the requisite intervening entity
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Bangalore Development Authority
[19]
9 Operating framework
91 Risks amp mitigation
The risk framework for this project has been outlined below
Table 9-1 Risk mitigation measures
Risk Category Risk implication Mitigation measure
Sponsor risk BDA scraps the project Termination payments in case of BDA scrapping the
project
Environment
risk
Adverse impact on
surrounding environment
Penalty clauses in case of default on
Concessionairersquos part
Environmental Impact Assessment to identify all
risks in advance
Political riskChange in government may
put project in jeopardy
Termination payments in case of project being
scrapped
Force
majeure riskProject is abandoned
Force majeure clauses in the concession
agreement
Operating riskThe operations of the
facility are stalled
Performance security clause in case of default on
Concessionairersquos part
Design risk Overdesign of the projectProject design to be finalized in mutual agreement
of concessionaire and BDA
Completion
risk
Completion of project is
delayed inconvenience to
citizens and tenants
Penalty clauses for time overrun in the concession
agreement
Cost overrun
risk
Project cost increases
beyond reasonable limits
Project cost increment ceiling to be specified in the
concession agreement Increase beyond this ceiling
to be borne by the developer No change in revenue
sharing
92 Indicative project structure
The best approach for such a large ticket project would be for the BDA to become a key actor in the
entire process of development The BDA may ask the private sector partner to form a Special
Purpose Company where the equity will be brought in by the private sector developer The designs
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Bangalore Development Authority
[20]
should be left to the developer and BDArsquos role would be in approving the same in accordance with the
Development Control Regulations
The SPC will develop and maintain Complex throughout the concession period The tenants would
pay the developer a sub-lease premium or lease rentals which will be escrowed in a separate accountand can be withdrawn based on the revenue sharing structure adopted
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Bangalore Development Authorit
10 Way ahead
101 Project develo
The key task for BDA is to ap
feasibility of the project Once t
the bid process
Figure 10-1 Project developm
The transaction advisor shall stralso prepare the relevant bid
management on behalf of BDA
102 Procurement
The foremost step for BDA is
feasibility The detailed financial
parameter Also an optimum str
bid documents would be prepar
process be conducted as a 2 sta
983105983152983152983151983145983150983156983149983141983150983156 983151983142 983156983154983137
983108983141983156983137983145983148983141983140 983142983141983137983155983145983138
983155983156983154983157983139983156983157983154983145983150983143
983120983154983141983152983137983154983137983156983145983151
983123983141983148983141983139
y
pment framework
oint a Transaction Advisor in order to conduc
e financial numbers are acceptable BDA BDA
nt framework
ucture the project upon completion of the feasibidocuments The transaction advisor shall un
nd will assist in appointment of the private secto
lan
to appoint a Transaction Advisor for the co
feasibility would determine the tentative revenue
cture would be arrived at Post the approval of
d for the selection of the developer It is recom
ge process involving Technical qualification and
983155983137983139983156983145983151983150 983137983140983158983145983155983151983154
983148983145983156983161 983155983156983157983140983145983141983155 983137983150983140 983152983154983151983146983141983139983156
983150 983151983142 983138983145983140 983140983151983139983157983149983141983150983156983155
983145983151983150 983151983142 983152983154983145983158983137983156983141 983155983141983139983156983151983154 983152983137983154983156983150983141983154
[21]
a detailed financial
should proceed with
ility studies and shallertake bid process
partner
nducting the project
for BDA and the bid
easibility Report the
mended that the Bid
inancial proposal
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B a n g a l o r e D e v e l o p m e n t A u t h o r i t y
B D A s h o u l d i n i t i a t e t h e p r o c e s s o f a p p o
i n t i n g a t r a n s a c t i o n a d v i s o r a t t h e
e a r l i e s t T h i s p r o c e s s c a n b e c o m p l e t e d i n 2 m o n t h s
O n c e t h e T A
i s i n p l a c e
t h e B D
A s h o u l d a l l o w
a t l e a s t 4 m o n t h s f o r t h e p r e p a r a t i o n o f f e a s i b i l i t y p r o j e c t s t r u c t u r i n g a n d b i d d o c u m e n
t s
O n c e t
h e b i d d o c u m e n t s a r e i n p l a c e t h
e B D A
s h o u l d i n i t i a t e t h e p r o c e s s
o f s e l e c t i n g t h e p r i v a t e s e c t o r p a
r t n e r w h i c h c a n b e c o m p l e t e d o v e r a 4 m o n t h
p e r i o d
T h e c u
r r e n t p r o c u r e m e n t p l a n i s s p r e a d
o v e r 1 1 m o n t h s w h i c h c a n b e s
h o r t e n e d d e p e n d i n g o n t h e m a n n e r i n w h i c h B D A
m a k e s d e c i s i o n
s r e l a t i n g t o
a p p o i n
t m e n t o f T A a n d p r i v a t e d e v e l o p e r
A c t i v i t y
M 1
M 2
M 3
M 4
M 5
M 6
M 7
M 8 M
9
M 1 0
M 1 1
M 1 2
A p p o i n t m e t o f t r a n s a c t i o n a d v i s o r
D e t a i l e d t e c h n o - e c o n o m i c f e a s i b i l i t y a n d
b i d d o c u m e n t p r e p a r a t i o n
B i d p r
o c e s s m a n a g e m e n t
S e l e c t i o n o f p r e f e r r e d b i d d e r a n d f o r m a t i o n o f S P C
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B a n g a l o r e D e v e l o p m e n t A u t h o r i t y
1 1
A n n e x u r e 1 ndash C a s h - f l o w
s t a t e m e n t
R e v e n u e H e a d
S u b H e a d R a t e
U n i t
3 1 - M a r - 1 4
3 1 - M
a r - 1 7
3 1 - M a r - 2 2
3 1 - M a r - 2 7
3 1 - M a r - 3 2
3 1 - M a r - 3 7
3 1 - M a r - 4 2
3 1 - M a r - 4 7
3 1 - M
a r - 5 2
3 1 - M a r - 5 7
3 1 - M a r - 6 2
C o m m e
r c i a l S p a c e
O c c u p a
n c y
P e r c e n t a g
0
9 0
9 5
9 5
9 5
9 5
9 5
9 5
9 5
9 5
9 5
C o m m e
r c i a l s p a c e l e a s e d o u t
s q f t
-
7 2 0 6
9 0
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6
0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
D e p o s i t f o r L e a s e
( N o o f m o n t h s r e n t )
1 2
A v e r a g e
L e a s e R e n t a l s
7 0
R s p s f p e r m o n t h
E s c a l a t i o n
1 0
M a i n t e n
a n c e c h a r g e s
2 2 5
R s p s f p e r m o n t h
R e v e n u e f r o m
L e a s e R e n t a l
R s
L a k h s
-
8 8
6 3
1 5 0
6 8
2 4 2
6 6
3 9 0
8 1
6 2 9
4 1
1 0 1 3
6 7
1 6 3 2
5 3
2 6
2 9
2 0
4 2 3 4
3 5
6 8 1 9
4 7
R e v e n u e f r o m
M a i n t e n a n c e c h a r g e s
-
2 8 5
4 8 4
7 8 0
1 2
5 6
2 0
2 3
3 2
5 8
5 2
4 7
8 4
5 1
1 3 6
1 0
2 1 9
2 0
T o t a l R
e v e n u e
-
9 1 4 8
1 5 5 5 2
2 5 0 4 6
4 0 3 3 8
6 4 9 6 4
1 0 4 6 2 5
1 6 8 5 0 0
2 7
1 3 7 1
4 3 7 0 4 6
7 0 3 8 6 7
R e v e n
u e H e a d
S u b H e a d R a t e
U n i t
3 1 - M a r - 6
7
3 1 - M a r - 7 2
3 1 - M a r - 7 8
3 1 - M a r - 7 9
C o m m e r c i a l S p a c e
O c c u p a n c y
P e r c e n t a g
9 5
9 5
9 5
9 5
C o m m e r c i a l s p a c e l e a s e d o u t
s q f t
7 6 0 7 2
8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
D e p o s i t f o r L e a s e
( N o o f m o n t h s r e n t )
1 2
A v e r a g
e L e a s e R e n t a l s
7 0 R s p s f p e r m o n t h
E s c a l a
t i o n
1 0
M a i n t e
n a n c e c h a r g e s
2 2
5 R s p s f p e r m o n t h
R e v e n u
e f r o m
L e a s e R e n t a l
R s
L a k h s
1 0
9 8 2 8 2
1 7
6 8 7
9 4
3 1
3 3 5
2 7
3 4
4 6 8
8 0
R e v e n u
e f r o m
M a i n t e n a n c e c h a r g e s
3 5 3 0 2
5 6 8
5 4
1 0 0 7
2 1
1 1 0 7
9 3
T o t a l R e v e n u e
1 1 3 3 5 8 4
1 8 2 5 6 4 8
3 2 3 4 2 4 8
3 5 5 7 6 7 2
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[x]
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[y]
Disclaimer
CRISIL Risk and Infrastructure Solutions Limited (CRIS) has taken due care and caution in preparation of this Report for
Bangalore Development Authority which is under the purview of the Urban Development Department Government of
Karnataka This Report is based on the information documents provided by the Company andor information available publicly
andor obtained by CRIS from sources which it considers reliable CRIS does not guarantee the accuracy adequacy or
completeness of the information documents Report and is not responsible for any errors or omissions or for the results
obtained from the use of the same The Report and results stated therein are subject to change CRIS especially states that it
has no financial liability whatsoever to the Company users of this Report This Report is strictly confidential and should not be
reproduced or redistributed or communicated directly or indirectly in any form or published or copied in whole or in part
especially outside India for any purpose
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ai
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Policy Advisory Company
CRISIL Infrastructure Advisory
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Bangalore Development Authorit
5 Market asse
51 Bangalore gro
The growth of Bangalore has be
from the growth in population in
to the economic opportunities it
Bangalore an obvious choice for
Bangalore has grown at averag
decades It is projected that B
explosive growth has meant th
pressure
Figure 5-1 Population growth
Source City Development Plan Ba
The city leads the country in
available However Bengaluru a
of projects under development a
983089983086983094983091 983089983086983096983097 983090983086983092
983088
983089983088
983090983088
983091983088
983092983088
983093983088
983094983088
983095983088
983096983088
983097983088
983089983097983088983089 983089983097983089983089 983089983097983090983089
983120 983151 983152 983157 983148 983137 983156 983145 983151 983150 983145 983150 983116
983137 983147 983144 983155
y
sment
th overview
en unprecedented in the past couple of decades
the last century Bangalore continues to attract t
offers This is also supported by a salubrious
not only businesses but also for people
compounded annual growth rate (CAGR) of 3
ngalorersquos population will cross the 10 million
at the infrastructure in Bangalore has been p
in Bangalore between 1901 and 2011
galore Development Authority and Census of India
ffice space with 738 million square feet of
lso has 22 per cent of the available space vacan
nd reduced demand
983091983086983089 983092983086983089983089983095983086983096983094
983089983090983086983088983094
983089983094983086983094983092
983090983097983086983090983090
983092
983089983097983091983089 983089983097983092983089 983089983097983093983089 983089983097983094983089 983089983097983095983089 983089983097983096983089 983089983097
[13]
This fact is laid bare
rongs of people due
eather which makes
58 in the last three
mark by 2021 This
t under tremendous
commercial capacity
with a large number
983086983091
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983096983092
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Bangalore Development Authority
[14]
52 Demand projections
Bangalore is the largest commercial market and third largest residential market in India The city has
typically been preferred by home buyers because of its favorable socio-economic conditions and a
salubrious climate In recent years Bangalore has attracted a large influx of population engaged inthe thriving IT sector City residential demand is more end-user driven with moderate price
appreciation The average residential real estate price in the city is 20-25 lesser than in Delhi and
Mumbai In the recent National Housing Bank Residex the index indicating property prices across key
cities in India Bangalore witnessed a mere 1 YoY fall in residential prices in 2011-12 Mumbai saw
an 116 YoY jump in home prices while Delhi witnessed 358 YoY increase during 2011-12 The
city witnessed tremendous growth in terms of population and the number of companies setting up
offices there Thus the ongoing projects such as Bengaluru metro rail project various flyovers and
the under-pass construction activities in Outer Ring Road (ORR) CNR and BHEL circles would ease
the congestion and provide better connectivity for all commuters This will boost real estate demand in
and around Bangalore city
In 2011-12 Bangalorersquos commercial market exhibited resiliency with comparatively high demand
levels despite the discomfort in the market on account of global uncertainty Though commercial
property demand in Bangalore is largely dependent on ITITES sectors the share of manufacturing is
increasing at a faster pace and thereby giving further boost to office space demand According to real
estate consultancy firm Knight Frank the manufacturing sector witnessed a quantum leap as its share
of absorption increased from 3 in 4QCY10 to 23 in 4QCY11 The absorption of commercial space
has gone up from 5mn sq ftquarter in CY09 to 7mn sq ftquarter in CY11 thanks to sustained
demand for Bangalore commercial space which witnessed 43 CAGR in absorption level over CY09-
11 Subdued supply during the first two quarters of 2011 coupled with high absorption level has
substantially lowered the vacancy level in the city (bringing it down from 17 in CY10 to 12 in
CY11) With the expansion of existing operations in the IT sector and the entry of newer sectors dueto renewed optimism in the market we expect the level of absorption of office space to remain stable
Revised Master Plan-2015 for the BMA has been published This document gives the likely growth to
take place in various areas of the BMA The population of the BMA is expected to grow from 61 lakh
in 2001 to 122 lakh in 2025
The proposed growth rate and the ever changing urban scenario is bound to increase the commercial
space demand in the region The site at Indiranagar is situated at a junction and has two road facing
sides which makes it very attractive for commercial development The site is also huge in size and
can easily accommodate a mall
Hence in view of the above it can be safely recommended that the site would generate huge interest
within the developers
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Bangalore Development Authority
[15]
6 Project financials
The project costs have been largely derived from the costs indicated by the Bangalore Development
Authority (BDA)
61 Cost estimation
The estimated cost of development of the project is Rs 23931 lakhs The costs have been outlined
below
Table 6-1 Project Cost of the proposed development
Particular Amount inRs Lakhs
Construction Cost 19967
Land Development 793
Other Infrastructure 50
Total Hard Costs 20810
Contingencies 3121
Total Project Development Cost 23931
Apart from the above mentioned project development cost the Concessionaire would incur the
development premium and Interest during construction (IDC) cost
Particulars 25 years 33 Years 66 years
Upfront Premium (Rs Lakh) 965000 1230000 600000
IDC Cost (Rs Lakh) 315600 361500 259100
Revenue Share every year 15 15 15
Total Project Cost (Rs Lakhs) 36737 39846 33022
62 Revenue stream
The Revenues to the Developer would accrue from the revenue earned from the lease rentals and the
maintenance charges which the developer earns from the tenants The total revenue from both the
heads has been arrived at Rs 6720 Lakhs for the base year It has been assumed that the
occupancy of the commercial complex 80 in the base year and stabilizes to a maximum of 95towards the end of the concession period The average lease rentals have been assumed at Rs 70
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Bangalore Development Authority
[16]
per square feet and the maintenance charges have been assumed at Rs 225 per square feet Both
the revenues are escalating at the rate of 10 per annum The income statement for the developer
has been provided in Annexure 1
63 Viability assessment
The viability assessment has been carried out over two concession period ie 25 33 and 66 years
The debt to equity ratio has been assumed to be 121
The project level internal rate of return (IRR) IRR of equity and the net present value of the equity
have been worked out
Table 6-2 Viability assessment for BDA complex at Indiranagar
Concession Period Project IRR Equity IRR NPV of Equity
Upfront Premium
(Rs in Lakhs)
25 years 1777 2007 96 9650
33 years 1818 2006 108 12300
66 years 2101 2333 5285 6000
It is evident that the project is viable for the developer for all the 3 concession periods In case of the
25 year concession period it is estimated that the developer would pay BDA an estimated upfront
premium of Rs 9650 lakhs Similarly the developer would pay BDA an amount of Rs 12300 lakhsand Rs 6000 lakhs for the concession periods of 33 years and 66 years respectively
64 Ranking of options based on commercial viability
Having assessed the project for two concession periods of 25 33 and 66 years we are of the view
that the 25 year concession option will be more suitable since it allows the developer to make
reasonable returns on the projects and his own investments along with a sizeable upfront premium for
BDA BDA would be in a position to renew the contract or retender the project after 25 years which
may enable BDA to earn as per the prevailing market rates
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Bangalore Development Authority
[17]
7 Statutory amp legal framework
71 Legal amp regulatory framework
Development Control Regulations (DCR)
As per RMP ndash 2015 published by BDA the project site has been classified as ldquoCommercial Businessrdquo
As per the definitions of RMP-2015 Commercial Business Zone allows development of Commercial
and Corporate offices Retail Shopping Complexes Restaurants and Hotels Convention centres and
banquet halls financial institutions Cinema and multiplexes places of assembly exhibition centres
Entertainment and amusement centres and stores
Permissible land uses under Commercial (Business) Zone as per RMP-2015 of BDA
Main land use category C3
Other land uses permissible (as main land use) R I-3 T3 amp U4
If the road width is less than 120 m and plot area is less than 240 square metre then C2 I-2
R and U4 only are allowed
The plot size is 24000 square metre Presently it has 18m wide access road The applicable DCR for
the plot as per proposed road width is as follows
Table 7-1 Plot details of Indiranagar site
Sr No Particulars Description Unit
1 Land Use Commercial Business
2 Road Width 18 Metre
3 Permissible FAR 325
4Permissible ground
coverage50
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Bangalore Development Authority
[18]
8 Indicative environmental amp social impacts
81 Environmental impacts
The proposed development is in line with the layout of BDA Due to the reasonably large site area the
development will be on the higher side A set back of 50 is found to be acceptable for the site
however an Environmental Impact Assessment studies have to be undertaken for the sites Since
already a commercial complex is existent redevelopment of the complex would need demolition of
the existent structures Hence a suitable disposal of construction and debris has to be undertaken by
the developer Also a Green building can be developed to ensure minimal effect on nature
82 Social impactsDuring the construction period the existing establishments have to be shifted or compensated
temporarily Hence a clear resettlement plan has to be decided before the implementation of the
project It is envisaged that if due care is taken about the existing tenants the development would go
smoothly
83 Mitigation measures
It is necessary that the impacts are identified early and action plans are prepared for their mitigation in
advance For instance for environmental impacts the BDA may insist on the developer to use clean
and green building technologies
It is also necessary that the project development plan is also accompanied by a Relocation and
Rehabilitation plan which will layout detailed action points with the requisite intervening entity
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Bangalore Development Authority
[19]
9 Operating framework
91 Risks amp mitigation
The risk framework for this project has been outlined below
Table 9-1 Risk mitigation measures
Risk Category Risk implication Mitigation measure
Sponsor risk BDA scraps the project Termination payments in case of BDA scrapping the
project
Environment
risk
Adverse impact on
surrounding environment
Penalty clauses in case of default on
Concessionairersquos part
Environmental Impact Assessment to identify all
risks in advance
Political riskChange in government may
put project in jeopardy
Termination payments in case of project being
scrapped
Force
majeure riskProject is abandoned
Force majeure clauses in the concession
agreement
Operating riskThe operations of the
facility are stalled
Performance security clause in case of default on
Concessionairersquos part
Design risk Overdesign of the projectProject design to be finalized in mutual agreement
of concessionaire and BDA
Completion
risk
Completion of project is
delayed inconvenience to
citizens and tenants
Penalty clauses for time overrun in the concession
agreement
Cost overrun
risk
Project cost increases
beyond reasonable limits
Project cost increment ceiling to be specified in the
concession agreement Increase beyond this ceiling
to be borne by the developer No change in revenue
sharing
92 Indicative project structure
The best approach for such a large ticket project would be for the BDA to become a key actor in the
entire process of development The BDA may ask the private sector partner to form a Special
Purpose Company where the equity will be brought in by the private sector developer The designs
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Bangalore Development Authority
[20]
should be left to the developer and BDArsquos role would be in approving the same in accordance with the
Development Control Regulations
The SPC will develop and maintain Complex throughout the concession period The tenants would
pay the developer a sub-lease premium or lease rentals which will be escrowed in a separate accountand can be withdrawn based on the revenue sharing structure adopted
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Bangalore Development Authorit
10 Way ahead
101 Project develo
The key task for BDA is to ap
feasibility of the project Once t
the bid process
Figure 10-1 Project developm
The transaction advisor shall stralso prepare the relevant bid
management on behalf of BDA
102 Procurement
The foremost step for BDA is
feasibility The detailed financial
parameter Also an optimum str
bid documents would be prepar
process be conducted as a 2 sta
983105983152983152983151983145983150983156983149983141983150983156 983151983142 983156983154983137
983108983141983156983137983145983148983141983140 983142983141983137983155983145983138
983155983156983154983157983139983156983157983154983145983150983143
983120983154983141983152983137983154983137983156983145983151
983123983141983148983141983139
y
pment framework
oint a Transaction Advisor in order to conduc
e financial numbers are acceptable BDA BDA
nt framework
ucture the project upon completion of the feasibidocuments The transaction advisor shall un
nd will assist in appointment of the private secto
lan
to appoint a Transaction Advisor for the co
feasibility would determine the tentative revenue
cture would be arrived at Post the approval of
d for the selection of the developer It is recom
ge process involving Technical qualification and
983155983137983139983156983145983151983150 983137983140983158983145983155983151983154
983148983145983156983161 983155983156983157983140983145983141983155 983137983150983140 983152983154983151983146983141983139983156
983150 983151983142 983138983145983140 983140983151983139983157983149983141983150983156983155
983145983151983150 983151983142 983152983154983145983158983137983156983141 983155983141983139983156983151983154 983152983137983154983156983150983141983154
[21]
a detailed financial
should proceed with
ility studies and shallertake bid process
partner
nducting the project
for BDA and the bid
easibility Report the
mended that the Bid
inancial proposal
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B a n g a l o r e D e v e l o p m e n t A u t h o r i t y
B D A s h o u l d i n i t i a t e t h e p r o c e s s o f a p p o
i n t i n g a t r a n s a c t i o n a d v i s o r a t t h e
e a r l i e s t T h i s p r o c e s s c a n b e c o m p l e t e d i n 2 m o n t h s
O n c e t h e T A
i s i n p l a c e
t h e B D
A s h o u l d a l l o w
a t l e a s t 4 m o n t h s f o r t h e p r e p a r a t i o n o f f e a s i b i l i t y p r o j e c t s t r u c t u r i n g a n d b i d d o c u m e n
t s
O n c e t
h e b i d d o c u m e n t s a r e i n p l a c e t h
e B D A
s h o u l d i n i t i a t e t h e p r o c e s s
o f s e l e c t i n g t h e p r i v a t e s e c t o r p a
r t n e r w h i c h c a n b e c o m p l e t e d o v e r a 4 m o n t h
p e r i o d
T h e c u
r r e n t p r o c u r e m e n t p l a n i s s p r e a d
o v e r 1 1 m o n t h s w h i c h c a n b e s
h o r t e n e d d e p e n d i n g o n t h e m a n n e r i n w h i c h B D A
m a k e s d e c i s i o n
s r e l a t i n g t o
a p p o i n
t m e n t o f T A a n d p r i v a t e d e v e l o p e r
A c t i v i t y
M 1
M 2
M 3
M 4
M 5
M 6
M 7
M 8 M
9
M 1 0
M 1 1
M 1 2
A p p o i n t m e t o f t r a n s a c t i o n a d v i s o r
D e t a i l e d t e c h n o - e c o n o m i c f e a s i b i l i t y a n d
b i d d o c u m e n t p r e p a r a t i o n
B i d p r
o c e s s m a n a g e m e n t
S e l e c t i o n o f p r e f e r r e d b i d d e r a n d f o r m a t i o n o f S P C
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B a n g a l o r e D e v e l o p m e n t A u t h o r i t y
1 1
A n n e x u r e 1 ndash C a s h - f l o w
s t a t e m e n t
R e v e n u e H e a d
S u b H e a d R a t e
U n i t
3 1 - M a r - 1 4
3 1 - M
a r - 1 7
3 1 - M a r - 2 2
3 1 - M a r - 2 7
3 1 - M a r - 3 2
3 1 - M a r - 3 7
3 1 - M a r - 4 2
3 1 - M a r - 4 7
3 1 - M
a r - 5 2
3 1 - M a r - 5 7
3 1 - M a r - 6 2
C o m m e
r c i a l S p a c e
O c c u p a
n c y
P e r c e n t a g
0
9 0
9 5
9 5
9 5
9 5
9 5
9 5
9 5
9 5
9 5
C o m m e
r c i a l s p a c e l e a s e d o u t
s q f t
-
7 2 0 6
9 0
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6
0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
D e p o s i t f o r L e a s e
( N o o f m o n t h s r e n t )
1 2
A v e r a g e
L e a s e R e n t a l s
7 0
R s p s f p e r m o n t h
E s c a l a t i o n
1 0
M a i n t e n
a n c e c h a r g e s
2 2 5
R s p s f p e r m o n t h
R e v e n u e f r o m
L e a s e R e n t a l
R s
L a k h s
-
8 8
6 3
1 5 0
6 8
2 4 2
6 6
3 9 0
8 1
6 2 9
4 1
1 0 1 3
6 7
1 6 3 2
5 3
2 6
2 9
2 0
4 2 3 4
3 5
6 8 1 9
4 7
R e v e n u e f r o m
M a i n t e n a n c e c h a r g e s
-
2 8 5
4 8 4
7 8 0
1 2
5 6
2 0
2 3
3 2
5 8
5 2
4 7
8 4
5 1
1 3 6
1 0
2 1 9
2 0
T o t a l R
e v e n u e
-
9 1 4 8
1 5 5 5 2
2 5 0 4 6
4 0 3 3 8
6 4 9 6 4
1 0 4 6 2 5
1 6 8 5 0 0
2 7
1 3 7 1
4 3 7 0 4 6
7 0 3 8 6 7
R e v e n
u e H e a d
S u b H e a d R a t e
U n i t
3 1 - M a r - 6
7
3 1 - M a r - 7 2
3 1 - M a r - 7 8
3 1 - M a r - 7 9
C o m m e r c i a l S p a c e
O c c u p a n c y
P e r c e n t a g
9 5
9 5
9 5
9 5
C o m m e r c i a l s p a c e l e a s e d o u t
s q f t
7 6 0 7 2
8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
D e p o s i t f o r L e a s e
( N o o f m o n t h s r e n t )
1 2
A v e r a g
e L e a s e R e n t a l s
7 0 R s p s f p e r m o n t h
E s c a l a
t i o n
1 0
M a i n t e
n a n c e c h a r g e s
2 2
5 R s p s f p e r m o n t h
R e v e n u
e f r o m
L e a s e R e n t a l
R s
L a k h s
1 0
9 8 2 8 2
1 7
6 8 7
9 4
3 1
3 3 5
2 7
3 4
4 6 8
8 0
R e v e n u
e f r o m
M a i n t e n a n c e c h a r g e s
3 5 3 0 2
5 6 8
5 4
1 0 0 7
2 1
1 1 0 7
9 3
T o t a l R e v e n u e
1 1 3 3 5 8 4
1 8 2 5 6 4 8
3 2 3 4 2 4 8
3 5 5 7 6 7 2
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[x]
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[y]
Disclaimer
CRISIL Risk and Infrastructure Solutions Limited (CRIS) has taken due care and caution in preparation of this Report for
Bangalore Development Authority which is under the purview of the Urban Development Department Government of
Karnataka This Report is based on the information documents provided by the Company andor information available publicly
andor obtained by CRIS from sources which it considers reliable CRIS does not guarantee the accuracy adequacy or
completeness of the information documents Report and is not responsible for any errors or omissions or for the results
obtained from the use of the same The Report and results stated therein are subject to change CRIS especially states that it
has no financial liability whatsoever to the Company users of this Report This Report is strictly confidential and should not be
reproduced or redistributed or communicated directly or indirectly in any form or published or copied in whole or in part
especially outside India for any purpose
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ai
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About CRISIL Infrastructu
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Policy Advisory Company
CRISIL Infrastructure Advisory
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re Advisory
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nd urbansupport to
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ins and is
ltant by
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a Middle East
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Bangalore Development Authority
[14]
52 Demand projections
Bangalore is the largest commercial market and third largest residential market in India The city has
typically been preferred by home buyers because of its favorable socio-economic conditions and a
salubrious climate In recent years Bangalore has attracted a large influx of population engaged inthe thriving IT sector City residential demand is more end-user driven with moderate price
appreciation The average residential real estate price in the city is 20-25 lesser than in Delhi and
Mumbai In the recent National Housing Bank Residex the index indicating property prices across key
cities in India Bangalore witnessed a mere 1 YoY fall in residential prices in 2011-12 Mumbai saw
an 116 YoY jump in home prices while Delhi witnessed 358 YoY increase during 2011-12 The
city witnessed tremendous growth in terms of population and the number of companies setting up
offices there Thus the ongoing projects such as Bengaluru metro rail project various flyovers and
the under-pass construction activities in Outer Ring Road (ORR) CNR and BHEL circles would ease
the congestion and provide better connectivity for all commuters This will boost real estate demand in
and around Bangalore city
In 2011-12 Bangalorersquos commercial market exhibited resiliency with comparatively high demand
levels despite the discomfort in the market on account of global uncertainty Though commercial
property demand in Bangalore is largely dependent on ITITES sectors the share of manufacturing is
increasing at a faster pace and thereby giving further boost to office space demand According to real
estate consultancy firm Knight Frank the manufacturing sector witnessed a quantum leap as its share
of absorption increased from 3 in 4QCY10 to 23 in 4QCY11 The absorption of commercial space
has gone up from 5mn sq ftquarter in CY09 to 7mn sq ftquarter in CY11 thanks to sustained
demand for Bangalore commercial space which witnessed 43 CAGR in absorption level over CY09-
11 Subdued supply during the first two quarters of 2011 coupled with high absorption level has
substantially lowered the vacancy level in the city (bringing it down from 17 in CY10 to 12 in
CY11) With the expansion of existing operations in the IT sector and the entry of newer sectors dueto renewed optimism in the market we expect the level of absorption of office space to remain stable
Revised Master Plan-2015 for the BMA has been published This document gives the likely growth to
take place in various areas of the BMA The population of the BMA is expected to grow from 61 lakh
in 2001 to 122 lakh in 2025
The proposed growth rate and the ever changing urban scenario is bound to increase the commercial
space demand in the region The site at Indiranagar is situated at a junction and has two road facing
sides which makes it very attractive for commercial development The site is also huge in size and
can easily accommodate a mall
Hence in view of the above it can be safely recommended that the site would generate huge interest
within the developers
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
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Bangalore Development Authority
[15]
6 Project financials
The project costs have been largely derived from the costs indicated by the Bangalore Development
Authority (BDA)
61 Cost estimation
The estimated cost of development of the project is Rs 23931 lakhs The costs have been outlined
below
Table 6-1 Project Cost of the proposed development
Particular Amount inRs Lakhs
Construction Cost 19967
Land Development 793
Other Infrastructure 50
Total Hard Costs 20810
Contingencies 3121
Total Project Development Cost 23931
Apart from the above mentioned project development cost the Concessionaire would incur the
development premium and Interest during construction (IDC) cost
Particulars 25 years 33 Years 66 years
Upfront Premium (Rs Lakh) 965000 1230000 600000
IDC Cost (Rs Lakh) 315600 361500 259100
Revenue Share every year 15 15 15
Total Project Cost (Rs Lakhs) 36737 39846 33022
62 Revenue stream
The Revenues to the Developer would accrue from the revenue earned from the lease rentals and the
maintenance charges which the developer earns from the tenants The total revenue from both the
heads has been arrived at Rs 6720 Lakhs for the base year It has been assumed that the
occupancy of the commercial complex 80 in the base year and stabilizes to a maximum of 95towards the end of the concession period The average lease rentals have been assumed at Rs 70
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Bangalore Development Authority
[16]
per square feet and the maintenance charges have been assumed at Rs 225 per square feet Both
the revenues are escalating at the rate of 10 per annum The income statement for the developer
has been provided in Annexure 1
63 Viability assessment
The viability assessment has been carried out over two concession period ie 25 33 and 66 years
The debt to equity ratio has been assumed to be 121
The project level internal rate of return (IRR) IRR of equity and the net present value of the equity
have been worked out
Table 6-2 Viability assessment for BDA complex at Indiranagar
Concession Period Project IRR Equity IRR NPV of Equity
Upfront Premium
(Rs in Lakhs)
25 years 1777 2007 96 9650
33 years 1818 2006 108 12300
66 years 2101 2333 5285 6000
It is evident that the project is viable for the developer for all the 3 concession periods In case of the
25 year concession period it is estimated that the developer would pay BDA an estimated upfront
premium of Rs 9650 lakhs Similarly the developer would pay BDA an amount of Rs 12300 lakhsand Rs 6000 lakhs for the concession periods of 33 years and 66 years respectively
64 Ranking of options based on commercial viability
Having assessed the project for two concession periods of 25 33 and 66 years we are of the view
that the 25 year concession option will be more suitable since it allows the developer to make
reasonable returns on the projects and his own investments along with a sizeable upfront premium for
BDA BDA would be in a position to renew the contract or retender the project after 25 years which
may enable BDA to earn as per the prevailing market rates
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
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Bangalore Development Authority
[17]
7 Statutory amp legal framework
71 Legal amp regulatory framework
Development Control Regulations (DCR)
As per RMP ndash 2015 published by BDA the project site has been classified as ldquoCommercial Businessrdquo
As per the definitions of RMP-2015 Commercial Business Zone allows development of Commercial
and Corporate offices Retail Shopping Complexes Restaurants and Hotels Convention centres and
banquet halls financial institutions Cinema and multiplexes places of assembly exhibition centres
Entertainment and amusement centres and stores
Permissible land uses under Commercial (Business) Zone as per RMP-2015 of BDA
Main land use category C3
Other land uses permissible (as main land use) R I-3 T3 amp U4
If the road width is less than 120 m and plot area is less than 240 square metre then C2 I-2
R and U4 only are allowed
The plot size is 24000 square metre Presently it has 18m wide access road The applicable DCR for
the plot as per proposed road width is as follows
Table 7-1 Plot details of Indiranagar site
Sr No Particulars Description Unit
1 Land Use Commercial Business
2 Road Width 18 Metre
3 Permissible FAR 325
4Permissible ground
coverage50
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
httpslidepdfcomreaderfullgim-pre-feasibility-report-indiranagarrevised 2533
Bangalore Development Authority
[18]
8 Indicative environmental amp social impacts
81 Environmental impacts
The proposed development is in line with the layout of BDA Due to the reasonably large site area the
development will be on the higher side A set back of 50 is found to be acceptable for the site
however an Environmental Impact Assessment studies have to be undertaken for the sites Since
already a commercial complex is existent redevelopment of the complex would need demolition of
the existent structures Hence a suitable disposal of construction and debris has to be undertaken by
the developer Also a Green building can be developed to ensure minimal effect on nature
82 Social impactsDuring the construction period the existing establishments have to be shifted or compensated
temporarily Hence a clear resettlement plan has to be decided before the implementation of the
project It is envisaged that if due care is taken about the existing tenants the development would go
smoothly
83 Mitigation measures
It is necessary that the impacts are identified early and action plans are prepared for their mitigation in
advance For instance for environmental impacts the BDA may insist on the developer to use clean
and green building technologies
It is also necessary that the project development plan is also accompanied by a Relocation and
Rehabilitation plan which will layout detailed action points with the requisite intervening entity
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
httpslidepdfcomreaderfullgim-pre-feasibility-report-indiranagarrevised 2633
Bangalore Development Authority
[19]
9 Operating framework
91 Risks amp mitigation
The risk framework for this project has been outlined below
Table 9-1 Risk mitigation measures
Risk Category Risk implication Mitigation measure
Sponsor risk BDA scraps the project Termination payments in case of BDA scrapping the
project
Environment
risk
Adverse impact on
surrounding environment
Penalty clauses in case of default on
Concessionairersquos part
Environmental Impact Assessment to identify all
risks in advance
Political riskChange in government may
put project in jeopardy
Termination payments in case of project being
scrapped
Force
majeure riskProject is abandoned
Force majeure clauses in the concession
agreement
Operating riskThe operations of the
facility are stalled
Performance security clause in case of default on
Concessionairersquos part
Design risk Overdesign of the projectProject design to be finalized in mutual agreement
of concessionaire and BDA
Completion
risk
Completion of project is
delayed inconvenience to
citizens and tenants
Penalty clauses for time overrun in the concession
agreement
Cost overrun
risk
Project cost increases
beyond reasonable limits
Project cost increment ceiling to be specified in the
concession agreement Increase beyond this ceiling
to be borne by the developer No change in revenue
sharing
92 Indicative project structure
The best approach for such a large ticket project would be for the BDA to become a key actor in the
entire process of development The BDA may ask the private sector partner to form a Special
Purpose Company where the equity will be brought in by the private sector developer The designs
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
httpslidepdfcomreaderfullgim-pre-feasibility-report-indiranagarrevised 2733
Bangalore Development Authority
[20]
should be left to the developer and BDArsquos role would be in approving the same in accordance with the
Development Control Regulations
The SPC will develop and maintain Complex throughout the concession period The tenants would
pay the developer a sub-lease premium or lease rentals which will be escrowed in a separate accountand can be withdrawn based on the revenue sharing structure adopted
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
httpslidepdfcomreaderfullgim-pre-feasibility-report-indiranagarrevised 2833
Bangalore Development Authorit
10 Way ahead
101 Project develo
The key task for BDA is to ap
feasibility of the project Once t
the bid process
Figure 10-1 Project developm
The transaction advisor shall stralso prepare the relevant bid
management on behalf of BDA
102 Procurement
The foremost step for BDA is
feasibility The detailed financial
parameter Also an optimum str
bid documents would be prepar
process be conducted as a 2 sta
983105983152983152983151983145983150983156983149983141983150983156 983151983142 983156983154983137
983108983141983156983137983145983148983141983140 983142983141983137983155983145983138
983155983156983154983157983139983156983157983154983145983150983143
983120983154983141983152983137983154983137983156983145983151
983123983141983148983141983139
y
pment framework
oint a Transaction Advisor in order to conduc
e financial numbers are acceptable BDA BDA
nt framework
ucture the project upon completion of the feasibidocuments The transaction advisor shall un
nd will assist in appointment of the private secto
lan
to appoint a Transaction Advisor for the co
feasibility would determine the tentative revenue
cture would be arrived at Post the approval of
d for the selection of the developer It is recom
ge process involving Technical qualification and
983155983137983139983156983145983151983150 983137983140983158983145983155983151983154
983148983145983156983161 983155983156983157983140983145983141983155 983137983150983140 983152983154983151983146983141983139983156
983150 983151983142 983138983145983140 983140983151983139983157983149983141983150983156983155
983145983151983150 983151983142 983152983154983145983158983137983156983141 983155983141983139983156983151983154 983152983137983154983156983150983141983154
[21]
a detailed financial
should proceed with
ility studies and shallertake bid process
partner
nducting the project
for BDA and the bid
easibility Report the
mended that the Bid
inancial proposal
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
httpslidepdfcomreaderfullgim-pre-feasibility-report-indiranagarrevised 2933
B a n g a l o r e D e v e l o p m e n t A u t h o r i t y
B D A s h o u l d i n i t i a t e t h e p r o c e s s o f a p p o
i n t i n g a t r a n s a c t i o n a d v i s o r a t t h e
e a r l i e s t T h i s p r o c e s s c a n b e c o m p l e t e d i n 2 m o n t h s
O n c e t h e T A
i s i n p l a c e
t h e B D
A s h o u l d a l l o w
a t l e a s t 4 m o n t h s f o r t h e p r e p a r a t i o n o f f e a s i b i l i t y p r o j e c t s t r u c t u r i n g a n d b i d d o c u m e n
t s
O n c e t
h e b i d d o c u m e n t s a r e i n p l a c e t h
e B D A
s h o u l d i n i t i a t e t h e p r o c e s s
o f s e l e c t i n g t h e p r i v a t e s e c t o r p a
r t n e r w h i c h c a n b e c o m p l e t e d o v e r a 4 m o n t h
p e r i o d
T h e c u
r r e n t p r o c u r e m e n t p l a n i s s p r e a d
o v e r 1 1 m o n t h s w h i c h c a n b e s
h o r t e n e d d e p e n d i n g o n t h e m a n n e r i n w h i c h B D A
m a k e s d e c i s i o n
s r e l a t i n g t o
a p p o i n
t m e n t o f T A a n d p r i v a t e d e v e l o p e r
A c t i v i t y
M 1
M 2
M 3
M 4
M 5
M 6
M 7
M 8 M
9
M 1 0
M 1 1
M 1 2
A p p o i n t m e t o f t r a n s a c t i o n a d v i s o r
D e t a i l e d t e c h n o - e c o n o m i c f e a s i b i l i t y a n d
b i d d o c u m e n t p r e p a r a t i o n
B i d p r
o c e s s m a n a g e m e n t
S e l e c t i o n o f p r e f e r r e d b i d d e r a n d f o r m a t i o n o f S P C
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
httpslidepdfcomreaderfullgim-pre-feasibility-report-indiranagarrevised 3033
B a n g a l o r e D e v e l o p m e n t A u t h o r i t y
1 1
A n n e x u r e 1 ndash C a s h - f l o w
s t a t e m e n t
R e v e n u e H e a d
S u b H e a d R a t e
U n i t
3 1 - M a r - 1 4
3 1 - M
a r - 1 7
3 1 - M a r - 2 2
3 1 - M a r - 2 7
3 1 - M a r - 3 2
3 1 - M a r - 3 7
3 1 - M a r - 4 2
3 1 - M a r - 4 7
3 1 - M
a r - 5 2
3 1 - M a r - 5 7
3 1 - M a r - 6 2
C o m m e
r c i a l S p a c e
O c c u p a
n c y
P e r c e n t a g
0
9 0
9 5
9 5
9 5
9 5
9 5
9 5
9 5
9 5
9 5
C o m m e
r c i a l s p a c e l e a s e d o u t
s q f t
-
7 2 0 6
9 0
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6
0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
D e p o s i t f o r L e a s e
( N o o f m o n t h s r e n t )
1 2
A v e r a g e
L e a s e R e n t a l s
7 0
R s p s f p e r m o n t h
E s c a l a t i o n
1 0
M a i n t e n
a n c e c h a r g e s
2 2 5
R s p s f p e r m o n t h
R e v e n u e f r o m
L e a s e R e n t a l
R s
L a k h s
-
8 8
6 3
1 5 0
6 8
2 4 2
6 6
3 9 0
8 1
6 2 9
4 1
1 0 1 3
6 7
1 6 3 2
5 3
2 6
2 9
2 0
4 2 3 4
3 5
6 8 1 9
4 7
R e v e n u e f r o m
M a i n t e n a n c e c h a r g e s
-
2 8 5
4 8 4
7 8 0
1 2
5 6
2 0
2 3
3 2
5 8
5 2
4 7
8 4
5 1
1 3 6
1 0
2 1 9
2 0
T o t a l R
e v e n u e
-
9 1 4 8
1 5 5 5 2
2 5 0 4 6
4 0 3 3 8
6 4 9 6 4
1 0 4 6 2 5
1 6 8 5 0 0
2 7
1 3 7 1
4 3 7 0 4 6
7 0 3 8 6 7
R e v e n
u e H e a d
S u b H e a d R a t e
U n i t
3 1 - M a r - 6
7
3 1 - M a r - 7 2
3 1 - M a r - 7 8
3 1 - M a r - 7 9
C o m m e r c i a l S p a c e
O c c u p a n c y
P e r c e n t a g
9 5
9 5
9 5
9 5
C o m m e r c i a l s p a c e l e a s e d o u t
s q f t
7 6 0 7 2
8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
D e p o s i t f o r L e a s e
( N o o f m o n t h s r e n t )
1 2
A v e r a g
e L e a s e R e n t a l s
7 0 R s p s f p e r m o n t h
E s c a l a
t i o n
1 0
M a i n t e
n a n c e c h a r g e s
2 2
5 R s p s f p e r m o n t h
R e v e n u
e f r o m
L e a s e R e n t a l
R s
L a k h s
1 0
9 8 2 8 2
1 7
6 8 7
9 4
3 1
3 3 5
2 7
3 4
4 6 8
8 0
R e v e n u
e f r o m
M a i n t e n a n c e c h a r g e s
3 5 3 0 2
5 6 8
5 4
1 0 0 7
2 1
1 1 0 7
9 3
T o t a l R e v e n u e
1 1 3 3 5 8 4
1 8 2 5 6 4 8
3 2 3 4 2 4 8
3 5 5 7 6 7 2
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
httpslidepdfcomreaderfullgim-pre-feasibility-report-indiranagarrevised 3133
[x]
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
httpslidepdfcomreaderfullgim-pre-feasibility-report-indiranagarrevised 3233
[y]
Disclaimer
CRISIL Risk and Infrastructure Solutions Limited (CRIS) has taken due care and caution in preparation of this Report for
Bangalore Development Authority which is under the purview of the Urban Development Department Government of
Karnataka This Report is based on the information documents provided by the Company andor information available publicly
andor obtained by CRIS from sources which it considers reliable CRIS does not guarantee the accuracy adequacy or
completeness of the information documents Report and is not responsible for any errors or omissions or for the results
obtained from the use of the same The Report and results stated therein are subject to change CRIS especially states that it
has no financial liability whatsoever to the Company users of this Report This Report is strictly confidential and should not be
reproduced or redistributed or communicated directly or indirectly in any form or published or copied in whole or in part
especially outside India for any purpose
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
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Registered Office ndash Mum
CRISIL House Central AvenueHiranandani Business ParkPowai Mumbai- 400 076Phone 91-22-3342 3000Fax 91-22-3342 3810
New Delhi
The Mira G-1 1st Floor Plot NoIshwar Nagar Mathura Road
New Delhi - 110 065 IndiaPhone 91-11-4250 510091-11-2693 0117 - 121Fax 91-11-2684 2213
Hyderabad
3rd Floor Uma ChambersPlot No 9amp10 Nagarjuna HillsNear Punjagutta Cross RoadHyderabad - 500 082Phone 91-40-40328200Fax 91-40-2335 7507
Bengaluru
W-101 Sunrise Chambers22 Ulsoor RoadBengaluru - 560 042Phone 91-80-2558 0899Fax 91-80-2559 4801
Ahmedabad
706 Venus AtlantisNear Reliance Petrol PumpPrahladnagarAhmedabad -Phone 91-79-4024 4500Fax 91-79-2755 9863
Visit us atwwwcrisilcom
ai
1 amp 2
About CRISIL Infrastructu
CRISIL Infrastructure Advisory
CRISIL Risk and Infrastructure
Limited a 100 subsidiary of
Indiarsquos leading Ratings Resear
Policy Advisory Company
CRISIL Infrastructure Advisory
premier advisor focusing on po
well as commercial and contra
the areas of transport energyinfrastructure We also provide
international firms planning inv
India Over a period of time C
Infrastructure Advisory has buil
position for itself in these doma
considered the preferred cons
governments multilateral agen
sector clients We have extend
operations beyond India and ar
other emerging markets in Afri
and South Asia
re Advisory
is a division of
Solutions
RISIL Limited ndash
ch Risk and
is Indiarsquos
licy issues as
tual issues in
nd urbansupport to
stments in
ISIL
t a unique
ins and is
ltant by
cies and private-
ed our
e present in
a Middle East
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
httpslidepdfcomreaderfullgim-pre-feasibility-report-indiranagarrevised 2233
Bangalore Development Authority
[15]
6 Project financials
The project costs have been largely derived from the costs indicated by the Bangalore Development
Authority (BDA)
61 Cost estimation
The estimated cost of development of the project is Rs 23931 lakhs The costs have been outlined
below
Table 6-1 Project Cost of the proposed development
Particular Amount inRs Lakhs
Construction Cost 19967
Land Development 793
Other Infrastructure 50
Total Hard Costs 20810
Contingencies 3121
Total Project Development Cost 23931
Apart from the above mentioned project development cost the Concessionaire would incur the
development premium and Interest during construction (IDC) cost
Particulars 25 years 33 Years 66 years
Upfront Premium (Rs Lakh) 965000 1230000 600000
IDC Cost (Rs Lakh) 315600 361500 259100
Revenue Share every year 15 15 15
Total Project Cost (Rs Lakhs) 36737 39846 33022
62 Revenue stream
The Revenues to the Developer would accrue from the revenue earned from the lease rentals and the
maintenance charges which the developer earns from the tenants The total revenue from both the
heads has been arrived at Rs 6720 Lakhs for the base year It has been assumed that the
occupancy of the commercial complex 80 in the base year and stabilizes to a maximum of 95towards the end of the concession period The average lease rentals have been assumed at Rs 70
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
httpslidepdfcomreaderfullgim-pre-feasibility-report-indiranagarrevised 2333
Bangalore Development Authority
[16]
per square feet and the maintenance charges have been assumed at Rs 225 per square feet Both
the revenues are escalating at the rate of 10 per annum The income statement for the developer
has been provided in Annexure 1
63 Viability assessment
The viability assessment has been carried out over two concession period ie 25 33 and 66 years
The debt to equity ratio has been assumed to be 121
The project level internal rate of return (IRR) IRR of equity and the net present value of the equity
have been worked out
Table 6-2 Viability assessment for BDA complex at Indiranagar
Concession Period Project IRR Equity IRR NPV of Equity
Upfront Premium
(Rs in Lakhs)
25 years 1777 2007 96 9650
33 years 1818 2006 108 12300
66 years 2101 2333 5285 6000
It is evident that the project is viable for the developer for all the 3 concession periods In case of the
25 year concession period it is estimated that the developer would pay BDA an estimated upfront
premium of Rs 9650 lakhs Similarly the developer would pay BDA an amount of Rs 12300 lakhsand Rs 6000 lakhs for the concession periods of 33 years and 66 years respectively
64 Ranking of options based on commercial viability
Having assessed the project for two concession periods of 25 33 and 66 years we are of the view
that the 25 year concession option will be more suitable since it allows the developer to make
reasonable returns on the projects and his own investments along with a sizeable upfront premium for
BDA BDA would be in a position to renew the contract or retender the project after 25 years which
may enable BDA to earn as per the prevailing market rates
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
httpslidepdfcomreaderfullgim-pre-feasibility-report-indiranagarrevised 2433
Bangalore Development Authority
[17]
7 Statutory amp legal framework
71 Legal amp regulatory framework
Development Control Regulations (DCR)
As per RMP ndash 2015 published by BDA the project site has been classified as ldquoCommercial Businessrdquo
As per the definitions of RMP-2015 Commercial Business Zone allows development of Commercial
and Corporate offices Retail Shopping Complexes Restaurants and Hotels Convention centres and
banquet halls financial institutions Cinema and multiplexes places of assembly exhibition centres
Entertainment and amusement centres and stores
Permissible land uses under Commercial (Business) Zone as per RMP-2015 of BDA
Main land use category C3
Other land uses permissible (as main land use) R I-3 T3 amp U4
If the road width is less than 120 m and plot area is less than 240 square metre then C2 I-2
R and U4 only are allowed
The plot size is 24000 square metre Presently it has 18m wide access road The applicable DCR for
the plot as per proposed road width is as follows
Table 7-1 Plot details of Indiranagar site
Sr No Particulars Description Unit
1 Land Use Commercial Business
2 Road Width 18 Metre
3 Permissible FAR 325
4Permissible ground
coverage50
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
httpslidepdfcomreaderfullgim-pre-feasibility-report-indiranagarrevised 2533
Bangalore Development Authority
[18]
8 Indicative environmental amp social impacts
81 Environmental impacts
The proposed development is in line with the layout of BDA Due to the reasonably large site area the
development will be on the higher side A set back of 50 is found to be acceptable for the site
however an Environmental Impact Assessment studies have to be undertaken for the sites Since
already a commercial complex is existent redevelopment of the complex would need demolition of
the existent structures Hence a suitable disposal of construction and debris has to be undertaken by
the developer Also a Green building can be developed to ensure minimal effect on nature
82 Social impactsDuring the construction period the existing establishments have to be shifted or compensated
temporarily Hence a clear resettlement plan has to be decided before the implementation of the
project It is envisaged that if due care is taken about the existing tenants the development would go
smoothly
83 Mitigation measures
It is necessary that the impacts are identified early and action plans are prepared for their mitigation in
advance For instance for environmental impacts the BDA may insist on the developer to use clean
and green building technologies
It is also necessary that the project development plan is also accompanied by a Relocation and
Rehabilitation plan which will layout detailed action points with the requisite intervening entity
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
httpslidepdfcomreaderfullgim-pre-feasibility-report-indiranagarrevised 2633
Bangalore Development Authority
[19]
9 Operating framework
91 Risks amp mitigation
The risk framework for this project has been outlined below
Table 9-1 Risk mitigation measures
Risk Category Risk implication Mitigation measure
Sponsor risk BDA scraps the project Termination payments in case of BDA scrapping the
project
Environment
risk
Adverse impact on
surrounding environment
Penalty clauses in case of default on
Concessionairersquos part
Environmental Impact Assessment to identify all
risks in advance
Political riskChange in government may
put project in jeopardy
Termination payments in case of project being
scrapped
Force
majeure riskProject is abandoned
Force majeure clauses in the concession
agreement
Operating riskThe operations of the
facility are stalled
Performance security clause in case of default on
Concessionairersquos part
Design risk Overdesign of the projectProject design to be finalized in mutual agreement
of concessionaire and BDA
Completion
risk
Completion of project is
delayed inconvenience to
citizens and tenants
Penalty clauses for time overrun in the concession
agreement
Cost overrun
risk
Project cost increases
beyond reasonable limits
Project cost increment ceiling to be specified in the
concession agreement Increase beyond this ceiling
to be borne by the developer No change in revenue
sharing
92 Indicative project structure
The best approach for such a large ticket project would be for the BDA to become a key actor in the
entire process of development The BDA may ask the private sector partner to form a Special
Purpose Company where the equity will be brought in by the private sector developer The designs
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
httpslidepdfcomreaderfullgim-pre-feasibility-report-indiranagarrevised 2733
Bangalore Development Authority
[20]
should be left to the developer and BDArsquos role would be in approving the same in accordance with the
Development Control Regulations
The SPC will develop and maintain Complex throughout the concession period The tenants would
pay the developer a sub-lease premium or lease rentals which will be escrowed in a separate accountand can be withdrawn based on the revenue sharing structure adopted
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
httpslidepdfcomreaderfullgim-pre-feasibility-report-indiranagarrevised 2833
Bangalore Development Authorit
10 Way ahead
101 Project develo
The key task for BDA is to ap
feasibility of the project Once t
the bid process
Figure 10-1 Project developm
The transaction advisor shall stralso prepare the relevant bid
management on behalf of BDA
102 Procurement
The foremost step for BDA is
feasibility The detailed financial
parameter Also an optimum str
bid documents would be prepar
process be conducted as a 2 sta
983105983152983152983151983145983150983156983149983141983150983156 983151983142 983156983154983137
983108983141983156983137983145983148983141983140 983142983141983137983155983145983138
983155983156983154983157983139983156983157983154983145983150983143
983120983154983141983152983137983154983137983156983145983151
983123983141983148983141983139
y
pment framework
oint a Transaction Advisor in order to conduc
e financial numbers are acceptable BDA BDA
nt framework
ucture the project upon completion of the feasibidocuments The transaction advisor shall un
nd will assist in appointment of the private secto
lan
to appoint a Transaction Advisor for the co
feasibility would determine the tentative revenue
cture would be arrived at Post the approval of
d for the selection of the developer It is recom
ge process involving Technical qualification and
983155983137983139983156983145983151983150 983137983140983158983145983155983151983154
983148983145983156983161 983155983156983157983140983145983141983155 983137983150983140 983152983154983151983146983141983139983156
983150 983151983142 983138983145983140 983140983151983139983157983149983141983150983156983155
983145983151983150 983151983142 983152983154983145983158983137983156983141 983155983141983139983156983151983154 983152983137983154983156983150983141983154
[21]
a detailed financial
should proceed with
ility studies and shallertake bid process
partner
nducting the project
for BDA and the bid
easibility Report the
mended that the Bid
inancial proposal
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
httpslidepdfcomreaderfullgim-pre-feasibility-report-indiranagarrevised 2933
B a n g a l o r e D e v e l o p m e n t A u t h o r i t y
B D A s h o u l d i n i t i a t e t h e p r o c e s s o f a p p o
i n t i n g a t r a n s a c t i o n a d v i s o r a t t h e
e a r l i e s t T h i s p r o c e s s c a n b e c o m p l e t e d i n 2 m o n t h s
O n c e t h e T A
i s i n p l a c e
t h e B D
A s h o u l d a l l o w
a t l e a s t 4 m o n t h s f o r t h e p r e p a r a t i o n o f f e a s i b i l i t y p r o j e c t s t r u c t u r i n g a n d b i d d o c u m e n
t s
O n c e t
h e b i d d o c u m e n t s a r e i n p l a c e t h
e B D A
s h o u l d i n i t i a t e t h e p r o c e s s
o f s e l e c t i n g t h e p r i v a t e s e c t o r p a
r t n e r w h i c h c a n b e c o m p l e t e d o v e r a 4 m o n t h
p e r i o d
T h e c u
r r e n t p r o c u r e m e n t p l a n i s s p r e a d
o v e r 1 1 m o n t h s w h i c h c a n b e s
h o r t e n e d d e p e n d i n g o n t h e m a n n e r i n w h i c h B D A
m a k e s d e c i s i o n
s r e l a t i n g t o
a p p o i n
t m e n t o f T A a n d p r i v a t e d e v e l o p e r
A c t i v i t y
M 1
M 2
M 3
M 4
M 5
M 6
M 7
M 8 M
9
M 1 0
M 1 1
M 1 2
A p p o i n t m e t o f t r a n s a c t i o n a d v i s o r
D e t a i l e d t e c h n o - e c o n o m i c f e a s i b i l i t y a n d
b i d d o c u m e n t p r e p a r a t i o n
B i d p r
o c e s s m a n a g e m e n t
S e l e c t i o n o f p r e f e r r e d b i d d e r a n d f o r m a t i o n o f S P C
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
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B a n g a l o r e D e v e l o p m e n t A u t h o r i t y
1 1
A n n e x u r e 1 ndash C a s h - f l o w
s t a t e m e n t
R e v e n u e H e a d
S u b H e a d R a t e
U n i t
3 1 - M a r - 1 4
3 1 - M
a r - 1 7
3 1 - M a r - 2 2
3 1 - M a r - 2 7
3 1 - M a r - 3 2
3 1 - M a r - 3 7
3 1 - M a r - 4 2
3 1 - M a r - 4 7
3 1 - M
a r - 5 2
3 1 - M a r - 5 7
3 1 - M a r - 6 2
C o m m e
r c i a l S p a c e
O c c u p a
n c y
P e r c e n t a g
0
9 0
9 5
9 5
9 5
9 5
9 5
9 5
9 5
9 5
9 5
C o m m e
r c i a l s p a c e l e a s e d o u t
s q f t
-
7 2 0 6
9 0
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6
0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
D e p o s i t f o r L e a s e
( N o o f m o n t h s r e n t )
1 2
A v e r a g e
L e a s e R e n t a l s
7 0
R s p s f p e r m o n t h
E s c a l a t i o n
1 0
M a i n t e n
a n c e c h a r g e s
2 2 5
R s p s f p e r m o n t h
R e v e n u e f r o m
L e a s e R e n t a l
R s
L a k h s
-
8 8
6 3
1 5 0
6 8
2 4 2
6 6
3 9 0
8 1
6 2 9
4 1
1 0 1 3
6 7
1 6 3 2
5 3
2 6
2 9
2 0
4 2 3 4
3 5
6 8 1 9
4 7
R e v e n u e f r o m
M a i n t e n a n c e c h a r g e s
-
2 8 5
4 8 4
7 8 0
1 2
5 6
2 0
2 3
3 2
5 8
5 2
4 7
8 4
5 1
1 3 6
1 0
2 1 9
2 0
T o t a l R
e v e n u e
-
9 1 4 8
1 5 5 5 2
2 5 0 4 6
4 0 3 3 8
6 4 9 6 4
1 0 4 6 2 5
1 6 8 5 0 0
2 7
1 3 7 1
4 3 7 0 4 6
7 0 3 8 6 7
R e v e n
u e H e a d
S u b H e a d R a t e
U n i t
3 1 - M a r - 6
7
3 1 - M a r - 7 2
3 1 - M a r - 7 8
3 1 - M a r - 7 9
C o m m e r c i a l S p a c e
O c c u p a n c y
P e r c e n t a g
9 5
9 5
9 5
9 5
C o m m e r c i a l s p a c e l e a s e d o u t
s q f t
7 6 0 7 2
8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
D e p o s i t f o r L e a s e
( N o o f m o n t h s r e n t )
1 2
A v e r a g
e L e a s e R e n t a l s
7 0 R s p s f p e r m o n t h
E s c a l a
t i o n
1 0
M a i n t e
n a n c e c h a r g e s
2 2
5 R s p s f p e r m o n t h
R e v e n u
e f r o m
L e a s e R e n t a l
R s
L a k h s
1 0
9 8 2 8 2
1 7
6 8 7
9 4
3 1
3 3 5
2 7
3 4
4 6 8
8 0
R e v e n u
e f r o m
M a i n t e n a n c e c h a r g e s
3 5 3 0 2
5 6 8
5 4
1 0 0 7
2 1
1 1 0 7
9 3
T o t a l R e v e n u e
1 1 3 3 5 8 4
1 8 2 5 6 4 8
3 2 3 4 2 4 8
3 5 5 7 6 7 2
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[x]
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
httpslidepdfcomreaderfullgim-pre-feasibility-report-indiranagarrevised 3233
[y]
Disclaimer
CRISIL Risk and Infrastructure Solutions Limited (CRIS) has taken due care and caution in preparation of this Report for
Bangalore Development Authority which is under the purview of the Urban Development Department Government of
Karnataka This Report is based on the information documents provided by the Company andor information available publicly
andor obtained by CRIS from sources which it considers reliable CRIS does not guarantee the accuracy adequacy or
completeness of the information documents Report and is not responsible for any errors or omissions or for the results
obtained from the use of the same The Report and results stated therein are subject to change CRIS especially states that it
has no financial liability whatsoever to the Company users of this Report This Report is strictly confidential and should not be
reproduced or redistributed or communicated directly or indirectly in any form or published or copied in whole or in part
especially outside India for any purpose
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Registered Office ndash Mum
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The Mira G-1 1st Floor Plot NoIshwar Nagar Mathura Road
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Visit us atwwwcrisilcom
ai
1 amp 2
About CRISIL Infrastructu
CRISIL Infrastructure Advisory
CRISIL Risk and Infrastructure
Limited a 100 subsidiary of
Indiarsquos leading Ratings Resear
Policy Advisory Company
CRISIL Infrastructure Advisory
premier advisor focusing on po
well as commercial and contra
the areas of transport energyinfrastructure We also provide
international firms planning inv
India Over a period of time C
Infrastructure Advisory has buil
position for itself in these doma
considered the preferred cons
governments multilateral agen
sector clients We have extend
operations beyond India and ar
other emerging markets in Afri
and South Asia
re Advisory
is a division of
Solutions
RISIL Limited ndash
ch Risk and
is Indiarsquos
licy issues as
tual issues in
nd urbansupport to
stments in
ISIL
t a unique
ins and is
ltant by
cies and private-
ed our
e present in
a Middle East
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Bangalore Development Authority
[16]
per square feet and the maintenance charges have been assumed at Rs 225 per square feet Both
the revenues are escalating at the rate of 10 per annum The income statement for the developer
has been provided in Annexure 1
63 Viability assessment
The viability assessment has been carried out over two concession period ie 25 33 and 66 years
The debt to equity ratio has been assumed to be 121
The project level internal rate of return (IRR) IRR of equity and the net present value of the equity
have been worked out
Table 6-2 Viability assessment for BDA complex at Indiranagar
Concession Period Project IRR Equity IRR NPV of Equity
Upfront Premium
(Rs in Lakhs)
25 years 1777 2007 96 9650
33 years 1818 2006 108 12300
66 years 2101 2333 5285 6000
It is evident that the project is viable for the developer for all the 3 concession periods In case of the
25 year concession period it is estimated that the developer would pay BDA an estimated upfront
premium of Rs 9650 lakhs Similarly the developer would pay BDA an amount of Rs 12300 lakhsand Rs 6000 lakhs for the concession periods of 33 years and 66 years respectively
64 Ranking of options based on commercial viability
Having assessed the project for two concession periods of 25 33 and 66 years we are of the view
that the 25 year concession option will be more suitable since it allows the developer to make
reasonable returns on the projects and his own investments along with a sizeable upfront premium for
BDA BDA would be in a position to renew the contract or retender the project after 25 years which
may enable BDA to earn as per the prevailing market rates
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Bangalore Development Authority
[17]
7 Statutory amp legal framework
71 Legal amp regulatory framework
Development Control Regulations (DCR)
As per RMP ndash 2015 published by BDA the project site has been classified as ldquoCommercial Businessrdquo
As per the definitions of RMP-2015 Commercial Business Zone allows development of Commercial
and Corporate offices Retail Shopping Complexes Restaurants and Hotels Convention centres and
banquet halls financial institutions Cinema and multiplexes places of assembly exhibition centres
Entertainment and amusement centres and stores
Permissible land uses under Commercial (Business) Zone as per RMP-2015 of BDA
Main land use category C3
Other land uses permissible (as main land use) R I-3 T3 amp U4
If the road width is less than 120 m and plot area is less than 240 square metre then C2 I-2
R and U4 only are allowed
The plot size is 24000 square metre Presently it has 18m wide access road The applicable DCR for
the plot as per proposed road width is as follows
Table 7-1 Plot details of Indiranagar site
Sr No Particulars Description Unit
1 Land Use Commercial Business
2 Road Width 18 Metre
3 Permissible FAR 325
4Permissible ground
coverage50
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Bangalore Development Authority
[18]
8 Indicative environmental amp social impacts
81 Environmental impacts
The proposed development is in line with the layout of BDA Due to the reasonably large site area the
development will be on the higher side A set back of 50 is found to be acceptable for the site
however an Environmental Impact Assessment studies have to be undertaken for the sites Since
already a commercial complex is existent redevelopment of the complex would need demolition of
the existent structures Hence a suitable disposal of construction and debris has to be undertaken by
the developer Also a Green building can be developed to ensure minimal effect on nature
82 Social impactsDuring the construction period the existing establishments have to be shifted or compensated
temporarily Hence a clear resettlement plan has to be decided before the implementation of the
project It is envisaged that if due care is taken about the existing tenants the development would go
smoothly
83 Mitigation measures
It is necessary that the impacts are identified early and action plans are prepared for their mitigation in
advance For instance for environmental impacts the BDA may insist on the developer to use clean
and green building technologies
It is also necessary that the project development plan is also accompanied by a Relocation and
Rehabilitation plan which will layout detailed action points with the requisite intervening entity
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Bangalore Development Authority
[19]
9 Operating framework
91 Risks amp mitigation
The risk framework for this project has been outlined below
Table 9-1 Risk mitigation measures
Risk Category Risk implication Mitigation measure
Sponsor risk BDA scraps the project Termination payments in case of BDA scrapping the
project
Environment
risk
Adverse impact on
surrounding environment
Penalty clauses in case of default on
Concessionairersquos part
Environmental Impact Assessment to identify all
risks in advance
Political riskChange in government may
put project in jeopardy
Termination payments in case of project being
scrapped
Force
majeure riskProject is abandoned
Force majeure clauses in the concession
agreement
Operating riskThe operations of the
facility are stalled
Performance security clause in case of default on
Concessionairersquos part
Design risk Overdesign of the projectProject design to be finalized in mutual agreement
of concessionaire and BDA
Completion
risk
Completion of project is
delayed inconvenience to
citizens and tenants
Penalty clauses for time overrun in the concession
agreement
Cost overrun
risk
Project cost increases
beyond reasonable limits
Project cost increment ceiling to be specified in the
concession agreement Increase beyond this ceiling
to be borne by the developer No change in revenue
sharing
92 Indicative project structure
The best approach for such a large ticket project would be for the BDA to become a key actor in the
entire process of development The BDA may ask the private sector partner to form a Special
Purpose Company where the equity will be brought in by the private sector developer The designs
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
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Bangalore Development Authority
[20]
should be left to the developer and BDArsquos role would be in approving the same in accordance with the
Development Control Regulations
The SPC will develop and maintain Complex throughout the concession period The tenants would
pay the developer a sub-lease premium or lease rentals which will be escrowed in a separate accountand can be withdrawn based on the revenue sharing structure adopted
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
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Bangalore Development Authorit
10 Way ahead
101 Project develo
The key task for BDA is to ap
feasibility of the project Once t
the bid process
Figure 10-1 Project developm
The transaction advisor shall stralso prepare the relevant bid
management on behalf of BDA
102 Procurement
The foremost step for BDA is
feasibility The detailed financial
parameter Also an optimum str
bid documents would be prepar
process be conducted as a 2 sta
983105983152983152983151983145983150983156983149983141983150983156 983151983142 983156983154983137
983108983141983156983137983145983148983141983140 983142983141983137983155983145983138
983155983156983154983157983139983156983157983154983145983150983143
983120983154983141983152983137983154983137983156983145983151
983123983141983148983141983139
y
pment framework
oint a Transaction Advisor in order to conduc
e financial numbers are acceptable BDA BDA
nt framework
ucture the project upon completion of the feasibidocuments The transaction advisor shall un
nd will assist in appointment of the private secto
lan
to appoint a Transaction Advisor for the co
feasibility would determine the tentative revenue
cture would be arrived at Post the approval of
d for the selection of the developer It is recom
ge process involving Technical qualification and
983155983137983139983156983145983151983150 983137983140983158983145983155983151983154
983148983145983156983161 983155983156983157983140983145983141983155 983137983150983140 983152983154983151983146983141983139983156
983150 983151983142 983138983145983140 983140983151983139983157983149983141983150983156983155
983145983151983150 983151983142 983152983154983145983158983137983156983141 983155983141983139983156983151983154 983152983137983154983156983150983141983154
[21]
a detailed financial
should proceed with
ility studies and shallertake bid process
partner
nducting the project
for BDA and the bid
easibility Report the
mended that the Bid
inancial proposal
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B a n g a l o r e D e v e l o p m e n t A u t h o r i t y
B D A s h o u l d i n i t i a t e t h e p r o c e s s o f a p p o
i n t i n g a t r a n s a c t i o n a d v i s o r a t t h e
e a r l i e s t T h i s p r o c e s s c a n b e c o m p l e t e d i n 2 m o n t h s
O n c e t h e T A
i s i n p l a c e
t h e B D
A s h o u l d a l l o w
a t l e a s t 4 m o n t h s f o r t h e p r e p a r a t i o n o f f e a s i b i l i t y p r o j e c t s t r u c t u r i n g a n d b i d d o c u m e n
t s
O n c e t
h e b i d d o c u m e n t s a r e i n p l a c e t h
e B D A
s h o u l d i n i t i a t e t h e p r o c e s s
o f s e l e c t i n g t h e p r i v a t e s e c t o r p a
r t n e r w h i c h c a n b e c o m p l e t e d o v e r a 4 m o n t h
p e r i o d
T h e c u
r r e n t p r o c u r e m e n t p l a n i s s p r e a d
o v e r 1 1 m o n t h s w h i c h c a n b e s
h o r t e n e d d e p e n d i n g o n t h e m a n n e r i n w h i c h B D A
m a k e s d e c i s i o n
s r e l a t i n g t o
a p p o i n
t m e n t o f T A a n d p r i v a t e d e v e l o p e r
A c t i v i t y
M 1
M 2
M 3
M 4
M 5
M 6
M 7
M 8 M
9
M 1 0
M 1 1
M 1 2
A p p o i n t m e t o f t r a n s a c t i o n a d v i s o r
D e t a i l e d t e c h n o - e c o n o m i c f e a s i b i l i t y a n d
b i d d o c u m e n t p r e p a r a t i o n
B i d p r
o c e s s m a n a g e m e n t
S e l e c t i o n o f p r e f e r r e d b i d d e r a n d f o r m a t i o n o f S P C
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B a n g a l o r e D e v e l o p m e n t A u t h o r i t y
1 1
A n n e x u r e 1 ndash C a s h - f l o w
s t a t e m e n t
R e v e n u e H e a d
S u b H e a d R a t e
U n i t
3 1 - M a r - 1 4
3 1 - M
a r - 1 7
3 1 - M a r - 2 2
3 1 - M a r - 2 7
3 1 - M a r - 3 2
3 1 - M a r - 3 7
3 1 - M a r - 4 2
3 1 - M a r - 4 7
3 1 - M
a r - 5 2
3 1 - M a r - 5 7
3 1 - M a r - 6 2
C o m m e
r c i a l S p a c e
O c c u p a
n c y
P e r c e n t a g
0
9 0
9 5
9 5
9 5
9 5
9 5
9 5
9 5
9 5
9 5
C o m m e
r c i a l s p a c e l e a s e d o u t
s q f t
-
7 2 0 6
9 0
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6
0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
D e p o s i t f o r L e a s e
( N o o f m o n t h s r e n t )
1 2
A v e r a g e
L e a s e R e n t a l s
7 0
R s p s f p e r m o n t h
E s c a l a t i o n
1 0
M a i n t e n
a n c e c h a r g e s
2 2 5
R s p s f p e r m o n t h
R e v e n u e f r o m
L e a s e R e n t a l
R s
L a k h s
-
8 8
6 3
1 5 0
6 8
2 4 2
6 6
3 9 0
8 1
6 2 9
4 1
1 0 1 3
6 7
1 6 3 2
5 3
2 6
2 9
2 0
4 2 3 4
3 5
6 8 1 9
4 7
R e v e n u e f r o m
M a i n t e n a n c e c h a r g e s
-
2 8 5
4 8 4
7 8 0
1 2
5 6
2 0
2 3
3 2
5 8
5 2
4 7
8 4
5 1
1 3 6
1 0
2 1 9
2 0
T o t a l R
e v e n u e
-
9 1 4 8
1 5 5 5 2
2 5 0 4 6
4 0 3 3 8
6 4 9 6 4
1 0 4 6 2 5
1 6 8 5 0 0
2 7
1 3 7 1
4 3 7 0 4 6
7 0 3 8 6 7
R e v e n
u e H e a d
S u b H e a d R a t e
U n i t
3 1 - M a r - 6
7
3 1 - M a r - 7 2
3 1 - M a r - 7 8
3 1 - M a r - 7 9
C o m m e r c i a l S p a c e
O c c u p a n c y
P e r c e n t a g
9 5
9 5
9 5
9 5
C o m m e r c i a l s p a c e l e a s e d o u t
s q f t
7 6 0 7 2
8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
D e p o s i t f o r L e a s e
( N o o f m o n t h s r e n t )
1 2
A v e r a g
e L e a s e R e n t a l s
7 0 R s p s f p e r m o n t h
E s c a l a
t i o n
1 0
M a i n t e
n a n c e c h a r g e s
2 2
5 R s p s f p e r m o n t h
R e v e n u
e f r o m
L e a s e R e n t a l
R s
L a k h s
1 0
9 8 2 8 2
1 7
6 8 7
9 4
3 1
3 3 5
2 7
3 4
4 6 8
8 0
R e v e n u
e f r o m
M a i n t e n a n c e c h a r g e s
3 5 3 0 2
5 6 8
5 4
1 0 0 7
2 1
1 1 0 7
9 3
T o t a l R e v e n u e
1 1 3 3 5 8 4
1 8 2 5 6 4 8
3 2 3 4 2 4 8
3 5 5 7 6 7 2
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
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[x]
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
httpslidepdfcomreaderfullgim-pre-feasibility-report-indiranagarrevised 3233
[y]
Disclaimer
CRISIL Risk and Infrastructure Solutions Limited (CRIS) has taken due care and caution in preparation of this Report for
Bangalore Development Authority which is under the purview of the Urban Development Department Government of
Karnataka This Report is based on the information documents provided by the Company andor information available publicly
andor obtained by CRIS from sources which it considers reliable CRIS does not guarantee the accuracy adequacy or
completeness of the information documents Report and is not responsible for any errors or omissions or for the results
obtained from the use of the same The Report and results stated therein are subject to change CRIS especially states that it
has no financial liability whatsoever to the Company users of this Report This Report is strictly confidential and should not be
reproduced or redistributed or communicated directly or indirectly in any form or published or copied in whole or in part
especially outside India for any purpose
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
httpslidepdfcomreaderfullgim-pre-feasibility-report-indiranagarrevised 3333
Registered Office ndash Mum
CRISIL House Central AvenueHiranandani Business ParkPowai Mumbai- 400 076Phone 91-22-3342 3000Fax 91-22-3342 3810
New Delhi
The Mira G-1 1st Floor Plot NoIshwar Nagar Mathura Road
New Delhi - 110 065 IndiaPhone 91-11-4250 510091-11-2693 0117 - 121Fax 91-11-2684 2213
Hyderabad
3rd Floor Uma ChambersPlot No 9amp10 Nagarjuna HillsNear Punjagutta Cross RoadHyderabad - 500 082Phone 91-40-40328200Fax 91-40-2335 7507
Bengaluru
W-101 Sunrise Chambers22 Ulsoor RoadBengaluru - 560 042Phone 91-80-2558 0899Fax 91-80-2559 4801
Ahmedabad
706 Venus AtlantisNear Reliance Petrol PumpPrahladnagarAhmedabad -Phone 91-79-4024 4500Fax 91-79-2755 9863
Visit us atwwwcrisilcom
ai
1 amp 2
About CRISIL Infrastructu
CRISIL Infrastructure Advisory
CRISIL Risk and Infrastructure
Limited a 100 subsidiary of
Indiarsquos leading Ratings Resear
Policy Advisory Company
CRISIL Infrastructure Advisory
premier advisor focusing on po
well as commercial and contra
the areas of transport energyinfrastructure We also provide
international firms planning inv
India Over a period of time C
Infrastructure Advisory has buil
position for itself in these doma
considered the preferred cons
governments multilateral agen
sector clients We have extend
operations beyond India and ar
other emerging markets in Afri
and South Asia
re Advisory
is a division of
Solutions
RISIL Limited ndash
ch Risk and
is Indiarsquos
licy issues as
tual issues in
nd urbansupport to
stments in
ISIL
t a unique
ins and is
ltant by
cies and private-
ed our
e present in
a Middle East
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
httpslidepdfcomreaderfullgim-pre-feasibility-report-indiranagarrevised 2433
Bangalore Development Authority
[17]
7 Statutory amp legal framework
71 Legal amp regulatory framework
Development Control Regulations (DCR)
As per RMP ndash 2015 published by BDA the project site has been classified as ldquoCommercial Businessrdquo
As per the definitions of RMP-2015 Commercial Business Zone allows development of Commercial
and Corporate offices Retail Shopping Complexes Restaurants and Hotels Convention centres and
banquet halls financial institutions Cinema and multiplexes places of assembly exhibition centres
Entertainment and amusement centres and stores
Permissible land uses under Commercial (Business) Zone as per RMP-2015 of BDA
Main land use category C3
Other land uses permissible (as main land use) R I-3 T3 amp U4
If the road width is less than 120 m and plot area is less than 240 square metre then C2 I-2
R and U4 only are allowed
The plot size is 24000 square metre Presently it has 18m wide access road The applicable DCR for
the plot as per proposed road width is as follows
Table 7-1 Plot details of Indiranagar site
Sr No Particulars Description Unit
1 Land Use Commercial Business
2 Road Width 18 Metre
3 Permissible FAR 325
4Permissible ground
coverage50
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
httpslidepdfcomreaderfullgim-pre-feasibility-report-indiranagarrevised 2533
Bangalore Development Authority
[18]
8 Indicative environmental amp social impacts
81 Environmental impacts
The proposed development is in line with the layout of BDA Due to the reasonably large site area the
development will be on the higher side A set back of 50 is found to be acceptable for the site
however an Environmental Impact Assessment studies have to be undertaken for the sites Since
already a commercial complex is existent redevelopment of the complex would need demolition of
the existent structures Hence a suitable disposal of construction and debris has to be undertaken by
the developer Also a Green building can be developed to ensure minimal effect on nature
82 Social impactsDuring the construction period the existing establishments have to be shifted or compensated
temporarily Hence a clear resettlement plan has to be decided before the implementation of the
project It is envisaged that if due care is taken about the existing tenants the development would go
smoothly
83 Mitigation measures
It is necessary that the impacts are identified early and action plans are prepared for their mitigation in
advance For instance for environmental impacts the BDA may insist on the developer to use clean
and green building technologies
It is also necessary that the project development plan is also accompanied by a Relocation and
Rehabilitation plan which will layout detailed action points with the requisite intervening entity
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
httpslidepdfcomreaderfullgim-pre-feasibility-report-indiranagarrevised 2633
Bangalore Development Authority
[19]
9 Operating framework
91 Risks amp mitigation
The risk framework for this project has been outlined below
Table 9-1 Risk mitigation measures
Risk Category Risk implication Mitigation measure
Sponsor risk BDA scraps the project Termination payments in case of BDA scrapping the
project
Environment
risk
Adverse impact on
surrounding environment
Penalty clauses in case of default on
Concessionairersquos part
Environmental Impact Assessment to identify all
risks in advance
Political riskChange in government may
put project in jeopardy
Termination payments in case of project being
scrapped
Force
majeure riskProject is abandoned
Force majeure clauses in the concession
agreement
Operating riskThe operations of the
facility are stalled
Performance security clause in case of default on
Concessionairersquos part
Design risk Overdesign of the projectProject design to be finalized in mutual agreement
of concessionaire and BDA
Completion
risk
Completion of project is
delayed inconvenience to
citizens and tenants
Penalty clauses for time overrun in the concession
agreement
Cost overrun
risk
Project cost increases
beyond reasonable limits
Project cost increment ceiling to be specified in the
concession agreement Increase beyond this ceiling
to be borne by the developer No change in revenue
sharing
92 Indicative project structure
The best approach for such a large ticket project would be for the BDA to become a key actor in the
entire process of development The BDA may ask the private sector partner to form a Special
Purpose Company where the equity will be brought in by the private sector developer The designs
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
httpslidepdfcomreaderfullgim-pre-feasibility-report-indiranagarrevised 2733
Bangalore Development Authority
[20]
should be left to the developer and BDArsquos role would be in approving the same in accordance with the
Development Control Regulations
The SPC will develop and maintain Complex throughout the concession period The tenants would
pay the developer a sub-lease premium or lease rentals which will be escrowed in a separate accountand can be withdrawn based on the revenue sharing structure adopted
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
httpslidepdfcomreaderfullgim-pre-feasibility-report-indiranagarrevised 2833
Bangalore Development Authorit
10 Way ahead
101 Project develo
The key task for BDA is to ap
feasibility of the project Once t
the bid process
Figure 10-1 Project developm
The transaction advisor shall stralso prepare the relevant bid
management on behalf of BDA
102 Procurement
The foremost step for BDA is
feasibility The detailed financial
parameter Also an optimum str
bid documents would be prepar
process be conducted as a 2 sta
983105983152983152983151983145983150983156983149983141983150983156 983151983142 983156983154983137
983108983141983156983137983145983148983141983140 983142983141983137983155983145983138
983155983156983154983157983139983156983157983154983145983150983143
983120983154983141983152983137983154983137983156983145983151
983123983141983148983141983139
y
pment framework
oint a Transaction Advisor in order to conduc
e financial numbers are acceptable BDA BDA
nt framework
ucture the project upon completion of the feasibidocuments The transaction advisor shall un
nd will assist in appointment of the private secto
lan
to appoint a Transaction Advisor for the co
feasibility would determine the tentative revenue
cture would be arrived at Post the approval of
d for the selection of the developer It is recom
ge process involving Technical qualification and
983155983137983139983156983145983151983150 983137983140983158983145983155983151983154
983148983145983156983161 983155983156983157983140983145983141983155 983137983150983140 983152983154983151983146983141983139983156
983150 983151983142 983138983145983140 983140983151983139983157983149983141983150983156983155
983145983151983150 983151983142 983152983154983145983158983137983156983141 983155983141983139983156983151983154 983152983137983154983156983150983141983154
[21]
a detailed financial
should proceed with
ility studies and shallertake bid process
partner
nducting the project
for BDA and the bid
easibility Report the
mended that the Bid
inancial proposal
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
httpslidepdfcomreaderfullgim-pre-feasibility-report-indiranagarrevised 2933
B a n g a l o r e D e v e l o p m e n t A u t h o r i t y
B D A s h o u l d i n i t i a t e t h e p r o c e s s o f a p p o
i n t i n g a t r a n s a c t i o n a d v i s o r a t t h e
e a r l i e s t T h i s p r o c e s s c a n b e c o m p l e t e d i n 2 m o n t h s
O n c e t h e T A
i s i n p l a c e
t h e B D
A s h o u l d a l l o w
a t l e a s t 4 m o n t h s f o r t h e p r e p a r a t i o n o f f e a s i b i l i t y p r o j e c t s t r u c t u r i n g a n d b i d d o c u m e n
t s
O n c e t
h e b i d d o c u m e n t s a r e i n p l a c e t h
e B D A
s h o u l d i n i t i a t e t h e p r o c e s s
o f s e l e c t i n g t h e p r i v a t e s e c t o r p a
r t n e r w h i c h c a n b e c o m p l e t e d o v e r a 4 m o n t h
p e r i o d
T h e c u
r r e n t p r o c u r e m e n t p l a n i s s p r e a d
o v e r 1 1 m o n t h s w h i c h c a n b e s
h o r t e n e d d e p e n d i n g o n t h e m a n n e r i n w h i c h B D A
m a k e s d e c i s i o n
s r e l a t i n g t o
a p p o i n
t m e n t o f T A a n d p r i v a t e d e v e l o p e r
A c t i v i t y
M 1
M 2
M 3
M 4
M 5
M 6
M 7
M 8 M
9
M 1 0
M 1 1
M 1 2
A p p o i n t m e t o f t r a n s a c t i o n a d v i s o r
D e t a i l e d t e c h n o - e c o n o m i c f e a s i b i l i t y a n d
b i d d o c u m e n t p r e p a r a t i o n
B i d p r
o c e s s m a n a g e m e n t
S e l e c t i o n o f p r e f e r r e d b i d d e r a n d f o r m a t i o n o f S P C
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
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B a n g a l o r e D e v e l o p m e n t A u t h o r i t y
1 1
A n n e x u r e 1 ndash C a s h - f l o w
s t a t e m e n t
R e v e n u e H e a d
S u b H e a d R a t e
U n i t
3 1 - M a r - 1 4
3 1 - M
a r - 1 7
3 1 - M a r - 2 2
3 1 - M a r - 2 7
3 1 - M a r - 3 2
3 1 - M a r - 3 7
3 1 - M a r - 4 2
3 1 - M a r - 4 7
3 1 - M
a r - 5 2
3 1 - M a r - 5 7
3 1 - M a r - 6 2
C o m m e
r c i a l S p a c e
O c c u p a
n c y
P e r c e n t a g
0
9 0
9 5
9 5
9 5
9 5
9 5
9 5
9 5
9 5
9 5
C o m m e
r c i a l s p a c e l e a s e d o u t
s q f t
-
7 2 0 6
9 0
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6
0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
D e p o s i t f o r L e a s e
( N o o f m o n t h s r e n t )
1 2
A v e r a g e
L e a s e R e n t a l s
7 0
R s p s f p e r m o n t h
E s c a l a t i o n
1 0
M a i n t e n
a n c e c h a r g e s
2 2 5
R s p s f p e r m o n t h
R e v e n u e f r o m
L e a s e R e n t a l
R s
L a k h s
-
8 8
6 3
1 5 0
6 8
2 4 2
6 6
3 9 0
8 1
6 2 9
4 1
1 0 1 3
6 7
1 6 3 2
5 3
2 6
2 9
2 0
4 2 3 4
3 5
6 8 1 9
4 7
R e v e n u e f r o m
M a i n t e n a n c e c h a r g e s
-
2 8 5
4 8 4
7 8 0
1 2
5 6
2 0
2 3
3 2
5 8
5 2
4 7
8 4
5 1
1 3 6
1 0
2 1 9
2 0
T o t a l R
e v e n u e
-
9 1 4 8
1 5 5 5 2
2 5 0 4 6
4 0 3 3 8
6 4 9 6 4
1 0 4 6 2 5
1 6 8 5 0 0
2 7
1 3 7 1
4 3 7 0 4 6
7 0 3 8 6 7
R e v e n
u e H e a d
S u b H e a d R a t e
U n i t
3 1 - M a r - 6
7
3 1 - M a r - 7 2
3 1 - M a r - 7 8
3 1 - M a r - 7 9
C o m m e r c i a l S p a c e
O c c u p a n c y
P e r c e n t a g
9 5
9 5
9 5
9 5
C o m m e r c i a l s p a c e l e a s e d o u t
s q f t
7 6 0 7 2
8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
D e p o s i t f o r L e a s e
( N o o f m o n t h s r e n t )
1 2
A v e r a g
e L e a s e R e n t a l s
7 0 R s p s f p e r m o n t h
E s c a l a
t i o n
1 0
M a i n t e
n a n c e c h a r g e s
2 2
5 R s p s f p e r m o n t h
R e v e n u
e f r o m
L e a s e R e n t a l
R s
L a k h s
1 0
9 8 2 8 2
1 7
6 8 7
9 4
3 1
3 3 5
2 7
3 4
4 6 8
8 0
R e v e n u
e f r o m
M a i n t e n a n c e c h a r g e s
3 5 3 0 2
5 6 8
5 4
1 0 0 7
2 1
1 1 0 7
9 3
T o t a l R e v e n u e
1 1 3 3 5 8 4
1 8 2 5 6 4 8
3 2 3 4 2 4 8
3 5 5 7 6 7 2
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
httpslidepdfcomreaderfullgim-pre-feasibility-report-indiranagarrevised 3133
[x]
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
httpslidepdfcomreaderfullgim-pre-feasibility-report-indiranagarrevised 3233
[y]
Disclaimer
CRISIL Risk and Infrastructure Solutions Limited (CRIS) has taken due care and caution in preparation of this Report for
Bangalore Development Authority which is under the purview of the Urban Development Department Government of
Karnataka This Report is based on the information documents provided by the Company andor information available publicly
andor obtained by CRIS from sources which it considers reliable CRIS does not guarantee the accuracy adequacy or
completeness of the information documents Report and is not responsible for any errors or omissions or for the results
obtained from the use of the same The Report and results stated therein are subject to change CRIS especially states that it
has no financial liability whatsoever to the Company users of this Report This Report is strictly confidential and should not be
reproduced or redistributed or communicated directly or indirectly in any form or published or copied in whole or in part
especially outside India for any purpose
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
httpslidepdfcomreaderfullgim-pre-feasibility-report-indiranagarrevised 3333
Registered Office ndash Mum
CRISIL House Central AvenueHiranandani Business ParkPowai Mumbai- 400 076Phone 91-22-3342 3000Fax 91-22-3342 3810
New Delhi
The Mira G-1 1st Floor Plot NoIshwar Nagar Mathura Road
New Delhi - 110 065 IndiaPhone 91-11-4250 510091-11-2693 0117 - 121Fax 91-11-2684 2213
Hyderabad
3rd Floor Uma ChambersPlot No 9amp10 Nagarjuna HillsNear Punjagutta Cross RoadHyderabad - 500 082Phone 91-40-40328200Fax 91-40-2335 7507
Bengaluru
W-101 Sunrise Chambers22 Ulsoor RoadBengaluru - 560 042Phone 91-80-2558 0899Fax 91-80-2559 4801
Ahmedabad
706 Venus AtlantisNear Reliance Petrol PumpPrahladnagarAhmedabad -Phone 91-79-4024 4500Fax 91-79-2755 9863
Visit us atwwwcrisilcom
ai
1 amp 2
About CRISIL Infrastructu
CRISIL Infrastructure Advisory
CRISIL Risk and Infrastructure
Limited a 100 subsidiary of
Indiarsquos leading Ratings Resear
Policy Advisory Company
CRISIL Infrastructure Advisory
premier advisor focusing on po
well as commercial and contra
the areas of transport energyinfrastructure We also provide
international firms planning inv
India Over a period of time C
Infrastructure Advisory has buil
position for itself in these doma
considered the preferred cons
governments multilateral agen
sector clients We have extend
operations beyond India and ar
other emerging markets in Afri
and South Asia
re Advisory
is a division of
Solutions
RISIL Limited ndash
ch Risk and
is Indiarsquos
licy issues as
tual issues in
nd urbansupport to
stments in
ISIL
t a unique
ins and is
ltant by
cies and private-
ed our
e present in
a Middle East
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
httpslidepdfcomreaderfullgim-pre-feasibility-report-indiranagarrevised 2533
Bangalore Development Authority
[18]
8 Indicative environmental amp social impacts
81 Environmental impacts
The proposed development is in line with the layout of BDA Due to the reasonably large site area the
development will be on the higher side A set back of 50 is found to be acceptable for the site
however an Environmental Impact Assessment studies have to be undertaken for the sites Since
already a commercial complex is existent redevelopment of the complex would need demolition of
the existent structures Hence a suitable disposal of construction and debris has to be undertaken by
the developer Also a Green building can be developed to ensure minimal effect on nature
82 Social impactsDuring the construction period the existing establishments have to be shifted or compensated
temporarily Hence a clear resettlement plan has to be decided before the implementation of the
project It is envisaged that if due care is taken about the existing tenants the development would go
smoothly
83 Mitigation measures
It is necessary that the impacts are identified early and action plans are prepared for their mitigation in
advance For instance for environmental impacts the BDA may insist on the developer to use clean
and green building technologies
It is also necessary that the project development plan is also accompanied by a Relocation and
Rehabilitation plan which will layout detailed action points with the requisite intervening entity
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
httpslidepdfcomreaderfullgim-pre-feasibility-report-indiranagarrevised 2633
Bangalore Development Authority
[19]
9 Operating framework
91 Risks amp mitigation
The risk framework for this project has been outlined below
Table 9-1 Risk mitigation measures
Risk Category Risk implication Mitigation measure
Sponsor risk BDA scraps the project Termination payments in case of BDA scrapping the
project
Environment
risk
Adverse impact on
surrounding environment
Penalty clauses in case of default on
Concessionairersquos part
Environmental Impact Assessment to identify all
risks in advance
Political riskChange in government may
put project in jeopardy
Termination payments in case of project being
scrapped
Force
majeure riskProject is abandoned
Force majeure clauses in the concession
agreement
Operating riskThe operations of the
facility are stalled
Performance security clause in case of default on
Concessionairersquos part
Design risk Overdesign of the projectProject design to be finalized in mutual agreement
of concessionaire and BDA
Completion
risk
Completion of project is
delayed inconvenience to
citizens and tenants
Penalty clauses for time overrun in the concession
agreement
Cost overrun
risk
Project cost increases
beyond reasonable limits
Project cost increment ceiling to be specified in the
concession agreement Increase beyond this ceiling
to be borne by the developer No change in revenue
sharing
92 Indicative project structure
The best approach for such a large ticket project would be for the BDA to become a key actor in the
entire process of development The BDA may ask the private sector partner to form a Special
Purpose Company where the equity will be brought in by the private sector developer The designs
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
httpslidepdfcomreaderfullgim-pre-feasibility-report-indiranagarrevised 2733
Bangalore Development Authority
[20]
should be left to the developer and BDArsquos role would be in approving the same in accordance with the
Development Control Regulations
The SPC will develop and maintain Complex throughout the concession period The tenants would
pay the developer a sub-lease premium or lease rentals which will be escrowed in a separate accountand can be withdrawn based on the revenue sharing structure adopted
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
httpslidepdfcomreaderfullgim-pre-feasibility-report-indiranagarrevised 2833
Bangalore Development Authorit
10 Way ahead
101 Project develo
The key task for BDA is to ap
feasibility of the project Once t
the bid process
Figure 10-1 Project developm
The transaction advisor shall stralso prepare the relevant bid
management on behalf of BDA
102 Procurement
The foremost step for BDA is
feasibility The detailed financial
parameter Also an optimum str
bid documents would be prepar
process be conducted as a 2 sta
983105983152983152983151983145983150983156983149983141983150983156 983151983142 983156983154983137
983108983141983156983137983145983148983141983140 983142983141983137983155983145983138
983155983156983154983157983139983156983157983154983145983150983143
983120983154983141983152983137983154983137983156983145983151
983123983141983148983141983139
y
pment framework
oint a Transaction Advisor in order to conduc
e financial numbers are acceptable BDA BDA
nt framework
ucture the project upon completion of the feasibidocuments The transaction advisor shall un
nd will assist in appointment of the private secto
lan
to appoint a Transaction Advisor for the co
feasibility would determine the tentative revenue
cture would be arrived at Post the approval of
d for the selection of the developer It is recom
ge process involving Technical qualification and
983155983137983139983156983145983151983150 983137983140983158983145983155983151983154
983148983145983156983161 983155983156983157983140983145983141983155 983137983150983140 983152983154983151983146983141983139983156
983150 983151983142 983138983145983140 983140983151983139983157983149983141983150983156983155
983145983151983150 983151983142 983152983154983145983158983137983156983141 983155983141983139983156983151983154 983152983137983154983156983150983141983154
[21]
a detailed financial
should proceed with
ility studies and shallertake bid process
partner
nducting the project
for BDA and the bid
easibility Report the
mended that the Bid
inancial proposal
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
httpslidepdfcomreaderfullgim-pre-feasibility-report-indiranagarrevised 2933
B a n g a l o r e D e v e l o p m e n t A u t h o r i t y
B D A s h o u l d i n i t i a t e t h e p r o c e s s o f a p p o
i n t i n g a t r a n s a c t i o n a d v i s o r a t t h e
e a r l i e s t T h i s p r o c e s s c a n b e c o m p l e t e d i n 2 m o n t h s
O n c e t h e T A
i s i n p l a c e
t h e B D
A s h o u l d a l l o w
a t l e a s t 4 m o n t h s f o r t h e p r e p a r a t i o n o f f e a s i b i l i t y p r o j e c t s t r u c t u r i n g a n d b i d d o c u m e n
t s
O n c e t
h e b i d d o c u m e n t s a r e i n p l a c e t h
e B D A
s h o u l d i n i t i a t e t h e p r o c e s s
o f s e l e c t i n g t h e p r i v a t e s e c t o r p a
r t n e r w h i c h c a n b e c o m p l e t e d o v e r a 4 m o n t h
p e r i o d
T h e c u
r r e n t p r o c u r e m e n t p l a n i s s p r e a d
o v e r 1 1 m o n t h s w h i c h c a n b e s
h o r t e n e d d e p e n d i n g o n t h e m a n n e r i n w h i c h B D A
m a k e s d e c i s i o n
s r e l a t i n g t o
a p p o i n
t m e n t o f T A a n d p r i v a t e d e v e l o p e r
A c t i v i t y
M 1
M 2
M 3
M 4
M 5
M 6
M 7
M 8 M
9
M 1 0
M 1 1
M 1 2
A p p o i n t m e t o f t r a n s a c t i o n a d v i s o r
D e t a i l e d t e c h n o - e c o n o m i c f e a s i b i l i t y a n d
b i d d o c u m e n t p r e p a r a t i o n
B i d p r
o c e s s m a n a g e m e n t
S e l e c t i o n o f p r e f e r r e d b i d d e r a n d f o r m a t i o n o f S P C
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
httpslidepdfcomreaderfullgim-pre-feasibility-report-indiranagarrevised 3033
B a n g a l o r e D e v e l o p m e n t A u t h o r i t y
1 1
A n n e x u r e 1 ndash C a s h - f l o w
s t a t e m e n t
R e v e n u e H e a d
S u b H e a d R a t e
U n i t
3 1 - M a r - 1 4
3 1 - M
a r - 1 7
3 1 - M a r - 2 2
3 1 - M a r - 2 7
3 1 - M a r - 3 2
3 1 - M a r - 3 7
3 1 - M a r - 4 2
3 1 - M a r - 4 7
3 1 - M
a r - 5 2
3 1 - M a r - 5 7
3 1 - M a r - 6 2
C o m m e
r c i a l S p a c e
O c c u p a
n c y
P e r c e n t a g
0
9 0
9 5
9 5
9 5
9 5
9 5
9 5
9 5
9 5
9 5
C o m m e
r c i a l s p a c e l e a s e d o u t
s q f t
-
7 2 0 6
9 0
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6
0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
D e p o s i t f o r L e a s e
( N o o f m o n t h s r e n t )
1 2
A v e r a g e
L e a s e R e n t a l s
7 0
R s p s f p e r m o n t h
E s c a l a t i o n
1 0
M a i n t e n
a n c e c h a r g e s
2 2 5
R s p s f p e r m o n t h
R e v e n u e f r o m
L e a s e R e n t a l
R s
L a k h s
-
8 8
6 3
1 5 0
6 8
2 4 2
6 6
3 9 0
8 1
6 2 9
4 1
1 0 1 3
6 7
1 6 3 2
5 3
2 6
2 9
2 0
4 2 3 4
3 5
6 8 1 9
4 7
R e v e n u e f r o m
M a i n t e n a n c e c h a r g e s
-
2 8 5
4 8 4
7 8 0
1 2
5 6
2 0
2 3
3 2
5 8
5 2
4 7
8 4
5 1
1 3 6
1 0
2 1 9
2 0
T o t a l R
e v e n u e
-
9 1 4 8
1 5 5 5 2
2 5 0 4 6
4 0 3 3 8
6 4 9 6 4
1 0 4 6 2 5
1 6 8 5 0 0
2 7
1 3 7 1
4 3 7 0 4 6
7 0 3 8 6 7
R e v e n
u e H e a d
S u b H e a d R a t e
U n i t
3 1 - M a r - 6
7
3 1 - M a r - 7 2
3 1 - M a r - 7 8
3 1 - M a r - 7 9
C o m m e r c i a l S p a c e
O c c u p a n c y
P e r c e n t a g
9 5
9 5
9 5
9 5
C o m m e r c i a l s p a c e l e a s e d o u t
s q f t
7 6 0 7 2
8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
D e p o s i t f o r L e a s e
( N o o f m o n t h s r e n t )
1 2
A v e r a g
e L e a s e R e n t a l s
7 0 R s p s f p e r m o n t h
E s c a l a
t i o n
1 0
M a i n t e
n a n c e c h a r g e s
2 2
5 R s p s f p e r m o n t h
R e v e n u
e f r o m
L e a s e R e n t a l
R s
L a k h s
1 0
9 8 2 8 2
1 7
6 8 7
9 4
3 1
3 3 5
2 7
3 4
4 6 8
8 0
R e v e n u
e f r o m
M a i n t e n a n c e c h a r g e s
3 5 3 0 2
5 6 8
5 4
1 0 0 7
2 1
1 1 0 7
9 3
T o t a l R e v e n u e
1 1 3 3 5 8 4
1 8 2 5 6 4 8
3 2 3 4 2 4 8
3 5 5 7 6 7 2
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
httpslidepdfcomreaderfullgim-pre-feasibility-report-indiranagarrevised 3133
[x]
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
httpslidepdfcomreaderfullgim-pre-feasibility-report-indiranagarrevised 3233
[y]
Disclaimer
CRISIL Risk and Infrastructure Solutions Limited (CRIS) has taken due care and caution in preparation of this Report for
Bangalore Development Authority which is under the purview of the Urban Development Department Government of
Karnataka This Report is based on the information documents provided by the Company andor information available publicly
andor obtained by CRIS from sources which it considers reliable CRIS does not guarantee the accuracy adequacy or
completeness of the information documents Report and is not responsible for any errors or omissions or for the results
obtained from the use of the same The Report and results stated therein are subject to change CRIS especially states that it
has no financial liability whatsoever to the Company users of this Report This Report is strictly confidential and should not be
reproduced or redistributed or communicated directly or indirectly in any form or published or copied in whole or in part
especially outside India for any purpose
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
httpslidepdfcomreaderfullgim-pre-feasibility-report-indiranagarrevised 3333
Registered Office ndash Mum
CRISIL House Central AvenueHiranandani Business ParkPowai Mumbai- 400 076Phone 91-22-3342 3000Fax 91-22-3342 3810
New Delhi
The Mira G-1 1st Floor Plot NoIshwar Nagar Mathura Road
New Delhi - 110 065 IndiaPhone 91-11-4250 510091-11-2693 0117 - 121Fax 91-11-2684 2213
Hyderabad
3rd Floor Uma ChambersPlot No 9amp10 Nagarjuna HillsNear Punjagutta Cross RoadHyderabad - 500 082Phone 91-40-40328200Fax 91-40-2335 7507
Bengaluru
W-101 Sunrise Chambers22 Ulsoor RoadBengaluru - 560 042Phone 91-80-2558 0899Fax 91-80-2559 4801
Ahmedabad
706 Venus AtlantisNear Reliance Petrol PumpPrahladnagarAhmedabad -Phone 91-79-4024 4500Fax 91-79-2755 9863
Visit us atwwwcrisilcom
ai
1 amp 2
About CRISIL Infrastructu
CRISIL Infrastructure Advisory
CRISIL Risk and Infrastructure
Limited a 100 subsidiary of
Indiarsquos leading Ratings Resear
Policy Advisory Company
CRISIL Infrastructure Advisory
premier advisor focusing on po
well as commercial and contra
the areas of transport energyinfrastructure We also provide
international firms planning inv
India Over a period of time C
Infrastructure Advisory has buil
position for itself in these doma
considered the preferred cons
governments multilateral agen
sector clients We have extend
operations beyond India and ar
other emerging markets in Afri
and South Asia
re Advisory
is a division of
Solutions
RISIL Limited ndash
ch Risk and
is Indiarsquos
licy issues as
tual issues in
nd urbansupport to
stments in
ISIL
t a unique
ins and is
ltant by
cies and private-
ed our
e present in
a Middle East
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
httpslidepdfcomreaderfullgim-pre-feasibility-report-indiranagarrevised 2633
Bangalore Development Authority
[19]
9 Operating framework
91 Risks amp mitigation
The risk framework for this project has been outlined below
Table 9-1 Risk mitigation measures
Risk Category Risk implication Mitigation measure
Sponsor risk BDA scraps the project Termination payments in case of BDA scrapping the
project
Environment
risk
Adverse impact on
surrounding environment
Penalty clauses in case of default on
Concessionairersquos part
Environmental Impact Assessment to identify all
risks in advance
Political riskChange in government may
put project in jeopardy
Termination payments in case of project being
scrapped
Force
majeure riskProject is abandoned
Force majeure clauses in the concession
agreement
Operating riskThe operations of the
facility are stalled
Performance security clause in case of default on
Concessionairersquos part
Design risk Overdesign of the projectProject design to be finalized in mutual agreement
of concessionaire and BDA
Completion
risk
Completion of project is
delayed inconvenience to
citizens and tenants
Penalty clauses for time overrun in the concession
agreement
Cost overrun
risk
Project cost increases
beyond reasonable limits
Project cost increment ceiling to be specified in the
concession agreement Increase beyond this ceiling
to be borne by the developer No change in revenue
sharing
92 Indicative project structure
The best approach for such a large ticket project would be for the BDA to become a key actor in the
entire process of development The BDA may ask the private sector partner to form a Special
Purpose Company where the equity will be brought in by the private sector developer The designs
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
httpslidepdfcomreaderfullgim-pre-feasibility-report-indiranagarrevised 2733
Bangalore Development Authority
[20]
should be left to the developer and BDArsquos role would be in approving the same in accordance with the
Development Control Regulations
The SPC will develop and maintain Complex throughout the concession period The tenants would
pay the developer a sub-lease premium or lease rentals which will be escrowed in a separate accountand can be withdrawn based on the revenue sharing structure adopted
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
httpslidepdfcomreaderfullgim-pre-feasibility-report-indiranagarrevised 2833
Bangalore Development Authorit
10 Way ahead
101 Project develo
The key task for BDA is to ap
feasibility of the project Once t
the bid process
Figure 10-1 Project developm
The transaction advisor shall stralso prepare the relevant bid
management on behalf of BDA
102 Procurement
The foremost step for BDA is
feasibility The detailed financial
parameter Also an optimum str
bid documents would be prepar
process be conducted as a 2 sta
983105983152983152983151983145983150983156983149983141983150983156 983151983142 983156983154983137
983108983141983156983137983145983148983141983140 983142983141983137983155983145983138
983155983156983154983157983139983156983157983154983145983150983143
983120983154983141983152983137983154983137983156983145983151
983123983141983148983141983139
y
pment framework
oint a Transaction Advisor in order to conduc
e financial numbers are acceptable BDA BDA
nt framework
ucture the project upon completion of the feasibidocuments The transaction advisor shall un
nd will assist in appointment of the private secto
lan
to appoint a Transaction Advisor for the co
feasibility would determine the tentative revenue
cture would be arrived at Post the approval of
d for the selection of the developer It is recom
ge process involving Technical qualification and
983155983137983139983156983145983151983150 983137983140983158983145983155983151983154
983148983145983156983161 983155983156983157983140983145983141983155 983137983150983140 983152983154983151983146983141983139983156
983150 983151983142 983138983145983140 983140983151983139983157983149983141983150983156983155
983145983151983150 983151983142 983152983154983145983158983137983156983141 983155983141983139983156983151983154 983152983137983154983156983150983141983154
[21]
a detailed financial
should proceed with
ility studies and shallertake bid process
partner
nducting the project
for BDA and the bid
easibility Report the
mended that the Bid
inancial proposal
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
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B a n g a l o r e D e v e l o p m e n t A u t h o r i t y
B D A s h o u l d i n i t i a t e t h e p r o c e s s o f a p p o
i n t i n g a t r a n s a c t i o n a d v i s o r a t t h e
e a r l i e s t T h i s p r o c e s s c a n b e c o m p l e t e d i n 2 m o n t h s
O n c e t h e T A
i s i n p l a c e
t h e B D
A s h o u l d a l l o w
a t l e a s t 4 m o n t h s f o r t h e p r e p a r a t i o n o f f e a s i b i l i t y p r o j e c t s t r u c t u r i n g a n d b i d d o c u m e n
t s
O n c e t
h e b i d d o c u m e n t s a r e i n p l a c e t h
e B D A
s h o u l d i n i t i a t e t h e p r o c e s s
o f s e l e c t i n g t h e p r i v a t e s e c t o r p a
r t n e r w h i c h c a n b e c o m p l e t e d o v e r a 4 m o n t h
p e r i o d
T h e c u
r r e n t p r o c u r e m e n t p l a n i s s p r e a d
o v e r 1 1 m o n t h s w h i c h c a n b e s
h o r t e n e d d e p e n d i n g o n t h e m a n n e r i n w h i c h B D A
m a k e s d e c i s i o n
s r e l a t i n g t o
a p p o i n
t m e n t o f T A a n d p r i v a t e d e v e l o p e r
A c t i v i t y
M 1
M 2
M 3
M 4
M 5
M 6
M 7
M 8 M
9
M 1 0
M 1 1
M 1 2
A p p o i n t m e t o f t r a n s a c t i o n a d v i s o r
D e t a i l e d t e c h n o - e c o n o m i c f e a s i b i l i t y a n d
b i d d o c u m e n t p r e p a r a t i o n
B i d p r
o c e s s m a n a g e m e n t
S e l e c t i o n o f p r e f e r r e d b i d d e r a n d f o r m a t i o n o f S P C
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
httpslidepdfcomreaderfullgim-pre-feasibility-report-indiranagarrevised 3033
B a n g a l o r e D e v e l o p m e n t A u t h o r i t y
1 1
A n n e x u r e 1 ndash C a s h - f l o w
s t a t e m e n t
R e v e n u e H e a d
S u b H e a d R a t e
U n i t
3 1 - M a r - 1 4
3 1 - M
a r - 1 7
3 1 - M a r - 2 2
3 1 - M a r - 2 7
3 1 - M a r - 3 2
3 1 - M a r - 3 7
3 1 - M a r - 4 2
3 1 - M a r - 4 7
3 1 - M
a r - 5 2
3 1 - M a r - 5 7
3 1 - M a r - 6 2
C o m m e
r c i a l S p a c e
O c c u p a
n c y
P e r c e n t a g
0
9 0
9 5
9 5
9 5
9 5
9 5
9 5
9 5
9 5
9 5
C o m m e
r c i a l s p a c e l e a s e d o u t
s q f t
-
7 2 0 6
9 0
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6
0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
D e p o s i t f o r L e a s e
( N o o f m o n t h s r e n t )
1 2
A v e r a g e
L e a s e R e n t a l s
7 0
R s p s f p e r m o n t h
E s c a l a t i o n
1 0
M a i n t e n
a n c e c h a r g e s
2 2 5
R s p s f p e r m o n t h
R e v e n u e f r o m
L e a s e R e n t a l
R s
L a k h s
-
8 8
6 3
1 5 0
6 8
2 4 2
6 6
3 9 0
8 1
6 2 9
4 1
1 0 1 3
6 7
1 6 3 2
5 3
2 6
2 9
2 0
4 2 3 4
3 5
6 8 1 9
4 7
R e v e n u e f r o m
M a i n t e n a n c e c h a r g e s
-
2 8 5
4 8 4
7 8 0
1 2
5 6
2 0
2 3
3 2
5 8
5 2
4 7
8 4
5 1
1 3 6
1 0
2 1 9
2 0
T o t a l R
e v e n u e
-
9 1 4 8
1 5 5 5 2
2 5 0 4 6
4 0 3 3 8
6 4 9 6 4
1 0 4 6 2 5
1 6 8 5 0 0
2 7
1 3 7 1
4 3 7 0 4 6
7 0 3 8 6 7
R e v e n
u e H e a d
S u b H e a d R a t e
U n i t
3 1 - M a r - 6
7
3 1 - M a r - 7 2
3 1 - M a r - 7 8
3 1 - M a r - 7 9
C o m m e r c i a l S p a c e
O c c u p a n c y
P e r c e n t a g
9 5
9 5
9 5
9 5
C o m m e r c i a l s p a c e l e a s e d o u t
s q f t
7 6 0 7 2
8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
D e p o s i t f o r L e a s e
( N o o f m o n t h s r e n t )
1 2
A v e r a g
e L e a s e R e n t a l s
7 0 R s p s f p e r m o n t h
E s c a l a
t i o n
1 0
M a i n t e
n a n c e c h a r g e s
2 2
5 R s p s f p e r m o n t h
R e v e n u
e f r o m
L e a s e R e n t a l
R s
L a k h s
1 0
9 8 2 8 2
1 7
6 8 7
9 4
3 1
3 3 5
2 7
3 4
4 6 8
8 0
R e v e n u
e f r o m
M a i n t e n a n c e c h a r g e s
3 5 3 0 2
5 6 8
5 4
1 0 0 7
2 1
1 1 0 7
9 3
T o t a l R e v e n u e
1 1 3 3 5 8 4
1 8 2 5 6 4 8
3 2 3 4 2 4 8
3 5 5 7 6 7 2
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
httpslidepdfcomreaderfullgim-pre-feasibility-report-indiranagarrevised 3133
[x]
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
httpslidepdfcomreaderfullgim-pre-feasibility-report-indiranagarrevised 3233
[y]
Disclaimer
CRISIL Risk and Infrastructure Solutions Limited (CRIS) has taken due care and caution in preparation of this Report for
Bangalore Development Authority which is under the purview of the Urban Development Department Government of
Karnataka This Report is based on the information documents provided by the Company andor information available publicly
andor obtained by CRIS from sources which it considers reliable CRIS does not guarantee the accuracy adequacy or
completeness of the information documents Report and is not responsible for any errors or omissions or for the results
obtained from the use of the same The Report and results stated therein are subject to change CRIS especially states that it
has no financial liability whatsoever to the Company users of this Report This Report is strictly confidential and should not be
reproduced or redistributed or communicated directly or indirectly in any form or published or copied in whole or in part
especially outside India for any purpose
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
httpslidepdfcomreaderfullgim-pre-feasibility-report-indiranagarrevised 3333
Registered Office ndash Mum
CRISIL House Central AvenueHiranandani Business ParkPowai Mumbai- 400 076Phone 91-22-3342 3000Fax 91-22-3342 3810
New Delhi
The Mira G-1 1st Floor Plot NoIshwar Nagar Mathura Road
New Delhi - 110 065 IndiaPhone 91-11-4250 510091-11-2693 0117 - 121Fax 91-11-2684 2213
Hyderabad
3rd Floor Uma ChambersPlot No 9amp10 Nagarjuna HillsNear Punjagutta Cross RoadHyderabad - 500 082Phone 91-40-40328200Fax 91-40-2335 7507
Bengaluru
W-101 Sunrise Chambers22 Ulsoor RoadBengaluru - 560 042Phone 91-80-2558 0899Fax 91-80-2559 4801
Ahmedabad
706 Venus AtlantisNear Reliance Petrol PumpPrahladnagarAhmedabad -Phone 91-79-4024 4500Fax 91-79-2755 9863
Visit us atwwwcrisilcom
ai
1 amp 2
About CRISIL Infrastructu
CRISIL Infrastructure Advisory
CRISIL Risk and Infrastructure
Limited a 100 subsidiary of
Indiarsquos leading Ratings Resear
Policy Advisory Company
CRISIL Infrastructure Advisory
premier advisor focusing on po
well as commercial and contra
the areas of transport energyinfrastructure We also provide
international firms planning inv
India Over a period of time C
Infrastructure Advisory has buil
position for itself in these doma
considered the preferred cons
governments multilateral agen
sector clients We have extend
operations beyond India and ar
other emerging markets in Afri
and South Asia
re Advisory
is a division of
Solutions
RISIL Limited ndash
ch Risk and
is Indiarsquos
licy issues as
tual issues in
nd urbansupport to
stments in
ISIL
t a unique
ins and is
ltant by
cies and private-
ed our
e present in
a Middle East
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
httpslidepdfcomreaderfullgim-pre-feasibility-report-indiranagarrevised 2733
Bangalore Development Authority
[20]
should be left to the developer and BDArsquos role would be in approving the same in accordance with the
Development Control Regulations
The SPC will develop and maintain Complex throughout the concession period The tenants would
pay the developer a sub-lease premium or lease rentals which will be escrowed in a separate accountand can be withdrawn based on the revenue sharing structure adopted
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
httpslidepdfcomreaderfullgim-pre-feasibility-report-indiranagarrevised 2833
Bangalore Development Authorit
10 Way ahead
101 Project develo
The key task for BDA is to ap
feasibility of the project Once t
the bid process
Figure 10-1 Project developm
The transaction advisor shall stralso prepare the relevant bid
management on behalf of BDA
102 Procurement
The foremost step for BDA is
feasibility The detailed financial
parameter Also an optimum str
bid documents would be prepar
process be conducted as a 2 sta
983105983152983152983151983145983150983156983149983141983150983156 983151983142 983156983154983137
983108983141983156983137983145983148983141983140 983142983141983137983155983145983138
983155983156983154983157983139983156983157983154983145983150983143
983120983154983141983152983137983154983137983156983145983151
983123983141983148983141983139
y
pment framework
oint a Transaction Advisor in order to conduc
e financial numbers are acceptable BDA BDA
nt framework
ucture the project upon completion of the feasibidocuments The transaction advisor shall un
nd will assist in appointment of the private secto
lan
to appoint a Transaction Advisor for the co
feasibility would determine the tentative revenue
cture would be arrived at Post the approval of
d for the selection of the developer It is recom
ge process involving Technical qualification and
983155983137983139983156983145983151983150 983137983140983158983145983155983151983154
983148983145983156983161 983155983156983157983140983145983141983155 983137983150983140 983152983154983151983146983141983139983156
983150 983151983142 983138983145983140 983140983151983139983157983149983141983150983156983155
983145983151983150 983151983142 983152983154983145983158983137983156983141 983155983141983139983156983151983154 983152983137983154983156983150983141983154
[21]
a detailed financial
should proceed with
ility studies and shallertake bid process
partner
nducting the project
for BDA and the bid
easibility Report the
mended that the Bid
inancial proposal
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
httpslidepdfcomreaderfullgim-pre-feasibility-report-indiranagarrevised 2933
B a n g a l o r e D e v e l o p m e n t A u t h o r i t y
B D A s h o u l d i n i t i a t e t h e p r o c e s s o f a p p o
i n t i n g a t r a n s a c t i o n a d v i s o r a t t h e
e a r l i e s t T h i s p r o c e s s c a n b e c o m p l e t e d i n 2 m o n t h s
O n c e t h e T A
i s i n p l a c e
t h e B D
A s h o u l d a l l o w
a t l e a s t 4 m o n t h s f o r t h e p r e p a r a t i o n o f f e a s i b i l i t y p r o j e c t s t r u c t u r i n g a n d b i d d o c u m e n
t s
O n c e t
h e b i d d o c u m e n t s a r e i n p l a c e t h
e B D A
s h o u l d i n i t i a t e t h e p r o c e s s
o f s e l e c t i n g t h e p r i v a t e s e c t o r p a
r t n e r w h i c h c a n b e c o m p l e t e d o v e r a 4 m o n t h
p e r i o d
T h e c u
r r e n t p r o c u r e m e n t p l a n i s s p r e a d
o v e r 1 1 m o n t h s w h i c h c a n b e s
h o r t e n e d d e p e n d i n g o n t h e m a n n e r i n w h i c h B D A
m a k e s d e c i s i o n
s r e l a t i n g t o
a p p o i n
t m e n t o f T A a n d p r i v a t e d e v e l o p e r
A c t i v i t y
M 1
M 2
M 3
M 4
M 5
M 6
M 7
M 8 M
9
M 1 0
M 1 1
M 1 2
A p p o i n t m e t o f t r a n s a c t i o n a d v i s o r
D e t a i l e d t e c h n o - e c o n o m i c f e a s i b i l i t y a n d
b i d d o c u m e n t p r e p a r a t i o n
B i d p r
o c e s s m a n a g e m e n t
S e l e c t i o n o f p r e f e r r e d b i d d e r a n d f o r m a t i o n o f S P C
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
httpslidepdfcomreaderfullgim-pre-feasibility-report-indiranagarrevised 3033
B a n g a l o r e D e v e l o p m e n t A u t h o r i t y
1 1
A n n e x u r e 1 ndash C a s h - f l o w
s t a t e m e n t
R e v e n u e H e a d
S u b H e a d R a t e
U n i t
3 1 - M a r - 1 4
3 1 - M
a r - 1 7
3 1 - M a r - 2 2
3 1 - M a r - 2 7
3 1 - M a r - 3 2
3 1 - M a r - 3 7
3 1 - M a r - 4 2
3 1 - M a r - 4 7
3 1 - M
a r - 5 2
3 1 - M a r - 5 7
3 1 - M a r - 6 2
C o m m e
r c i a l S p a c e
O c c u p a
n c y
P e r c e n t a g
0
9 0
9 5
9 5
9 5
9 5
9 5
9 5
9 5
9 5
9 5
C o m m e
r c i a l s p a c e l e a s e d o u t
s q f t
-
7 2 0 6
9 0
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6
0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
D e p o s i t f o r L e a s e
( N o o f m o n t h s r e n t )
1 2
A v e r a g e
L e a s e R e n t a l s
7 0
R s p s f p e r m o n t h
E s c a l a t i o n
1 0
M a i n t e n
a n c e c h a r g e s
2 2 5
R s p s f p e r m o n t h
R e v e n u e f r o m
L e a s e R e n t a l
R s
L a k h s
-
8 8
6 3
1 5 0
6 8
2 4 2
6 6
3 9 0
8 1
6 2 9
4 1
1 0 1 3
6 7
1 6 3 2
5 3
2 6
2 9
2 0
4 2 3 4
3 5
6 8 1 9
4 7
R e v e n u e f r o m
M a i n t e n a n c e c h a r g e s
-
2 8 5
4 8 4
7 8 0
1 2
5 6
2 0
2 3
3 2
5 8
5 2
4 7
8 4
5 1
1 3 6
1 0
2 1 9
2 0
T o t a l R
e v e n u e
-
9 1 4 8
1 5 5 5 2
2 5 0 4 6
4 0 3 3 8
6 4 9 6 4
1 0 4 6 2 5
1 6 8 5 0 0
2 7
1 3 7 1
4 3 7 0 4 6
7 0 3 8 6 7
R e v e n
u e H e a d
S u b H e a d R a t e
U n i t
3 1 - M a r - 6
7
3 1 - M a r - 7 2
3 1 - M a r - 7 8
3 1 - M a r - 7 9
C o m m e r c i a l S p a c e
O c c u p a n c y
P e r c e n t a g
9 5
9 5
9 5
9 5
C o m m e r c i a l s p a c e l e a s e d o u t
s q f t
7 6 0 7 2
8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
D e p o s i t f o r L e a s e
( N o o f m o n t h s r e n t )
1 2
A v e r a g
e L e a s e R e n t a l s
7 0 R s p s f p e r m o n t h
E s c a l a
t i o n
1 0
M a i n t e
n a n c e c h a r g e s
2 2
5 R s p s f p e r m o n t h
R e v e n u
e f r o m
L e a s e R e n t a l
R s
L a k h s
1 0
9 8 2 8 2
1 7
6 8 7
9 4
3 1
3 3 5
2 7
3 4
4 6 8
8 0
R e v e n u
e f r o m
M a i n t e n a n c e c h a r g e s
3 5 3 0 2
5 6 8
5 4
1 0 0 7
2 1
1 1 0 7
9 3
T o t a l R e v e n u e
1 1 3 3 5 8 4
1 8 2 5 6 4 8
3 2 3 4 2 4 8
3 5 5 7 6 7 2
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
httpslidepdfcomreaderfullgim-pre-feasibility-report-indiranagarrevised 3133
[x]
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
httpslidepdfcomreaderfullgim-pre-feasibility-report-indiranagarrevised 3233
[y]
Disclaimer
CRISIL Risk and Infrastructure Solutions Limited (CRIS) has taken due care and caution in preparation of this Report for
Bangalore Development Authority which is under the purview of the Urban Development Department Government of
Karnataka This Report is based on the information documents provided by the Company andor information available publicly
andor obtained by CRIS from sources which it considers reliable CRIS does not guarantee the accuracy adequacy or
completeness of the information documents Report and is not responsible for any errors or omissions or for the results
obtained from the use of the same The Report and results stated therein are subject to change CRIS especially states that it
has no financial liability whatsoever to the Company users of this Report This Report is strictly confidential and should not be
reproduced or redistributed or communicated directly or indirectly in any form or published or copied in whole or in part
especially outside India for any purpose
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
httpslidepdfcomreaderfullgim-pre-feasibility-report-indiranagarrevised 3333
Registered Office ndash Mum
CRISIL House Central AvenueHiranandani Business ParkPowai Mumbai- 400 076Phone 91-22-3342 3000Fax 91-22-3342 3810
New Delhi
The Mira G-1 1st Floor Plot NoIshwar Nagar Mathura Road
New Delhi - 110 065 IndiaPhone 91-11-4250 510091-11-2693 0117 - 121Fax 91-11-2684 2213
Hyderabad
3rd Floor Uma ChambersPlot No 9amp10 Nagarjuna HillsNear Punjagutta Cross RoadHyderabad - 500 082Phone 91-40-40328200Fax 91-40-2335 7507
Bengaluru
W-101 Sunrise Chambers22 Ulsoor RoadBengaluru - 560 042Phone 91-80-2558 0899Fax 91-80-2559 4801
Ahmedabad
706 Venus AtlantisNear Reliance Petrol PumpPrahladnagarAhmedabad -Phone 91-79-4024 4500Fax 91-79-2755 9863
Visit us atwwwcrisilcom
ai
1 amp 2
About CRISIL Infrastructu
CRISIL Infrastructure Advisory
CRISIL Risk and Infrastructure
Limited a 100 subsidiary of
Indiarsquos leading Ratings Resear
Policy Advisory Company
CRISIL Infrastructure Advisory
premier advisor focusing on po
well as commercial and contra
the areas of transport energyinfrastructure We also provide
international firms planning inv
India Over a period of time C
Infrastructure Advisory has buil
position for itself in these doma
considered the preferred cons
governments multilateral agen
sector clients We have extend
operations beyond India and ar
other emerging markets in Afri
and South Asia
re Advisory
is a division of
Solutions
RISIL Limited ndash
ch Risk and
is Indiarsquos
licy issues as
tual issues in
nd urbansupport to
stments in
ISIL
t a unique
ins and is
ltant by
cies and private-
ed our
e present in
a Middle East
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
httpslidepdfcomreaderfullgim-pre-feasibility-report-indiranagarrevised 2833
Bangalore Development Authorit
10 Way ahead
101 Project develo
The key task for BDA is to ap
feasibility of the project Once t
the bid process
Figure 10-1 Project developm
The transaction advisor shall stralso prepare the relevant bid
management on behalf of BDA
102 Procurement
The foremost step for BDA is
feasibility The detailed financial
parameter Also an optimum str
bid documents would be prepar
process be conducted as a 2 sta
983105983152983152983151983145983150983156983149983141983150983156 983151983142 983156983154983137
983108983141983156983137983145983148983141983140 983142983141983137983155983145983138
983155983156983154983157983139983156983157983154983145983150983143
983120983154983141983152983137983154983137983156983145983151
983123983141983148983141983139
y
pment framework
oint a Transaction Advisor in order to conduc
e financial numbers are acceptable BDA BDA
nt framework
ucture the project upon completion of the feasibidocuments The transaction advisor shall un
nd will assist in appointment of the private secto
lan
to appoint a Transaction Advisor for the co
feasibility would determine the tentative revenue
cture would be arrived at Post the approval of
d for the selection of the developer It is recom
ge process involving Technical qualification and
983155983137983139983156983145983151983150 983137983140983158983145983155983151983154
983148983145983156983161 983155983156983157983140983145983141983155 983137983150983140 983152983154983151983146983141983139983156
983150 983151983142 983138983145983140 983140983151983139983157983149983141983150983156983155
983145983151983150 983151983142 983152983154983145983158983137983156983141 983155983141983139983156983151983154 983152983137983154983156983150983141983154
[21]
a detailed financial
should proceed with
ility studies and shallertake bid process
partner
nducting the project
for BDA and the bid
easibility Report the
mended that the Bid
inancial proposal
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
httpslidepdfcomreaderfullgim-pre-feasibility-report-indiranagarrevised 2933
B a n g a l o r e D e v e l o p m e n t A u t h o r i t y
B D A s h o u l d i n i t i a t e t h e p r o c e s s o f a p p o
i n t i n g a t r a n s a c t i o n a d v i s o r a t t h e
e a r l i e s t T h i s p r o c e s s c a n b e c o m p l e t e d i n 2 m o n t h s
O n c e t h e T A
i s i n p l a c e
t h e B D
A s h o u l d a l l o w
a t l e a s t 4 m o n t h s f o r t h e p r e p a r a t i o n o f f e a s i b i l i t y p r o j e c t s t r u c t u r i n g a n d b i d d o c u m e n
t s
O n c e t
h e b i d d o c u m e n t s a r e i n p l a c e t h
e B D A
s h o u l d i n i t i a t e t h e p r o c e s s
o f s e l e c t i n g t h e p r i v a t e s e c t o r p a
r t n e r w h i c h c a n b e c o m p l e t e d o v e r a 4 m o n t h
p e r i o d
T h e c u
r r e n t p r o c u r e m e n t p l a n i s s p r e a d
o v e r 1 1 m o n t h s w h i c h c a n b e s
h o r t e n e d d e p e n d i n g o n t h e m a n n e r i n w h i c h B D A
m a k e s d e c i s i o n
s r e l a t i n g t o
a p p o i n
t m e n t o f T A a n d p r i v a t e d e v e l o p e r
A c t i v i t y
M 1
M 2
M 3
M 4
M 5
M 6
M 7
M 8 M
9
M 1 0
M 1 1
M 1 2
A p p o i n t m e t o f t r a n s a c t i o n a d v i s o r
D e t a i l e d t e c h n o - e c o n o m i c f e a s i b i l i t y a n d
b i d d o c u m e n t p r e p a r a t i o n
B i d p r
o c e s s m a n a g e m e n t
S e l e c t i o n o f p r e f e r r e d b i d d e r a n d f o r m a t i o n o f S P C
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
httpslidepdfcomreaderfullgim-pre-feasibility-report-indiranagarrevised 3033
B a n g a l o r e D e v e l o p m e n t A u t h o r i t y
1 1
A n n e x u r e 1 ndash C a s h - f l o w
s t a t e m e n t
R e v e n u e H e a d
S u b H e a d R a t e
U n i t
3 1 - M a r - 1 4
3 1 - M
a r - 1 7
3 1 - M a r - 2 2
3 1 - M a r - 2 7
3 1 - M a r - 3 2
3 1 - M a r - 3 7
3 1 - M a r - 4 2
3 1 - M a r - 4 7
3 1 - M
a r - 5 2
3 1 - M a r - 5 7
3 1 - M a r - 6 2
C o m m e
r c i a l S p a c e
O c c u p a
n c y
P e r c e n t a g
0
9 0
9 5
9 5
9 5
9 5
9 5
9 5
9 5
9 5
9 5
C o m m e
r c i a l s p a c e l e a s e d o u t
s q f t
-
7 2 0 6
9 0
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6
0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
D e p o s i t f o r L e a s e
( N o o f m o n t h s r e n t )
1 2
A v e r a g e
L e a s e R e n t a l s
7 0
R s p s f p e r m o n t h
E s c a l a t i o n
1 0
M a i n t e n
a n c e c h a r g e s
2 2 5
R s p s f p e r m o n t h
R e v e n u e f r o m
L e a s e R e n t a l
R s
L a k h s
-
8 8
6 3
1 5 0
6 8
2 4 2
6 6
3 9 0
8 1
6 2 9
4 1
1 0 1 3
6 7
1 6 3 2
5 3
2 6
2 9
2 0
4 2 3 4
3 5
6 8 1 9
4 7
R e v e n u e f r o m
M a i n t e n a n c e c h a r g e s
-
2 8 5
4 8 4
7 8 0
1 2
5 6
2 0
2 3
3 2
5 8
5 2
4 7
8 4
5 1
1 3 6
1 0
2 1 9
2 0
T o t a l R
e v e n u e
-
9 1 4 8
1 5 5 5 2
2 5 0 4 6
4 0 3 3 8
6 4 9 6 4
1 0 4 6 2 5
1 6 8 5 0 0
2 7
1 3 7 1
4 3 7 0 4 6
7 0 3 8 6 7
R e v e n
u e H e a d
S u b H e a d R a t e
U n i t
3 1 - M a r - 6
7
3 1 - M a r - 7 2
3 1 - M a r - 7 8
3 1 - M a r - 7 9
C o m m e r c i a l S p a c e
O c c u p a n c y
P e r c e n t a g
9 5
9 5
9 5
9 5
C o m m e r c i a l s p a c e l e a s e d o u t
s q f t
7 6 0 7 2
8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
D e p o s i t f o r L e a s e
( N o o f m o n t h s r e n t )
1 2
A v e r a g
e L e a s e R e n t a l s
7 0 R s p s f p e r m o n t h
E s c a l a
t i o n
1 0
M a i n t e
n a n c e c h a r g e s
2 2
5 R s p s f p e r m o n t h
R e v e n u
e f r o m
L e a s e R e n t a l
R s
L a k h s
1 0
9 8 2 8 2
1 7
6 8 7
9 4
3 1
3 3 5
2 7
3 4
4 6 8
8 0
R e v e n u
e f r o m
M a i n t e n a n c e c h a r g e s
3 5 3 0 2
5 6 8
5 4
1 0 0 7
2 1
1 1 0 7
9 3
T o t a l R e v e n u e
1 1 3 3 5 8 4
1 8 2 5 6 4 8
3 2 3 4 2 4 8
3 5 5 7 6 7 2
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
httpslidepdfcomreaderfullgim-pre-feasibility-report-indiranagarrevised 3133
[x]
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
httpslidepdfcomreaderfullgim-pre-feasibility-report-indiranagarrevised 3233
[y]
Disclaimer
CRISIL Risk and Infrastructure Solutions Limited (CRIS) has taken due care and caution in preparation of this Report for
Bangalore Development Authority which is under the purview of the Urban Development Department Government of
Karnataka This Report is based on the information documents provided by the Company andor information available publicly
andor obtained by CRIS from sources which it considers reliable CRIS does not guarantee the accuracy adequacy or
completeness of the information documents Report and is not responsible for any errors or omissions or for the results
obtained from the use of the same The Report and results stated therein are subject to change CRIS especially states that it
has no financial liability whatsoever to the Company users of this Report This Report is strictly confidential and should not be
reproduced or redistributed or communicated directly or indirectly in any form or published or copied in whole or in part
especially outside India for any purpose
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
httpslidepdfcomreaderfullgim-pre-feasibility-report-indiranagarrevised 3333
Registered Office ndash Mum
CRISIL House Central AvenueHiranandani Business ParkPowai Mumbai- 400 076Phone 91-22-3342 3000Fax 91-22-3342 3810
New Delhi
The Mira G-1 1st Floor Plot NoIshwar Nagar Mathura Road
New Delhi - 110 065 IndiaPhone 91-11-4250 510091-11-2693 0117 - 121Fax 91-11-2684 2213
Hyderabad
3rd Floor Uma ChambersPlot No 9amp10 Nagarjuna HillsNear Punjagutta Cross RoadHyderabad - 500 082Phone 91-40-40328200Fax 91-40-2335 7507
Bengaluru
W-101 Sunrise Chambers22 Ulsoor RoadBengaluru - 560 042Phone 91-80-2558 0899Fax 91-80-2559 4801
Ahmedabad
706 Venus AtlantisNear Reliance Petrol PumpPrahladnagarAhmedabad -Phone 91-79-4024 4500Fax 91-79-2755 9863
Visit us atwwwcrisilcom
ai
1 amp 2
About CRISIL Infrastructu
CRISIL Infrastructure Advisory
CRISIL Risk and Infrastructure
Limited a 100 subsidiary of
Indiarsquos leading Ratings Resear
Policy Advisory Company
CRISIL Infrastructure Advisory
premier advisor focusing on po
well as commercial and contra
the areas of transport energyinfrastructure We also provide
international firms planning inv
India Over a period of time C
Infrastructure Advisory has buil
position for itself in these doma
considered the preferred cons
governments multilateral agen
sector clients We have extend
operations beyond India and ar
other emerging markets in Afri
and South Asia
re Advisory
is a division of
Solutions
RISIL Limited ndash
ch Risk and
is Indiarsquos
licy issues as
tual issues in
nd urbansupport to
stments in
ISIL
t a unique
ins and is
ltant by
cies and private-
ed our
e present in
a Middle East
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
httpslidepdfcomreaderfullgim-pre-feasibility-report-indiranagarrevised 2933
B a n g a l o r e D e v e l o p m e n t A u t h o r i t y
B D A s h o u l d i n i t i a t e t h e p r o c e s s o f a p p o
i n t i n g a t r a n s a c t i o n a d v i s o r a t t h e
e a r l i e s t T h i s p r o c e s s c a n b e c o m p l e t e d i n 2 m o n t h s
O n c e t h e T A
i s i n p l a c e
t h e B D
A s h o u l d a l l o w
a t l e a s t 4 m o n t h s f o r t h e p r e p a r a t i o n o f f e a s i b i l i t y p r o j e c t s t r u c t u r i n g a n d b i d d o c u m e n
t s
O n c e t
h e b i d d o c u m e n t s a r e i n p l a c e t h
e B D A
s h o u l d i n i t i a t e t h e p r o c e s s
o f s e l e c t i n g t h e p r i v a t e s e c t o r p a
r t n e r w h i c h c a n b e c o m p l e t e d o v e r a 4 m o n t h
p e r i o d
T h e c u
r r e n t p r o c u r e m e n t p l a n i s s p r e a d
o v e r 1 1 m o n t h s w h i c h c a n b e s
h o r t e n e d d e p e n d i n g o n t h e m a n n e r i n w h i c h B D A
m a k e s d e c i s i o n
s r e l a t i n g t o
a p p o i n
t m e n t o f T A a n d p r i v a t e d e v e l o p e r
A c t i v i t y
M 1
M 2
M 3
M 4
M 5
M 6
M 7
M 8 M
9
M 1 0
M 1 1
M 1 2
A p p o i n t m e t o f t r a n s a c t i o n a d v i s o r
D e t a i l e d t e c h n o - e c o n o m i c f e a s i b i l i t y a n d
b i d d o c u m e n t p r e p a r a t i o n
B i d p r
o c e s s m a n a g e m e n t
S e l e c t i o n o f p r e f e r r e d b i d d e r a n d f o r m a t i o n o f S P C
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
httpslidepdfcomreaderfullgim-pre-feasibility-report-indiranagarrevised 3033
B a n g a l o r e D e v e l o p m e n t A u t h o r i t y
1 1
A n n e x u r e 1 ndash C a s h - f l o w
s t a t e m e n t
R e v e n u e H e a d
S u b H e a d R a t e
U n i t
3 1 - M a r - 1 4
3 1 - M
a r - 1 7
3 1 - M a r - 2 2
3 1 - M a r - 2 7
3 1 - M a r - 3 2
3 1 - M a r - 3 7
3 1 - M a r - 4 2
3 1 - M a r - 4 7
3 1 - M
a r - 5 2
3 1 - M a r - 5 7
3 1 - M a r - 6 2
C o m m e
r c i a l S p a c e
O c c u p a
n c y
P e r c e n t a g
0
9 0
9 5
9 5
9 5
9 5
9 5
9 5
9 5
9 5
9 5
C o m m e
r c i a l s p a c e l e a s e d o u t
s q f t
-
7 2 0 6
9 0
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6
0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
D e p o s i t f o r L e a s e
( N o o f m o n t h s r e n t )
1 2
A v e r a g e
L e a s e R e n t a l s
7 0
R s p s f p e r m o n t h
E s c a l a t i o n
1 0
M a i n t e n
a n c e c h a r g e s
2 2 5
R s p s f p e r m o n t h
R e v e n u e f r o m
L e a s e R e n t a l
R s
L a k h s
-
8 8
6 3
1 5 0
6 8
2 4 2
6 6
3 9 0
8 1
6 2 9
4 1
1 0 1 3
6 7
1 6 3 2
5 3
2 6
2 9
2 0
4 2 3 4
3 5
6 8 1 9
4 7
R e v e n u e f r o m
M a i n t e n a n c e c h a r g e s
-
2 8 5
4 8 4
7 8 0
1 2
5 6
2 0
2 3
3 2
5 8
5 2
4 7
8 4
5 1
1 3 6
1 0
2 1 9
2 0
T o t a l R
e v e n u e
-
9 1 4 8
1 5 5 5 2
2 5 0 4 6
4 0 3 3 8
6 4 9 6 4
1 0 4 6 2 5
1 6 8 5 0 0
2 7
1 3 7 1
4 3 7 0 4 6
7 0 3 8 6 7
R e v e n
u e H e a d
S u b H e a d R a t e
U n i t
3 1 - M a r - 6
7
3 1 - M a r - 7 2
3 1 - M a r - 7 8
3 1 - M a r - 7 9
C o m m e r c i a l S p a c e
O c c u p a n c y
P e r c e n t a g
9 5
9 5
9 5
9 5
C o m m e r c i a l s p a c e l e a s e d o u t
s q f t
7 6 0 7 2
8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
D e p o s i t f o r L e a s e
( N o o f m o n t h s r e n t )
1 2
A v e r a g
e L e a s e R e n t a l s
7 0 R s p s f p e r m o n t h
E s c a l a
t i o n
1 0
M a i n t e
n a n c e c h a r g e s
2 2
5 R s p s f p e r m o n t h
R e v e n u
e f r o m
L e a s e R e n t a l
R s
L a k h s
1 0
9 8 2 8 2
1 7
6 8 7
9 4
3 1
3 3 5
2 7
3 4
4 6 8
8 0
R e v e n u
e f r o m
M a i n t e n a n c e c h a r g e s
3 5 3 0 2
5 6 8
5 4
1 0 0 7
2 1
1 1 0 7
9 3
T o t a l R e v e n u e
1 1 3 3 5 8 4
1 8 2 5 6 4 8
3 2 3 4 2 4 8
3 5 5 7 6 7 2
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
httpslidepdfcomreaderfullgim-pre-feasibility-report-indiranagarrevised 3133
[x]
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
httpslidepdfcomreaderfullgim-pre-feasibility-report-indiranagarrevised 3233
[y]
Disclaimer
CRISIL Risk and Infrastructure Solutions Limited (CRIS) has taken due care and caution in preparation of this Report for
Bangalore Development Authority which is under the purview of the Urban Development Department Government of
Karnataka This Report is based on the information documents provided by the Company andor information available publicly
andor obtained by CRIS from sources which it considers reliable CRIS does not guarantee the accuracy adequacy or
completeness of the information documents Report and is not responsible for any errors or omissions or for the results
obtained from the use of the same The Report and results stated therein are subject to change CRIS especially states that it
has no financial liability whatsoever to the Company users of this Report This Report is strictly confidential and should not be
reproduced or redistributed or communicated directly or indirectly in any form or published or copied in whole or in part
especially outside India for any purpose
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
httpslidepdfcomreaderfullgim-pre-feasibility-report-indiranagarrevised 3333
Registered Office ndash Mum
CRISIL House Central AvenueHiranandani Business ParkPowai Mumbai- 400 076Phone 91-22-3342 3000Fax 91-22-3342 3810
New Delhi
The Mira G-1 1st Floor Plot NoIshwar Nagar Mathura Road
New Delhi - 110 065 IndiaPhone 91-11-4250 510091-11-2693 0117 - 121Fax 91-11-2684 2213
Hyderabad
3rd Floor Uma ChambersPlot No 9amp10 Nagarjuna HillsNear Punjagutta Cross RoadHyderabad - 500 082Phone 91-40-40328200Fax 91-40-2335 7507
Bengaluru
W-101 Sunrise Chambers22 Ulsoor RoadBengaluru - 560 042Phone 91-80-2558 0899Fax 91-80-2559 4801
Ahmedabad
706 Venus AtlantisNear Reliance Petrol PumpPrahladnagarAhmedabad -Phone 91-79-4024 4500Fax 91-79-2755 9863
Visit us atwwwcrisilcom
ai
1 amp 2
About CRISIL Infrastructu
CRISIL Infrastructure Advisory
CRISIL Risk and Infrastructure
Limited a 100 subsidiary of
Indiarsquos leading Ratings Resear
Policy Advisory Company
CRISIL Infrastructure Advisory
premier advisor focusing on po
well as commercial and contra
the areas of transport energyinfrastructure We also provide
international firms planning inv
India Over a period of time C
Infrastructure Advisory has buil
position for itself in these doma
considered the preferred cons
governments multilateral agen
sector clients We have extend
operations beyond India and ar
other emerging markets in Afri
and South Asia
re Advisory
is a division of
Solutions
RISIL Limited ndash
ch Risk and
is Indiarsquos
licy issues as
tual issues in
nd urbansupport to
stments in
ISIL
t a unique
ins and is
ltant by
cies and private-
ed our
e present in
a Middle East
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
httpslidepdfcomreaderfullgim-pre-feasibility-report-indiranagarrevised 3033
B a n g a l o r e D e v e l o p m e n t A u t h o r i t y
1 1
A n n e x u r e 1 ndash C a s h - f l o w
s t a t e m e n t
R e v e n u e H e a d
S u b H e a d R a t e
U n i t
3 1 - M a r - 1 4
3 1 - M
a r - 1 7
3 1 - M a r - 2 2
3 1 - M a r - 2 7
3 1 - M a r - 3 2
3 1 - M a r - 3 7
3 1 - M a r - 4 2
3 1 - M a r - 4 7
3 1 - M
a r - 5 2
3 1 - M a r - 5 7
3 1 - M a r - 6 2
C o m m e
r c i a l S p a c e
O c c u p a
n c y
P e r c e n t a g
0
9 0
9 5
9 5
9 5
9 5
9 5
9 5
9 5
9 5
9 5
C o m m e
r c i a l s p a c e l e a s e d o u t
s q f t
-
7 2 0 6
9 0
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
7 6
0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
D e p o s i t f o r L e a s e
( N o o f m o n t h s r e n t )
1 2
A v e r a g e
L e a s e R e n t a l s
7 0
R s p s f p e r m o n t h
E s c a l a t i o n
1 0
M a i n t e n
a n c e c h a r g e s
2 2 5
R s p s f p e r m o n t h
R e v e n u e f r o m
L e a s e R e n t a l
R s
L a k h s
-
8 8
6 3
1 5 0
6 8
2 4 2
6 6
3 9 0
8 1
6 2 9
4 1
1 0 1 3
6 7
1 6 3 2
5 3
2 6
2 9
2 0
4 2 3 4
3 5
6 8 1 9
4 7
R e v e n u e f r o m
M a i n t e n a n c e c h a r g e s
-
2 8 5
4 8 4
7 8 0
1 2
5 6
2 0
2 3
3 2
5 8
5 2
4 7
8 4
5 1
1 3 6
1 0
2 1 9
2 0
T o t a l R
e v e n u e
-
9 1 4 8
1 5 5 5 2
2 5 0 4 6
4 0 3 3 8
6 4 9 6 4
1 0 4 6 2 5
1 6 8 5 0 0
2 7
1 3 7 1
4 3 7 0 4 6
7 0 3 8 6 7
R e v e n
u e H e a d
S u b H e a d R a t e
U n i t
3 1 - M a r - 6
7
3 1 - M a r - 7 2
3 1 - M a r - 7 8
3 1 - M a r - 7 9
C o m m e r c i a l S p a c e
O c c u p a n c y
P e r c e n t a g
9 5
9 5
9 5
9 5
C o m m e r c i a l s p a c e l e a s e d o u t
s q f t
7 6 0 7 2
8
7 6 0 7
2 8
7 6 0 7
2 8
7 6 0 7
2 8
D e p o s i t f o r L e a s e
( N o o f m o n t h s r e n t )
1 2
A v e r a g
e L e a s e R e n t a l s
7 0 R s p s f p e r m o n t h
E s c a l a
t i o n
1 0
M a i n t e
n a n c e c h a r g e s
2 2
5 R s p s f p e r m o n t h
R e v e n u
e f r o m
L e a s e R e n t a l
R s
L a k h s
1 0
9 8 2 8 2
1 7
6 8 7
9 4
3 1
3 3 5
2 7
3 4
4 6 8
8 0
R e v e n u
e f r o m
M a i n t e n a n c e c h a r g e s
3 5 3 0 2
5 6 8
5 4
1 0 0 7
2 1
1 1 0 7
9 3
T o t a l R e v e n u e
1 1 3 3 5 8 4
1 8 2 5 6 4 8
3 2 3 4 2 4 8
3 5 5 7 6 7 2
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
httpslidepdfcomreaderfullgim-pre-feasibility-report-indiranagarrevised 3133
[x]
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
httpslidepdfcomreaderfullgim-pre-feasibility-report-indiranagarrevised 3233
[y]
Disclaimer
CRISIL Risk and Infrastructure Solutions Limited (CRIS) has taken due care and caution in preparation of this Report for
Bangalore Development Authority which is under the purview of the Urban Development Department Government of
Karnataka This Report is based on the information documents provided by the Company andor information available publicly
andor obtained by CRIS from sources which it considers reliable CRIS does not guarantee the accuracy adequacy or
completeness of the information documents Report and is not responsible for any errors or omissions or for the results
obtained from the use of the same The Report and results stated therein are subject to change CRIS especially states that it
has no financial liability whatsoever to the Company users of this Report This Report is strictly confidential and should not be
reproduced or redistributed or communicated directly or indirectly in any form or published or copied in whole or in part
especially outside India for any purpose
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
httpslidepdfcomreaderfullgim-pre-feasibility-report-indiranagarrevised 3333
Registered Office ndash Mum
CRISIL House Central AvenueHiranandani Business ParkPowai Mumbai- 400 076Phone 91-22-3342 3000Fax 91-22-3342 3810
New Delhi
The Mira G-1 1st Floor Plot NoIshwar Nagar Mathura Road
New Delhi - 110 065 IndiaPhone 91-11-4250 510091-11-2693 0117 - 121Fax 91-11-2684 2213
Hyderabad
3rd Floor Uma ChambersPlot No 9amp10 Nagarjuna HillsNear Punjagutta Cross RoadHyderabad - 500 082Phone 91-40-40328200Fax 91-40-2335 7507
Bengaluru
W-101 Sunrise Chambers22 Ulsoor RoadBengaluru - 560 042Phone 91-80-2558 0899Fax 91-80-2559 4801
Ahmedabad
706 Venus AtlantisNear Reliance Petrol PumpPrahladnagarAhmedabad -Phone 91-79-4024 4500Fax 91-79-2755 9863
Visit us atwwwcrisilcom
ai
1 amp 2
About CRISIL Infrastructu
CRISIL Infrastructure Advisory
CRISIL Risk and Infrastructure
Limited a 100 subsidiary of
Indiarsquos leading Ratings Resear
Policy Advisory Company
CRISIL Infrastructure Advisory
premier advisor focusing on po
well as commercial and contra
the areas of transport energyinfrastructure We also provide
international firms planning inv
India Over a period of time C
Infrastructure Advisory has buil
position for itself in these doma
considered the preferred cons
governments multilateral agen
sector clients We have extend
operations beyond India and ar
other emerging markets in Afri
and South Asia
re Advisory
is a division of
Solutions
RISIL Limited ndash
ch Risk and
is Indiarsquos
licy issues as
tual issues in
nd urbansupport to
stments in
ISIL
t a unique
ins and is
ltant by
cies and private-
ed our
e present in
a Middle East
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
httpslidepdfcomreaderfullgim-pre-feasibility-report-indiranagarrevised 3133
[x]
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
httpslidepdfcomreaderfullgim-pre-feasibility-report-indiranagarrevised 3233
[y]
Disclaimer
CRISIL Risk and Infrastructure Solutions Limited (CRIS) has taken due care and caution in preparation of this Report for
Bangalore Development Authority which is under the purview of the Urban Development Department Government of
Karnataka This Report is based on the information documents provided by the Company andor information available publicly
andor obtained by CRIS from sources which it considers reliable CRIS does not guarantee the accuracy adequacy or
completeness of the information documents Report and is not responsible for any errors or omissions or for the results
obtained from the use of the same The Report and results stated therein are subject to change CRIS especially states that it
has no financial liability whatsoever to the Company users of this Report This Report is strictly confidential and should not be
reproduced or redistributed or communicated directly or indirectly in any form or published or copied in whole or in part
especially outside India for any purpose
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
httpslidepdfcomreaderfullgim-pre-feasibility-report-indiranagarrevised 3333
Registered Office ndash Mum
CRISIL House Central AvenueHiranandani Business ParkPowai Mumbai- 400 076Phone 91-22-3342 3000Fax 91-22-3342 3810
New Delhi
The Mira G-1 1st Floor Plot NoIshwar Nagar Mathura Road
New Delhi - 110 065 IndiaPhone 91-11-4250 510091-11-2693 0117 - 121Fax 91-11-2684 2213
Hyderabad
3rd Floor Uma ChambersPlot No 9amp10 Nagarjuna HillsNear Punjagutta Cross RoadHyderabad - 500 082Phone 91-40-40328200Fax 91-40-2335 7507
Bengaluru
W-101 Sunrise Chambers22 Ulsoor RoadBengaluru - 560 042Phone 91-80-2558 0899Fax 91-80-2559 4801
Ahmedabad
706 Venus AtlantisNear Reliance Petrol PumpPrahladnagarAhmedabad -Phone 91-79-4024 4500Fax 91-79-2755 9863
Visit us atwwwcrisilcom
ai
1 amp 2
About CRISIL Infrastructu
CRISIL Infrastructure Advisory
CRISIL Risk and Infrastructure
Limited a 100 subsidiary of
Indiarsquos leading Ratings Resear
Policy Advisory Company
CRISIL Infrastructure Advisory
premier advisor focusing on po
well as commercial and contra
the areas of transport energyinfrastructure We also provide
international firms planning inv
India Over a period of time C
Infrastructure Advisory has buil
position for itself in these doma
considered the preferred cons
governments multilateral agen
sector clients We have extend
operations beyond India and ar
other emerging markets in Afri
and South Asia
re Advisory
is a division of
Solutions
RISIL Limited ndash
ch Risk and
is Indiarsquos
licy issues as
tual issues in
nd urbansupport to
stments in
ISIL
t a unique
ins and is
ltant by
cies and private-
ed our
e present in
a Middle East
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
httpslidepdfcomreaderfullgim-pre-feasibility-report-indiranagarrevised 3233
[y]
Disclaimer
CRISIL Risk and Infrastructure Solutions Limited (CRIS) has taken due care and caution in preparation of this Report for
Bangalore Development Authority which is under the purview of the Urban Development Department Government of
Karnataka This Report is based on the information documents provided by the Company andor information available publicly
andor obtained by CRIS from sources which it considers reliable CRIS does not guarantee the accuracy adequacy or
completeness of the information documents Report and is not responsible for any errors or omissions or for the results
obtained from the use of the same The Report and results stated therein are subject to change CRIS especially states that it
has no financial liability whatsoever to the Company users of this Report This Report is strictly confidential and should not be
reproduced or redistributed or communicated directly or indirectly in any form or published or copied in whole or in part
especially outside India for any purpose
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
httpslidepdfcomreaderfullgim-pre-feasibility-report-indiranagarrevised 3333
Registered Office ndash Mum
CRISIL House Central AvenueHiranandani Business ParkPowai Mumbai- 400 076Phone 91-22-3342 3000Fax 91-22-3342 3810
New Delhi
The Mira G-1 1st Floor Plot NoIshwar Nagar Mathura Road
New Delhi - 110 065 IndiaPhone 91-11-4250 510091-11-2693 0117 - 121Fax 91-11-2684 2213
Hyderabad
3rd Floor Uma ChambersPlot No 9amp10 Nagarjuna HillsNear Punjagutta Cross RoadHyderabad - 500 082Phone 91-40-40328200Fax 91-40-2335 7507
Bengaluru
W-101 Sunrise Chambers22 Ulsoor RoadBengaluru - 560 042Phone 91-80-2558 0899Fax 91-80-2559 4801
Ahmedabad
706 Venus AtlantisNear Reliance Petrol PumpPrahladnagarAhmedabad -Phone 91-79-4024 4500Fax 91-79-2755 9863
Visit us atwwwcrisilcom
ai
1 amp 2
About CRISIL Infrastructu
CRISIL Infrastructure Advisory
CRISIL Risk and Infrastructure
Limited a 100 subsidiary of
Indiarsquos leading Ratings Resear
Policy Advisory Company
CRISIL Infrastructure Advisory
premier advisor focusing on po
well as commercial and contra
the areas of transport energyinfrastructure We also provide
international firms planning inv
India Over a period of time C
Infrastructure Advisory has buil
position for itself in these doma
considered the preferred cons
governments multilateral agen
sector clients We have extend
operations beyond India and ar
other emerging markets in Afri
and South Asia
re Advisory
is a division of
Solutions
RISIL Limited ndash
ch Risk and
is Indiarsquos
licy issues as
tual issues in
nd urbansupport to
stments in
ISIL
t a unique
ins and is
ltant by
cies and private-
ed our
e present in
a Middle East
7212019 GIM Pre-Feasibility Report - Indiranagar_Revised
httpslidepdfcomreaderfullgim-pre-feasibility-report-indiranagarrevised 3333
Registered Office ndash Mum
CRISIL House Central AvenueHiranandani Business ParkPowai Mumbai- 400 076Phone 91-22-3342 3000Fax 91-22-3342 3810
New Delhi
The Mira G-1 1st Floor Plot NoIshwar Nagar Mathura Road
New Delhi - 110 065 IndiaPhone 91-11-4250 510091-11-2693 0117 - 121Fax 91-11-2684 2213
Hyderabad
3rd Floor Uma ChambersPlot No 9amp10 Nagarjuna HillsNear Punjagutta Cross RoadHyderabad - 500 082Phone 91-40-40328200Fax 91-40-2335 7507
Bengaluru
W-101 Sunrise Chambers22 Ulsoor RoadBengaluru - 560 042Phone 91-80-2558 0899Fax 91-80-2559 4801
Ahmedabad
706 Venus AtlantisNear Reliance Petrol PumpPrahladnagarAhmedabad -Phone 91-79-4024 4500Fax 91-79-2755 9863
Visit us atwwwcrisilcom
ai
1 amp 2
About CRISIL Infrastructu
CRISIL Infrastructure Advisory
CRISIL Risk and Infrastructure
Limited a 100 subsidiary of
Indiarsquos leading Ratings Resear
Policy Advisory Company
CRISIL Infrastructure Advisory
premier advisor focusing on po
well as commercial and contra
the areas of transport energyinfrastructure We also provide
international firms planning inv
India Over a period of time C
Infrastructure Advisory has buil
position for itself in these doma
considered the preferred cons
governments multilateral agen
sector clients We have extend
operations beyond India and ar
other emerging markets in Afri
and South Asia
re Advisory
is a division of
Solutions
RISIL Limited ndash
ch Risk and
is Indiarsquos
licy issues as
tual issues in
nd urbansupport to
stments in
ISIL
t a unique
ins and is
ltant by
cies and private-
ed our
e present in
a Middle East
Recommended