Flying high

In this week's edition of Open House , I shared my thoughts on 3D printing and its future in real estate. To read the full editions in your inbox every Thursday, subscribe for free?on my website (https://ashwinderrsingh.com/ ).

An airport is, in many ways, an engineering and real estate marvel on a large scale. Over the years, they've become more than just travel hubs. They're fulcrums of economic growth and real estate development. Ideally, they're well connected to other modes of transport like roads, railways, and metro networks.

Airports are usually on a city's outskirts. That's understandable since you need plenty of land to build a full-fledged international airport. But what about the surroundings? Depending on where you are, the nearby areas might have a lot of real estate projects or barely any. It's interesting to consider how airports influence the real estate sector since they can go hand-in-hand.

Economic driver

Economic growth and infrastructure are joined at the hip. Mega projects like airports don't just cohesively link a region with the world but also generate economic activities.

Mobility is a key attribute of a successful economy, and airports play a big part in that. Airports are a gateway, literally, as people enter a city, state, or country. A new airport can change the dynamics of a locality through increasing connectivity to other locations, facilitating trade logistics, and improving commutes. If the movement of labour and capital is considered an important component of the Industrial Revolution 4.0, then airports will always be vital.

Airports are complex economic systems by themselves. Apart from passenger activities, there are cargo, catering, and other ancillary services to generate job opportunities. Airports have moved towards non-aeronautical revenue (NAR) sources to unlock new paths to generate revenue. Here are some of the spillover effects for the real estate sector:

• A massive project like an airport necessitates a big push for transport infrastructure development like roadways and metro lines for the region.
• The area surrounding an airport can become a self-sustainable business ecosystem. As commercial activities pick up with offices and retail, housing demand will accelerate.
• The region surrounding an airport can be fertile ground for alternate tourist activities like eco and business hotels and medical and wellness tourism.

Apart from existing airports, up-and-coming ones present the real estate sector with interesting opportunities. Take the proposed Parandur airport near Chennai, for example. An analysis by Wisdom Properties showed that it could have a positive spillover effect. Property values in neighbouring areas are expected to increase by 15%. It's also because Parandur is 10 km from the Thirumalpur Railway Station and the government plans to extend the Chennai metro to Sriperumbudur, a vital industrial hub.

Aerocities

Aerocities are a relatively new phenomenon. They're fully functional business districts anchored around the airport. There's a realisation that the centre of gravity of modern cities' business is shifting toward aerocities. They can range from 200 to 1,500 acres around the airport region, usually 1-3 km from the main airport premises. It's the 21st century's new urban development paradigm necessitated by the shift toward NAR.

Globally, the share of NAR is about 60% as the pandemic reinforced the importance of diversifying revenue streams. In India, that number is relatively low overall, except for larger airports like Delhi (60%) and Mumbai (55%).

One of the most notable examples of an aerocity is the KLIA Aeropolis in Malaysia’s Kuala Lumpur. It spans over 100 sq km of aviation, business, and leisure space. Dubai has the Festival City. Located a mile from the international airport, it has housing for 1 lakh residents, schools, malls, and a marina.

India got its first aerocity in 2010 around the Indira Gandhi International Airport in New Delhi during the Commonwealth Games. Spread across 200 acres, it became a sought-after neighbourhood in the National Capital Region (NCR).

According to 360 Realtors, India has 9 Aerocity projects spread over 14,000 acres. Among those under construction are a 150-acre project near the newly inaugurated Valmiki International Airport in Ayodhya and the 740-acre Aerocity project near the Navi Mumbai International Airport.

Promising runway to success

Perhaps the biggest reason to be optimistic about the impact on real estate is that tier 2 and 3 cities are seeing increasing passenger numbers. The government has responded with more airports. That means a boom in property investments. The Airports Authority of India (AAI) has about 45,000 acres of land around 50 airports ripe for development.

As the economy grows and people's propensity to travel increases, the real estate sector will have its hands full to keep up with projects around airports. It's a gold mine in the waiting.