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Dense and Expanding: Urban Development and Land Markets inChennai, India

Research for this paper was conducted as a land market assessment in the Chennai Metropolitan Area (CMA) as a joint effort of the World Bank, the Chennai Metropolitan Development Authority (CMDA) and the Department of Geography, University of Madras. The study was initiated in June, 2003, and the underlying methodology and approach is provided by Dowall (1995).ii The CMDA was responsible for compiling detailed land use archival information for the metropolitan area and interpreting IKONOS satellite images for 2001. The CMDA also built the socio-economic and housing database, linking together information on population, households and dwelling units from Government of India Censuses. The University of Madras Department of Geography was responsible for carrying out the extensive surveys of real estate brokers in the metropolitan area.

Working Paper 2007-18INSTITUTE OF URBAN AND REGIONAL DEVELOPMENTSubmitted By:Mahinder BawariaVishal ChettryChennai located in State of Tamil Nadu, 4th largest metropolitan area in India, population of 7 million in 2001.Main automobile production and assembly center in India and gradually becoming a back-office and IT center.The Metropolitan Area comprises of the Chennai City Corporation, 16 municipalities, 20 Special Grade Village Panchayats and 214 villages. The total land area is 1,189 square kilometers.Unlike other cities, Chennai partially liberalized land policy and it recognizes the role of the private sector in housing and real estate development. Still it has rent control and a very low FSI (1: 1.5). These regulations and inadequate infrastructure service coverage, might be a cause of the unusual density trends of the city in the area outside the central 10 km of the CMA .BACKGROUNDThe population of the CMA doubled form 1971- 2001.In 1971 the CCC accounted for 75 % of the regions population, but 2001 share decreased to 62 %.The core of Chennai, area within 5 km of the central railway station, 50 % of the regions population in 1971. By 2001, the cores share declined to 31 %, but in absolute terms, population increased by 400,000.In contrast, the ring just beyond the core, 6-10 km, increased in both absolute terms, by 1.44 million people, as well percentage terms, from 27 to 34 %.Already dense center of Chennai continues to absorb population due to the fact that there has been little redevelopment which would displace population. The population in 6 - 10 km band seems to have stopped Inc. in relative importance. It might be, that area reached a density limit or due to low FSI (1:1.50).Decentralization pattern in Chennais population is not due to a loss of population in the center, it is due to the filling of available land. The average gross density of the city, measured by the number of persons per urbanized hectare of land, increased from 136 in 1971 to 152 in 2001, indicating that the city is supporting a larger number of residents per hectare of land.TRENDS IN SPATIAL DISTRIBUTION OF POPULATION AND DENSITY

DENSITY GRADIENTSCOMPARISON DENSITY GRADIENTSIt has much lower central city density & density gradient than Hyderabad/Ahmedabad, to having a much higher central city density and density gradient due to Inc. density in the central city; but parts of central Chennai has higher gross density than Mumbai.LAND USELand use patterns of the CMA are comparable to other coastal areas, dense CBD with radial development along major Corridors.Currently, 40% of total area of CMA is urbanized. Within the CCC, between 80-100% of the land is urbanized, and probably has reached urbanization due to zoning, land use regulations and govt. ownership.There is a drop in the % of urbanization of old city, due to open space, river corridor & coastal strand. % of urbanized land flattens beyond 5-10 km from the center & declines; outer land is mostly undeveloped.The majority of urban land conversion occurred outside of the CCC. Between 1973 & 1980, the areas between 11-15 & 21-25 km made up about 60% of the land conversion. In this period, 16-20 km zone is converted to urban at a unduly small rate.1981 & 2001, almost 1/3 of urbanized in the CMA was in 11 and 15 km band, outside CCC. Beyond this band the rate of conversion decreases proportionately. If the amt. of land urbanized per person continues to decrease, the current decade should see less land conversion.

Thus, density falls from the predicted density of the center of the city at a rate equal to the distance times the gradient: the larger the gradient, the faster density drops from the city center.Below table shows Population Density gradient, First, unlike most cities in developed countries, the estimated intercept (predicted population density in the center of the city) has increased over the last 30 years.It seems that the area furthest from the city center is still not yet being urbanized at an appreciable rate.

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RESIDENTIAL LANDBulk of urbanized land is residential, avg. 72%. Urbanized residential land Inc. significantly by distance from center. Inst. and Comm. are in majority in central 2 km. The drop in residential use at 12 km, due to a majority of industrial use.

Percent of urbanized area dedicated to industrial use by distance from city centre- 1971 - 2001INDUSTRIAL LANDConcentrations of industrial use at 4, 12 and 15 km from the city center, the largest by far being at 12 km, where more than 50% the urbanized area was dedicated to industrial use. In 2001, industrial use took over a significant percent of urban areas at 17, 21, 24 and 27 km distance from the city center. (Industrial activity in the center of the city has also increased in recent decades.)AGRICULTURAL LANDThere is no longer a huge increase in the amount of land dedicated to agricultural in the area directly outside the CCC, rather a slow increase outward. Almost seven times more land was taken out of agricultural use than was converted to urban use between 1991 and 2001.

Percent of zone dedicated to agriculture by distance from city center, 1971 - 2001THE PRICE OF LANDPrice of land in Chennai varies considerably by location the most expensive land is that purchased in serviced residential plots in the city center, while the cheapest is in unserviced residential parcels in the outskirts of the city. Effect of different attributes on the price of land :-distance, access to infrastructure Jurisdictiondevelopment approvalRESIDENTIAL LANDResidential land prices in the city center (0 to 5 km) are lower than in the next buffer. This is probably due to the poor environmental quality and the poor conditions of the housing stock in the old city.

the level of urbanization recent growth

Mean price of land in residential plots by distance from city center, 2003 and 2004The mean price of land in a residential plot in the CMA in 2003 was about 8,200 rupees per square meter, and in 2004 it increased to 9,250 rupees per square meter.Mean price of land in residential parcels by distance from city center, 2003 and 2004

Distance from city centerThere is a very large premium on having development approval, infrastructure or both versus not having any formal recognition of development potential. This is likely due to tendencies in the consolidation of irregular housing. Once a neighborhood is able to obtain either approval for development, it becomes much easier to get infrastructure installed, and vice versa.

Mean price of land in residential plots by infrastructure and development approval, 2003 and 2004

Mean price of land in residential parcels by infrastructure and development approval, 2003 and 2004The relatively smaller premium on infrastructure and development approval for parcels as compared to plots makes sense, because they are both cheaper to obtain for parcels than plots due to the economies of scale and scope.

Hedonic price regression results: Land in residential plots, 2004 Natural log of the price of land per square foot (rupees)Three hedonic regression models were generated using the natural log of the price of land in residential plots as the dependent variable. The first model includes only characteristics of the plot, the second adds the jurisdiction in which the plot is located to these characteristics and the third includes characteristics of the zone in which the plot is located.The price of land in Chennai Decreases with distance from city center and when it is located near industrial areas, Increases with access to infrastructure, access to development approval and when it is located in highly urbanized zones.Description of Land Price DataThe price for industrial land is lower than that of residential land, but higher than that of residential parcels at 2,820 rupees per square meter in 2003 and 3,380 rupees per square meter in 2004. The price gradient for this land is quite steep, perhaps steeper than that of residential plotsHaving only infrastructure or development approval does not add much value to the land; however, having both increases the price of land by about six times. Infrastructure and development approval is more important for industrial land because industrial activity needs infrastructure more than residential land, and the government is more likely to overlook informal housing than informal industrial use.Mean price of land in industrial plots by distance from city center, 2003 and 2004

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Mean price of land in industrial plots by infrastructure and development approval,2003 and 2004For industrial land Variable Mean SD Minimum Maximum

Price per square foot in 200410,25810,99476.24112,124

Infrastructure.42.49301

Development approval.38.48701

Distance from City Center 12.4 8.68 .491 31.79

Chennai corporation.46.49901

Municipality.02.13701

Town .12 .327 0 1 Percent Urban Land.65.348.0071

Urban Change 1991 2001.12.235-.47.926

Percent Commercial Land.06.1090.865

Percent Industrial Land .05 .106 0 .965