What You Need to Know About Aerotropolis As An Investment Hub
Airports are constantly evolving these days, if their form, function, and utility. They are the centers for constant growth, as today, the world is traveling much more be it for business, education, tourism, leisure or healthcare. In India, the infrastructure around the airports especially is top-notch, this is because the government understands that proper infrastructure of airports would propel the growth of the economy. As a result, governments invest funds in the construction of infrastructure leading up to the airport and around it, making aerotropolis a convincing investment avenue.
An aerotropolis is an urban plan that is based on an airport and exists as an airport city, with the architecture, facilities, and economy all centered on the airport. An aerotropolis operates similarly to a typical city, with all of the requisite facilities in place, such as well-organized commercial spaces, offices, health centers, and educational infrastructure. However, unlike conventional towns, however, its operational hub is located within and around the airport grounds.
Some of these aerotropolis projects have taken shape in the metropolitan cities in India, starting with the aerocity that has been developed in Delhi, near Indira Gandhi International Airport. While, there are several others that are up and coming in Bangalore, Mumbai, Hyderabad, Durgapur other cities in India. All this hustle and bustle surrounding the development of aerotropolis is also attracting the attention of many investors and stakeholders.
The Emergence of Aerotropolis as an Important Investment Destination
An aerotropolis typically is an urban plan that consists of various different zones such as, the commercial and leisure zone, education zone, healthcare zone, residential area, and business and corporate zone. All of these zones are developed in close proximity to each other as well as the airport. This makes aerotropolis an interesting investment hub that provides investors with a variety of real estate avenues to invest in. The following are the various ways in which the development of aerotropolis has a great scope in India.
The Scope for Growth of Businesses
There is a potential for the many new businesses to expand with the development of aerotropolis as businesses can actually escalate their operations by making use of the increased connectivity. Suppliers, clients, and business associates communicate at airports, which serve as connection points. This is one of the primary reasons that many businesses want to locate their headquarters near the airport. Commercial office space construction in aerotropolis would result in quicker and more time-efficient transactions, communications, and service delivery, resulting in substantial cost savings.
With the increase in the air passenger traffic for business and leisure travel, it is expected that by FY40, India will have increased the number of operating airports to 190–200. This robust demand is mainly due to an expanding middle class and working population demographic. Therefore, the development of economically dynamic hotspots like the aerotropolis has a lot of scope in India. Many aviation and non-aviation businesses will reap the benefits of efficient and faster trades and transactions, business meetings, and product reach associated with the construction of aerotropolis.
The number of flights taking off every day is increasing dramatically, and it is projected to double by 2030. With the growing number of flights, there is a huge demand for airport construction and therefore a huge opportunity to build sustainable airports. Therefore, Indian airports forecast to receive investment worth Rs 420–450 billion (US$ 5.99–6.41 billion) infrastructure from FY18 to FY23. The government has been encouraging private sector involvement and FDI up to 49% in the airport sector alone.
Important Landmark and Location
An aerotropolis will serve as an important landmark with elaborate and efficient surface connectivity. For example, the proposed aerotropolis in Bangalore at Kempegowda International Airport will act as an important landmark in terms of trade. This is because it offers direct connectivity from Bangalore to Mumbai and Chennai, both of which have suitable port connectivity. Apart from the trade perspective, many residential projects are being developed within the vicinity of the aerotropolis due to the ease of travel and proximity to the airport, hospital, and schools, etc. Aerotropolis cities in India will act as beacon and key spots for tourists visiting India, thereby, making them essential for the tourism industry.
Guidelines for Potential Investors Looking to Invest in Aerotropolis
- Conduct Market Research– Create an overview of the current supply and demand of the commercial facilities provided at the aerotropolis. This will help ascertain whether or not the planned project is bankable and whether or not there are any competitors. It is also important to determine the key stakeholders involved.
- Determine the Return on Investment- Look for a return on investment that is based on the net operating asset’s cap rate. The aesthetics of the airport or the availability of land are not variables that will attract investment if there is no return.
- Approval From Government- It is a necessary requisite to follow a proper legal procedure while purchasing real estate assets in the aerotropolis. You must also consider the rules and regulations put forth by the government regarding the legality of transactions before you invest.
- Know About the Builder- You must be aware about the managing authority or entity involved in the project. The managing entity involved, can tell a lot about the bankability, and execution of the project. There may be projects where there are multiple stakeholders involved whereas, in some there may be only few. It is also important to make yourself aware about the track record of the builder and the previous projects that have been undertaken by the respective builder.
Since aerotropolises are usually built on a greenfield basis, they have the advantage of being designed and having fewer internal space constraints. For those stakeholders that believe in long-term and sustainable growth, this is a wonderful opportunity. With a futuristic infrastructure plan and an aggregate of impressive features, aerotropolis can revolutionize the entire concept of smart cities. It certainly points towards a prosperous future for the economy and shining prospects for investors all over the country.
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Frequently Asked Questions on What You Need to Know About Aerotropolis As An Investment Hub:
Air connectivity, urbanization, and local accessibility are all important factors. An aerotropolis will generate seven times more high-value job growth, with each regularly scheduled long-haul service supporting 3000 direct and indirect jobs, and each 10% increase in passenger growth generating 2% regional employment growth.
- It acts as a dynamic hub that offers all the basic facilities and infrastructure of a city, but with a wide array of facilities such as golf courses, spas, bars, and even accountants and dentists that make life simpler for residents and employees alike.
- Companies located in an aerotropolis benefit from the transportation of goods and services from all over the country or overseas, as well as from customers in other regions.
The upcoming aerotropolis in Bangalore is emerging as a real estate hub. Andal aerotropolis situated in Durgapur, West Bengal is another flourishing project that boasts a greenfield airport, aviation-related businesses and sectors, business park clusters, logistics parks, manufacturing parks, and a township. There are many other greenfield airports in Kochi, Hyderabad, and Chennai that are also going to emerge as aerotropolis cities.