How metro can pay for itself and build low-cost homes
Five years ago, the Tamil Nadu govt chose a progressive financial tool to build affordable houses in areas that were growing fast, aided by public infrastructure investment. These homes, under state and central housing schemes, would receive bonus funding thanks to higher property values wherever the govt was spending on metro rail lines.The mechanism at work,
Land Value Capture
(LVC), helps raise funds for housing — and potentially for future metro rail projects — by creating a land value 'uplift'.
Just announcing an infrastructure project triggers a rise in property prices. It is unclear how much funding came through LVC for the proposed housing programme in the past five years, but the prospects for using such funds for transport projects look bright.In the 2025 budget, the state govt announced plans to introduce new metro rail lines, extend existing ones, launch a regional rapid transport system (RRTS) covering several districts, and build a 2,000-acre city near Chennai.
This is part of a planned shift to
transport-oriented development
(TOD) in cities and towns. Given that metro rail Phase II involves public expenditure of ₹63,246 crore in Chennai and ₹10,740 crore in Coimbatore under equity sharing and multilateral institution loans, the resulting real estate premium should accrue significantly to the govt, and not just to private real estate developers. Additional metro lines are on the cards, and Madurai is also on the list of proposed cities.The state budget announced the RRTS semi-high-speed train format to link Chengalpattu, Villupuram, and Vellore with Chennai, and Tirupur-Salem with Coimbatore.
Sponsored Links
Sponsored Links
Promoted Links
Promoted Links
You May Like
AI guru Andrew Ng recommends: Read These 5 Books And Turn Your Life Around in 2025
Blinkist: Andrew Ng's Reading List
Undo
The model RRTS between Delhi and Meerut, with a price tag of ₹30,274 crore and a top speed of 160 km/h, is funded through multilateral and domestic tax funding. Investments have pushed up property prices around stations, with Chennai seeing rates rise by thousands of rupees per square foot. One gated community on Anna Salai near a metro station advertises luxury flats starting at ₹7 crore, highlighting the potential to fund affordable housing through value capture.The Union Ministry of Housing and Urban Affairs defines the benefits of public infrastructure funding and LVC thus: "Value capture is based on the principle that private land and buildings benefit from public investments in infrastructure and govt's policy decisions. Part of the increment in the value of land and building should be captured to fund projects being set up for the public by the central/state govt and urban local bodies." In Tamil Nadu, value capture from the metro is limited to commercial use of station spaces, advertising, and naming rights. While Chennai's third master plan's (2026-46) revised terms of reference mention LVC, this needs to be applied to Tier II cities too.LVC works by monetising the economic surplus generated through govt planning, as seen in Singapore, Hong Kong, and the US. High-capacity rail hiked land values by 60% in New York and 40% in San Francisco near stations. A third of London's Crossrail (metro) system was funded through a business tax on non-domestic properties. Private entities here enjoy the premium from metro rail entirely, in the absence of a framework to estimate, quantify, and share value gain by the real estate developer and govt.This gap stands in contrast to the many charges that builders pass on to property buyers. Gated communities earmark "pass-through" charges running into a few lakhs of rupees per flat, which includes documented and undocumented payments to civic agencies in charge of services such as electricity and water provision. One builder recently quoted ₹3 lakh as pass-through charges for a 2 BHK flat in Padur, South Chennai. Under a transparent framework, grey pricing and black money would be eliminated, and the value gains proportionately harvested by the govt towards metro rail and bus network investments.One of the methods used to extract value followed so far is transferable development rights (TDR). More than a decade ago, the CMDA was allowing TDR under the Chennai master plan for private lands acquired, but the concept got off to a slow start partly due to a lack of clarity on pricing. Value capture would extend govt gains through a land value levy. In greenfield projects such as the planned satellite city, the govt could hold land until infrastructure is ready and sell at market rates. The same approach applies to Tier 2 cities such as Coimbatore and Madurai. It would also be fair, considering civic planning agencies are willing to give a higher floor space index to the builder around metro stations.The Union govt says value capture financing "is an opportunity for the private sector because the projects are planned for the overall development, thus increasing the value and are also backed by the govt". An equitable system could levy a betterment charge on builders on the rate per square foot, which should not be passed on to the flat purchaser by law. High-value commercial properties, such as business towers, could be charged a higher property tax rate. In all instances, LVC funds should be sequestered for use in housing and transport projects.The state govt would have to start by creating empowered planning and transport integration bodies for major cities, discover the value uplift from various investments, and decide on appropriate financial arrangements to appropriate some of the value it has helped generate.(The writer is a Chennai-based journalist)Email your feedback with name and address to southpole.toi@timesofindia.com
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Time of India
36 minutes ago
- Time of India
Royal Challengers Bengaluru stake sale on cards? Diageo weighs options in IPL winner RCB; may seek valuation of $2 billion
RCB, an original IPL franchise with Virat Kohli as one of its key players, was first owned by Vijay Mallya. (PTI photo) Diageo Plc is exploring options regarding its ownership of the Royal Challengers Bengaluru (RCB), the Indian Premier League cricket franchise, according to individuals knowledgeable about the situation. RCB achieved their maiden IPL victory recently. RCB, an original IPL franchise with Virat Kohli as one of its key players, was first owned by Vijay Mallya, who ran the now-defunct Kingfisher Airlines Ltd. that ceased operations in 2012. The team subsequently came under Diageo's ownership following their acquisition of Mallya's spirits operations. Diageo, the UK-based spirits company, has initiated consultations with potential advisers to evaluate various options, including the possible stake sale of a portion or the entirety of the club, according to a Bloomberg report. Through its Indian subsidiary, United Spirits Ltd., Diageo could value the franchise at approximately $2 billion, according to these individuals quoted in the report. The sources indicated that the final decision remains pending and the company might opt to retain ownership. On Tuesday morning, United Spirits' shares rose by up to 3.3% in Mumbai trading, reaching a five-month peak following reports of the potential transaction. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Good News: You May Be Richer Than You Think Undo These developments coincide with the Indian health ministry's efforts to prohibit the promotion of tobacco and alcohol brands in the IPL, alongside restricting sports personalities from indirect endorsement of other unhealthy products, the report said. In India, direct advertising of tobacco and alcohol products is forbidden, although companies like Diageo have marketed alternative products such as soda using prominent cricket players. The increasing value of IPL teams has transformed them into highly desirable sports investments. A potential sale could establish new pricing standards for future transactions in this rapidly expanding sports league. The IPL has developed into a significant entertainment and advertising platform, comparable to the National Football League and English Premier League in commercial value. Its condensed, three-hour matches attract vast audiences across India and internationally. Diageo faces challenges in its primary market, the US, where tariffs and reduced consumer spending affect premium spirits sales. A potential sale could provide capital whilst the company focuses on core operations and evaluates its global asset portfolio, the report said. Stay informed with the latest business news, updates on bank holidays and public holidays . AI Masterclass for Students. Upskill Young Ones Today!– Join Now
Time of India
an hour ago
- Time of India
Reviving tourism: Travel agents from across India to converge in Kashmir this weekend
Reviving tourism: Travel agents from across India to converge in Kashmir this weekend NEW DELHI: Travel agents from across the country will converge in Kashmir this weekend in a bid to revive tourism there following this once-thriving industry's near-total collapse after the deadly April 22 terror attack in Pahalgam. The Travel Agents Federation of India (TAFI), which is one of the country's biggest umbrella organisations for agents with over 1,600 members, is holding its meeting in Srinagar and Pahalgam from June 13-16 to instill confidence among the fraternity. 'Our members from all over the country will go to Kashmir and assess the situation for themselves. Once and if they feel confident about the place and about the safety & security of tourists, they will again start presenting Kashmir as a destination,' said TAFI VP Anil Kalsi, adding, 'We will be staying across hotels, including houseboats, and have meetings with govt representatives. Airlines will also be a part of this meeting we are having in Kashmir. ' Srinagar hotels and flights commanded a big premium before the Pahalgam attack as Kashmir was seeing unprecedented tourist footfalls post Covid. But after the April 22 attack, tourists already there left Kashmir in droves and those who had plans to visit cancelled the same. 'What happened in Pahalgam was tragic and shocking beyond words. Authorities there need to regain confidence and trust of tourists for the latter to return there,' said a Delhi-based travel agent. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Giao dịch CFD với công nghệ và tốc độ tốt hơn IC Markets Đăng ký Undo If the agents' meet finds the situation safe enough for that to happen, what incentives will the local hotels and airlines offer for tourists to return? 'The near complete collapse of demand has left airfares and hotel tariffs at near bottom levels, so prices are very low. Gulmarg's Khyber, for instance, used to have daily tariffs of about Rs 75,000 which are now down to Rs 21-22,000 and the hotel is offering packages,' said Kalsi. J & K is currently focussed on ensuring a safe Amarnath Yatra as they hope that will send out a message that tourists can return to Kashmir. The yatra duration has been curtailed to 38 days, instead of 52 days in 2024, and will be on between July 3 and Aug 9, 2025. A total of 581 companies from various Central Armed Police Forces, along with personnel from the Jammu and Kashmir Police, will be deployed along the pilgrimage routes to ensure safety of the lakhs of pilgrims. Stay informed with the latest business news, updates on bank holidays and public holidays . AI Masterclass for Students. Upskill Young Ones Today!– Join Now
The Hindu
an hour ago
- The Hindu
Getty Images and Stability AI face off in British copyright trial that will test AI industry
Getty Images is facing off against artificial intelligence company Stability AI in a London courtroom for the first major copyright trial of the generative AI industry. Opening arguments before a judge at the British High Court began on Monday. The trial could last for three weeks followed by a written decision from the judge expected at a later date. Stability, based in London, owns a widely used AI image-making tool that sparked enthusiasm for the instant creation of AI artwork and photorealistic images upon its release in August 2022. OpenAI introduced its surprise hit chatbot ChatGPT three months later. Seattle-based Getty has argued that the development of the AI image maker, called Stable Diffusion, involved 'brazen infringement' of Getty's photography collection 'on a staggering scale." Tech companies have long argued that 'fair use' or 'fair dealing' legal doctrines in the United States and United Kingdom allow them to train their AI systems on large troves of writings or images. Getty was among the first to challenge those practices when it filed copyright infringement lawsuits in the United States and the United Kingdom in early 2023. 'What Stability did was inappropriate,' Getty CEO Craig Peters told The Associated Press in 2023. He said creators of intellectual property should be asked for permission before their works are fed into AI systems rather than having to participate in an 'opt-out regime." Getty's legal team told the court Monday that the case isn't a battle between the creative and technology industries and that the two can still work together in 'synergistic harmony' because licensing creative works is critical to AI's success. 'The problem is when AI companies such as Stability AI want to use those works without payment,' Getty's trial lawyer, Lindsay Lane, said. She said the case was about 'straightforward enforcement of intellectual property rights,' including copyright, trademark and database rights. Getty Images 'recognizes that the AI industry is a force for good but that doesn't justify those developing AI models to ride roughshod over intellectual property rights,' Lane said. Stability AI had a 'voracious appetite' for images to train its AI model, but was "completely indifferent to the nature of those works,' Lane said. Stability didn't care if images were protected by copyright, had watermarks, were not safe for work or were pornographic — it just wanted to get its model to the market as soon as possible, Lane said. 'This trial is the day of reckoning for that approach,' she said. Stability lawyers are expected to make their opening arguments Tuesday. They say in a prepared written argument that Getty's claims 'represent an overt threat to Stability's whole business, and the wider generative AI industry.' Stability has argued that the case doesn't belong in the United Kingdom because the training of the AI model technically happened elsewhere, on computers run by U.S. tech giant Amazon. The company also argues that 'only a tiny proportion' of the random outputs of its AI image-generator 'look at all similar' to Getty's works. Once the trial concludes later this month, the judge's decision is unlikely to give the AI industry what it most wants, which is expanded copyright exemptions for AI training, said Ben Milloy, a senior associate at UK law firm Fladgate, which is not involved in the case. But it could 'strengthen the hand of either party – rights holders or AI developers – in the context of the commercial negotiations for content licensing deals that are currently playing out worldwide,' Milloy said. Similar cases in the U.S. have not yet gone to trial. In the years after introducing its open-source technology, Stability confronted challenges in capitalizing on the popularity of the tool, battling lawsuits, misuse and other business problems. Stable Diffusion's roots trace back to Germany, where computer scientists at Ludwig Maximilian University of Munich worked with the New York-based tech company Runway to develop the original algorithms. The university researchers credited Stability AI for providing the servers that trained the models, which require large amounts of computing power. Stability later blamed Runway for releasing an early version of Stable Diffusion that was used to produce abusive sexual images, but also said it would have exclusive control of more recent versions of the AI model. Stability last year announced what it described as a 'significant' infusion of money from new investors including Facebook's former president Sean Parker, who is now chair of Stability's board. Parker has experience in intellectual property disputes as the co-founder of online music company Napster, which temporarily shuttered in the early 2000s after the record industry and popular rock band Metallica sued over copyright violations. Hollywood director James Cameron, whose films include 'Titanic' and 'Avatar' is also a Stability board member. The new investments came after Stability's founding CEO Emad Mostaque quit and several top researchers left to form a new German startup, Black Forest Labs, which makes a competing AI image generator.
