Are amusement parks the answer to soaring real estate prices? What scope for development do they have in the country and will they ever be able to replicate international theme parks? By Varun Soni
As the real estate sector surges ahead in the country, new formats are being introduced by developers in a bid to offer something new as well as stay afloat in this period of slowdown. One of the more lucrative formats is the concept of new age, world-class amusement parks-cum-malls. There are around 150 parks in India, with 10-15 coming up over the next few years. Worth Rs 3,000 crore, the industry has been growing at 25 per cent per annum during the last five years, according to industry experts.
While a world-class amusement park has already come up in Rohini in north- west Delhi by the name of Adventure Island, the company behind it, IRPPL (International Recreation Parks), is also planning to open the much-hyped Entertainment City in the heart of Noida by the year-end. The Entertainment City, spread over 150 acres and being set up at an investment of Rs 1,100 crore, represents a new class of parks that are under construction or are being planned around the country. The Adventure Island, on the other hand, is spread over 62 acres and has been built with an investment of Rs 200 crore.
Larger, better and with the costliest 'rides' around, they reflect a change in not only how park operators and real estate developers think about amusement parks, but also how state governments perceive them. Other upcoming projects include two planned by ISKCON, one at Vrindavan at an investment of Rs 1,000 crore and spread over 600 acres of land and the other at Bangalore at an investment of Rs 350 crore. The themes for the two parks would revolve around the stories of Krishna. The religious theme is held in common with a Rs 100 crore park being promoted by the Saagar family at Haridwar. Revolving around the epic Ramayana, the park to be called 'Ganga Dham' will be situated on the banks of the Ganga.
Chandigarh too will be getting its own mega park in the next three years. To be developed and operated by Unitech, the park would be spread over 73 acres and have an initial investment of Rs 250 crore. The south too hasn't been immune to the action with the WonderLa park on the outskirts of Bangalore. Built over 83 acres and promoted by the V-Guard group, the park has already been in operation for a year. As far as the scope of the sector goes, Ravi Madan, Director, IRPPL says, "The business potential is enormous. What we have seen up till now are low-standard and low-cost amusement parks, but now the trend is more in favour of internationally-styled, world-class parks. And if malls accompany these parks, it also results in impulse retail and merchandise."
The new leisure class
With growing disposable incomes and consumer aspirations coupled with the enormous tourism potential in India, demand for holiday homes and thus leisure real estate is booming.
According to the World Travel and Tourism Council (WTTC), India is expected to be the third fastest growing country in the world over the next ten years, as far as travel and tourism demand is concerned. That growth potential, coupled with the 19.8 per cent increase in the number of Indians living in India with financial assets of more than US$ one million, (compared to the 6.5 per cent growth worldwide) are important factors in promoting the growth of leisure real estate in India. Leisure real estate means planning mixed-use development and fractional ownership to boost tourism in India.
Leisure real estate also entails owning a second home, which many Indians are going in for today after satisfying their need for a first home. The demand for a second home is more in tourist destinations like Goa, Uttarakhand and Himachal. Says Radhika Shastry, managing director - Indian subcontinent, Group RCI, "With land bank choking in mega cities and people already having fulfilled their requirement of owning a home, the next step is to look for a second home. This comes under the purview of leisure real estate, which also encompasses timeshare/fractional ownership."
As far as the scope of this field goes, Arindam Kumar, general manager, marketing & retail Sales, Mapsko Builders says, "The scope for leisure real estate is very good. People want to enjoy their leisure time and for that they require a few good options. Nowadays, with the growing economy, the income status of the people is growing, leading to a change in tastes and wants. The demand for resorts, amusement parks, etc. is soaring in the market."
Says P K Sanyal, president, OSB group, "Growth prospects of this segment are really good. With customer preferences changing, everyone needs a different option. Therefore, developers have to invest taking stock of the rise in demand."
In fact, property experts opine that this segment will be a key driver of real estate in the country in the coming years.
Adds Prem Adip Rishi, chairman & managing director, MVL- Real Estate division, "One of the key drivers of leisure real estate will be tourism. India is expected to be the third fastest growing country in the world in travel and tourism demand over the next ten years. Hectic lifestyle is leading people to splurge on leisure activities to be able to unwind in the short respite time that they get. Companies have also substantially increased their spending on employee delight initiatives."
In fact, Indian tourism is expected to grow at the rate of 20-25 per cent per annum till 2017, posing a huge opportunity for wealth creation in our country. This makes leisure real estate a good investment option for developers. Says Kenneth May, chairman and CEO, Group RCI, "India is poised for growth in leisure real estate and is at the helm of an explosive economic growth in tourism. The market for leisure real estate today is expected to gain further momentum over the next few years. With growing disposable incomes and consumer aspirations coupled with the enormous tourism potential in India, the time could not be better for the industry to launch new leisure real estate models that will meet the needs of the evolving consumer."
Amitabh Kant, principal secretary (industries and commerce), government of Kerala and former joint secretary, ministry of tourism recently said at a 'Leisure Real Estate Symposium' held in the capital, "With the growing purchasing power of Indians, holidays are evolving into experiential and aspirational experiences for the affluent traveller. Through the Incredible India Campaign, we are focussing on opening up newer destinations and new experiences like rural tourism and medical tourism for both the inbound domestic and international traveller."
A number of small and upcoming builders have already announced projects in places like Haridwar, Rishikesh, Ramgarh, Vrindavan, Solan, Shimla, etc. with bigger developers too getting ready to foray into these areas.
Adds Ranjeev Kalia, DGM - sales & marketing, Ansal Buildwell, "Amusement parks add value to the real estate sector. These parks provide a complete entertainment package to people, leading to an increase in the footfalls of the commercial projects located within the complex. That's why more and more builders are introducing amusement parks in or adjacent to malls."
But, can amusement parks become one of the key drivers of the real estate growth in times to come? Says Kaushik Sengupta, VP - sales & marketing, Eros group, "In fact, amusement parks have already become a key driver in the growth of real estate and will reach even greater heights in times to come. With the opening of the economy and multinational companies entering into joint ventures with their Indian counterparts, real estate development is bound to gain with such collaborations."
Adds K P Singh, DGM-marketing, Pearls Infrastructure Projects, "Seeing the current development in the residential, commercial and retail real estate industry, the need for growth for amusement parks has risen and the increasing demand of the market definitely is leading to its growth. Because of the huge demand, developers are bound to build them. Amusement parks should receive due recognition for their enormous potential as an infrastructural facility for tourism. In terms of employment generation, the new parks are likely to create jobs. In short, it would be one of the major reasons for the growth of the real estate industry leading to the growth of the economy as a whole."
But, does an upcoming amusement park affect the real estate prices in the vicinity? "Definitely," says Madan citing the example of Disneyland, which after its development changed the face of real estate in Florida for times to come. "If such projects are built in suburbs, then they do give a fillip to the area. A similar trend was seen in Rohini, when after the announcement of our project, realty rates went up by 10-15 per cent," he says.
Adds Rakesh Gupta, managing director, RPS Group, "The prices of the surrounding real estate defintely shoots up with the commencement of the amusement parks. Additionally, the prices of surrounding areas rise thereby leading to an overall increase in the standard of living of people. Even for tourists, this place seems to be more entertaining considering the fact that it boasts of having good infrastructural facilities and service apartments."
So, what is the future of amusement parks in India? Is there any possibility of Disneyland ever setting shop in India, considering that it is scouting for a location in China at the moment? Says Madan, "The infrastructure in India is not ready to host Disneyland. Though we are moving towards it, it will be only three-five years down the line that we will be able to match the standards of the biggest amusement/theme park of the world."
Adds Arindam Kumar, general manager, marketing & retail sales, Mapsko, "The future is very bright and we would be in a position to witness many parks in the near future, provided improved technology and international specifications and standards are implemented to beat the existing competition prevailing in the country."
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