Sometime around the mid of last decade, Delhi’s traffic situation had almost collapsed even after the laying multiple flyovers on the main ring road connecting North Delhi to Noida.  I still remember the never ending jams that ran in kilometers for hours between Dhaulakuan Crossing and Maharani Bagh during peak hours. Delhi metro first phase in 2006 and second phase in 2009 was a breath of fresh air, that had put an end to this traffic mayhem, at least for the next few years.  Real estate prices also saw an average 10% increase in all areas that were touched or even partially touched by the Delhi metro. All in all, the Delhi metro has been a great success story that impacted every person living in Delhi and NCR are in one or the other way.


Most public service projects in India are under duress however, the DMRC is one of the very few that are actually making profit, (we are talking about operating profit). And that only is quite an achievement in itself. The reason why I am writing about the Delhi metro on a real estate blog is because it has some of the best under-utilized commercial real estate assets in Delhi. Total cost of all three phases of metro put together is around 70,000 CRORE (10500 + 18000 + 41000), most of this cost has been financed by Japan bank for International Cooperation (over 50% ) and around 7% of overall cost (5000 CR) was supposed to be generated through property development. While the property development team at DMRC got an overwhelming response during the first phase in generating funds, somehow the momentum did not continue through the second phase and third phase.


As soon as the 3rd phase is completed (hopefully by end of 2016), the Delhi metro will have a total of 241 metro station running through a total length of 330 KM. If I take each metro station on an average has around 40000 sq ft area (both retail and office space) available for lease, this translates in to about 10 million sq ft! Some of these spaces are of grade A specification with large contiguous floor plates in accesses of 200,000 sq ft. Other than this, metro also has vacant plots that are to be developed for residential, malls, MLCP’s recreational parks etc. However, the problem is that most of it is lying vacant or the yields are not justifiable for the value of the asset. Now that is a lot of prime commercial real estate to be lying vacant or underutilized. They also have some of the best residential real estate plots scattered across Delhi and NCR area.


Some of the most prime and underutilized real estate is on the loss making route of Airport metro which has struggled to even recover the operating expenses from its inception till date. The route has 5 metro stations, NDRS, Baba kharak Singh marg, Dhaulakuan, Aerocity and Dwarka 21. Just these 5 metro’s put together have over 1 million sq ft and most of this prime real estate is lying vacant. These are not lying vacant because there is anything wrong with the space, in fact all these are most sought after locations by corporate and could command fairly good rentals, but because the way these are being marketed and auctioned off by the metro property development cell. Like most procurement in public sector the Delhi Metro wants participation by prospective tenants via on line tendering process which is full of high eligibility criteria, rigid procedures and long decision making process. Tendering process and bureaucracy has always been one of the biggest impediment to get things moving in government offices but when it comes to real estate the whole thing becomes even more complicated. No one buys real estate online, at least in India. Any buyers/tenant would ideally want to do several tours of the property, negotiate price with someone in person, get an understanding of lessor’s responsibilities, things like parking, electricity, back up, working hours etc. Unfortunately, DMRC doesn’t seem to have time for all of this rigmarole. However, one has to except, it is what it is, when it comes to real estate transactions. The erstwhile concessionaire “Reliance” for the Airport metro line did make an effort by roping in local and international real estate advisers and the exercise started to show results within 4-6 months, however the whole thing was put to an abrupt halt once Reliance opted out of the deal siting huge losses due to low traffic on the route. While, the route still remains to incur losses after DMRC took charge, the momentum on property development side is even poorer than at the time of previous operator.


When there is a lot of noise about how IT companies are guzzling up huge commercial spaces, international LP’s like Blackstone, Xander etc are acquiring rented commercial assets of big real estate developers, there’s  hardly ever a news about a big chunk of office space being leased out by DMRC,  this, despite the fact that there is an acute shortage of grade A commercial space in Delhi. The only success DMRC really had with leasing is at Shastri Park metro, IT park, from a low vacancy point of view, however rental yields there are anybody’s guess. Here are some simple things the metro should do to ensure a speedy occupancy at all vacant commercial spaces across Delhi and NCR area.

  • Actively engage private players/local consultants in CRE and educate them about each property
  • Empower private partners to clear initial doubts of interested parties
  • Set quality bench marking for each commercial asset
  • Prioritize all assets based on their quality
  • Set pricing bench mark on each asset
  • Standardize the lease agreements with more acceptable and flexible terms
  • Get away with EMD for participating in bidding process
  • Be ready to negotiate a fair deal!


Even some of the sick PSU’s like MTNL are a leg ahead when it comes to hiving off some extra income through its unused commercial properties, one definitely expects better from an efficient organisation like DMRC.  According to one report DMRC was able to garner only about 900 CR from various property development initiatives till 2014. 7% of may sound less, however, it is perhaps more than enough to pay off JICA and other government loan recurring interest payment each month and this would make probably make huge difference in improving the bottom line figure on balance sheet.