The Alchemy of Mixed Use Developments:
In the world of convergence where telephony, internet, and videos are converging, even
the real estate sector is going through a similar metamorphosis. Increasingly, the urban
customers of today are emphasising on a better quality of life and demand more of the
city and the developments. In high density urban areas world over, high rise mixed use
developments are increasingly being sought after. Here, we briefly explore this urban
real estate phenomenon.
Mixed-use properties are developments may be single buildings or a substantially large
urban or suburban community that combine residential, commercial, cultural or
industrial usage within a relatively small and dense area. People who live and work in
these developments enjoy easy access to a wide range of amenities as, retail stores,
restaurants, multifamily housing, entertainment, etc. that in turn result in a better
quality of urban life.
And this quality of life enhancement is brought about by a large saving in quality time
that is available for social interactions with the family and friends. Such savings in time
also, additionally, leads to higher productivity levels increasing the earnings on one hand
and lower expenses in travel and transport on the other. Various estimates indicate that
these translate into higher percentages of disposable incomes from 8% to 17% of
household incomes for such families compared with those living in stand-alone
residential apartments. There was a recent study that concluded after examining New
York and Mumbai that these two cities showcase an emerging urban design lesson:
Sprawling cities decrease quality of life; compact, mixed-use developments yield
economic and social benefits.
If the people want quality of life and higher disposable incomes and they understand
that the mixed use developments can offer that, the demand and therefore, rentals of
apartments are higher as is evidenced worldwide. And this leads to one of the reasons
as to why apartments in Mixed use developments are being more sought after by real
estate investors who are always looking for investment opportunities in apartments that
not only offer high rents but also high occupancies. Investors also love the fact that
apartments in mixed use developments are marginally less expensive per square foot for
the same specifications. This is because the bulk of the infrastructure costs are shared
between various asset classes as retail and hotel, whereas all of such infrastructure costs
such as external development, parking areas, common facilities and amenities, etc would
have been completely passed on to the apartment owner / investor. The other asset
classes too enjoy a similar relief on costs of the infrastructure too – an economic win-win
all around.
For densely planned urban cities as Colombo, tall mixed use developments are,
therefore, particularly exciting from all perspectives. There are studies that enunciate
that the dependence on private cars has dropped by over 50% in precincts in New York
where mixed use developments have been fostered. “Mixed-use projects also reduce
ongoing costs to municipalities for services like police, fire and trash. Smart Growth
America estimates the average savings at almost 10 percent.”
Cities embracing mixed
use developments have reported dramatic reductions in infrastructure costs as also
reductions in green house gasses resulting in such cities being more efficient
economically and greener.
Tall, high density mixed use developments are the preferred option for residents,
investors and the city. Commenting on the increased interest in mixed-use
developments, Cheng Hsing Yao, Chief Operating Officer at GuocoLand (Singapore) said,
“Mixed developments are a rational answer to higher-density living.” Colombo is now on
the verge of experiencing this change in real estate dynamics and the benefits of what
such a paradigm shift brings, for the residents, for the investors and for the city that
aspires to be amongst the best metros of the world.
-----------------------The Author: Anand Sundaram, a Real Estate specialist, is the CEO of Colombo City
Centre – an iconic Mixed Use development underway at Beira Lake.
FOR the editor – some useful links:
http://www.wri.org/blog/2014/07/people-oriented-cities-mixed-use-developmentcreates-social-and-economic-benefits
http://www.completecommunitiesde.org/planning/landuse/mixed-use-benefits/
http://www.pinpointcommercial.com/blog/2014/06/30/the-benefits-of-mixed-useproperties/
http://www.propertyguru.com.sg/property-management-news/2014/12/77307/mixeduse-developments-looking-good-to-investors-