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Our Bureau

Chennai, May 20 The development and privatisation of airports in the country could unlock a huge stock of realty thereby boosting non-aeronautical revenues for airports.

If India’s privatisation of airports continue and the 47 airports initiated for development are completed by 2014-15 (being the planned target), non-aeronautical revenues would increase to 54 per cent from the present 35 per cent, according to a report on airport realty by real estate consultancy Cushman & Wakefield.

According to the report, about 40,000 acres of airport area (including 40 Brownfield and 7 Greenfield projects) would generate 78 million sq. ft. of real estate space spanning retail, commercial and hospitality.

While the research expects 50 per cent of the above space to be concentrated in the Tier-I cities of Mumbai, Bangalore and Chennai, 45 per cent of the space could emerge from Mumbai alone. Tier II cities of Chennai, Hyderabad, Ahmedabad and Pune would account for another 26 per cent while the rest would be spread across Tier III cities such as Shimoga and Hassan.

The research expects increased business as well as residential activity in and around the new airports, a majority of which are in the city outskirts. Termed as aerotropolises, these hubs could boost economic growth. The report cited the cases of Shamshabad (Hyderabad) and Devanahalli (Bangalore) areas which attracted heavy investments after airports were planned.

The research expects retail space to account for 18 per cent of the developable area, with most of this supply to be concentrated in Tier III towns and cities. But overall, Hyderabad leads the retail supply with nearly 1.8 million sq.ft of area.

The consultancy expects hospitality space to account for 30 per cent with the rest of the area dominated by commercial activity.

The research estimates that the above development activity would enable Indian airports to move towards the global airport strategy of deriving a chunk of revenues from non-aeronautical revenue sources. Changi Airport for instance now derives over 60 per cent of its revenue through non-aeronautical sources. This aided the airport to bring down aeronautical charges thus enabling cheaper tickets and providing a highly competitive means of transport.

Of the total non-aeronautical source contribution expected by 2014-15, rent from retail, office and hospitality would account for 45 per cent with the rest arising from other traditional sources such as trading concessions, public admission fees and advertising and car parking.

Interestingly, the report states that India’s average annual growth rate of the airport sector is 35 per cent over a period of six years against the 9 per cent per annum growth witnessed globally.

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