Behind BMRCL's non-fare revenue goals

BMRCL'S retain monetisation plan

Bangalore Metro Rail Corporation Limited (BMRCL) has been mulling extra floors at the Nadaprabhu Kempegowda interchange.

It has had many opportunities in the past to use its space to generate revenue but has missed out on them.

The impact of this can be seen in the fact that retail spaces inside stations are lying vacant. In the past, when BMRCL wanted to rent out the spaces in bulk for a single vendor, it had no takers except at the Swami Vivekananda Road Station.

In July 2022, the BMRCL changed its strategy. The tenders floated then sought to allot retail space on new terms. Each vendor had to rent a minimum of five kiosks across stations, with a maximum area of 150 sqft per vendor.

Among 190 locations measuring upto 17,000 sqft area open for kiosks, only 30 locations have got takers, in about 2,500 sqft, with kiosks ranging from 30 to 150 sqft. The stalls will come up soon.

High rentals, premium space

Anjum Parvez, managing director of BMRCL, says: “Tenders were called for the allotment of kiosks in the open spaces inside the stations. The kiosks are given for a maximum of three years. Depending upon the years they commit to staying, we give concessions on the rentals. The rentals depend on the location.”

The stations with the highest footfall such as Kempegowda Interchange and MG Road are graded A+ and have a rental of Rs 2,000/sqft/month. This is reduced to Rs 1,000 if the rental is for three years.

Kiosk rentals at the stations

A shopkeeper near MG Road Metro station says the current rental in the area varies from Rs 200 to 500/sqft per month. A rental of Rs 1,000 would be too high in the area, even if it is inside the Metro station; it will not cross Rs 400-500/sqft by any standards, he feels. M G Road is an A+ category station, with a footfall of 3,94,741 for July.

Another shopkeeper near Deepanjali Nagar Metro station (a B category station with a ridership of 94,345 for July) said she pays Rs 6,000 for the 64 sqft space she has rented. The same space, going by the BMRCL rentals, would cost Rs 48,000 per month excluding GST, with a maximum discount, which is way too high. BMRCL has fixed a rent of Rs 750/sqft/month here for the kiosks.

‘Bigger spaces for low rentals’

“Earlier kiosk rents used to be 40-50 per cent costlier than this. We have actually reduced the rates,” says Parvez. “We decided to give the discount based on historical data of footfalls and sales. These rates are only for temporary kiosks, and not for the long term. It seems to be higher but it is not. These kiosks host businesses that are fast and have high turnovers. Since the businesses know these will work out for them they are coming forward,” he clarifies. “Long-term tenders will cost much less. For big areas rental rates will be lower,” he adds.

“We decide kiosk prices based on footfalls and movement study. Also, kiosks are premium spaces and we try to give them wherever the vendors ask. But in future tenders, we will decide on the area, quote the base price and vendors will bid for the space. The prices will be lower than this, but the location will be our choice” says a BMRCL official.

“Rents in retail and food and beverage outlets in transit-oriented developments (TOD) are relatively higher than in surrounding areas primarily on account of factors of scarcity (limited outlets in the controlled area) and access to a large pool of target customers,” said Saurabh Mehrotra, Executive Director, Valuation and Advisory, Knight Frank India. TOD is a policy where developments and densification are planned around transport hubs and mass transport systems.

Non-fare revenue of BMRCL

Lack of planning around transit

Satya Arikutharam, an independent consultant who previously worked at the Directorate of Urban Land Transport (DULT), says that a Metro company must have its revenue goal set out at the planning stage itself. “There will be various expenses involved in station maintenance. You should aim for a non-fare revenue stream that at least covers the cost of annual maintenance of stations. You can then design the station by understanding what sort of spaces at particular stations would be in demand,” he says.

“You can’t put a big retail outlet in a 100 sqft area. At best, it can only accommodate a small bookshop, which may or may not work at that station. K-RIDE should also be planning these things when designing the stations and the DPRs should spell out non-fare target revenues,” he adds.

He points out the lack of transit-oriented development (TOD) policy for the city. “TOD policy will give guidelines on how to configure the stations in accordance with the types of locations. This is fundamental and needs to be embedded into the master plan of the city,” he says, adding that the TOD policy will also attract private investment in stations.

“If BMRCL knew in what manner the area around the station is going to be developed, they could have planned the type of outlets in the area and invested in it,” he says adding that this is still not happening.

“In Hyderabad Metro, 40 per cent of the space was sold even before the stations were built. Here in Bengaluru, MG Road station is a missed opportunity to build a multi-storey commercial space, which could have blended well into the streetscape around. Now hopefully, at least the new Metro stations coming up on the Outer Ring Road and suburban rail stations will be better planned,” he says.

Another expert who didn’t want to be named points out the lack of vision among businesses. “When MG Road Metro station was commissioned, businesses could have aggregated land around Brigade Road and Residency Road, to build clusters of business centres directly connected to the station. This has not happened. The same could have been replicated in other major metro stations,” he says.

TOD policy soon

The BMRCL prepared a draft TOD policy in 2019, which spoke about its integration with the Revised Master Plan 2031. However, this was not accepted by the government. Finally, in 2020, another draft plan was prepared by the DULT, but it is yet to be finalised and notified. Asian Development Bank (ADB) which funds part of the Metro project, and BMRCL coordinated a series of meetings in August 2021 to chalk out the plans for TOD.

“We consulted with ADB as it is associated with the financing of Metro,” said Parvez. Experts say the ball is in the state Urban Development Department’s court, and are hopeful of the government notifying the TOD policy soon.

Kiosks of packaged food to come up at Metro stations

Kiosks selling chocolates, sugarcane juice, coffee and tea will come up within a month inside Metro stations in Bengaluru.

The Central Sahitya Akademi has already opened a bookshop at the Kempegowda Interchange.

The BMRCL is wary of allowing non-packaged food inside the ticketed area. Officials fear that the waste will add to the maintenance burden.

“We have to see what is happening at the Metro stations where these things are permitted and take a call,” says Anjum Parvez, Managing Director of BMRCL.

Advertisements inside the Metro stations are another way to monetise the space. They were not allowed so far, but recently, the BMRCL got permission and is in the process of floating tenders. Metro trains will also see more ads inside the coaches, going forward.

Ad revenue of BMRCL

Parvez says the BMRCL has given out space for telecom towers, which will bring some revenue. It is planning to auction the piers and viaduct spaces for the installation of 5G transmission cells, looking to generate more revenue.

Monetising land assets is something BMRCL is actively pursuing. “If a corporate or private party is interested in developing parking and commercial space, we would like to partner with them to get this done. This is still at the initial stage,” he says.

Median maintenance has been given to corporate agencies, thereby bringing down the cost of maintenance. BMRCL is naming some stations after some corporates for a fee. “We are also providing direct access to the Metro station if companies ask for it. ITPL, Biocon, and Infosys have signed up for such projects. This also generates some income for us,” says Parvez.

With electronic vehicles (EVs) coming in vogue, BMRCL has rented out space for EV charging and swapping stations. “We would like to generate more and more non-fare revenue so that we can keep the fares for the commuters low,” he says.