India's Aerocity Boom: Transforming Urban Landscapes and Airport Revenues
India is experiencing a surge in the development of aerocities, mirroring a global trend. These airport-centric urban areas are becoming emblematic of a modern Indian lifestyle. Aerocities function as fully operational business districts, a relatively new phenomenon gaining traction in urban India. A joint report by 360 Realtors and Axon Developers reveals nine aerocity projects spanning 14,000 acres nationwide.
Current and Upcoming Aerocity Projects
Currently, India has approximately 3,050 acres (22%) of operational aerocity land, with active developments in Delhi, Hyderabad, Mohali, and Durgapur. Another 2,585 acres (over 18%) are under development and will soon be available for purchase. Several projects are under construction, including a 150-acre project near Ayodhya's newly inaugurated Valmiki International Airport, a 463-acre mixed-use project near Devanahalli Airport, and a 172-acre aerocity project near the upcoming Jewar Airport. Construction is also in full swing on the extensive 740-acre aerocity project near Navi Mumbai International Airport, a joint venture between Adani and CIDCO. Furthermore, the Uttar Pradesh state government has announced ambitious projects like the 1,500-acre cityside development adjacent to Lucknow Airport.
The Global Rise and Indian Debut of Aerocities
The concept of aerocities emerged in the 2000s with self-sustaining urban ecosystems near airports in cities like Singapore, Kuala Lumpur, London, Dallas, and Dubai. These thriving business hubs evolved into parallel central business districts, reshaping urban development. India witnessed its first Aerocity emerge near IGI Airport during the 2010 Commonwealth Games. This 200-acre development has become a highly sought-after area in the National Capital Region (NCR), running parallel to prominent locations like Cyber Hub, Golf Course Road, and Vasant Kunj. The GMR Aerocity features more than 15 upscale hotels, over 100 top fast-food chains, and numerous specialty shops, high-street retailers, and lifestyle stores. GMR is also developing high-end Aerocities at MOPA (232 acres) and Hyderabad (1,500 acres).
Attracting Businesses and Fostering Growth
Aerocities are rapidly becoming symbols of the contemporary Indian lifestyle. Initially designed as commercial transit hubs for travelers, they have transformed into comprehensive commercial suburbs. Featuring upscale hotels, retail outlets, dining establishments, and office spaces, these areas cater to both tourists and locals. Ankit Kansal, MD of 360 Realtors, explains: “They also include logistic parks, business parks, e-commerce warehousing, etc. functioning as commercial catchments.”
“The original plan for Aerocities was to serve as commercial transit hubs for domestic and foreign travelers. Over time, however, they have developed into fully operational commercial suburbs with several upscale hotels, chic retail establishments, fine dining establishments, affluent office buildings, etc., making them a popular destination for tourists and locals. They also include logistic parks, business parks, e-commerce warehousing, etc. functioning as commercial catchments.”
Situated within close proximity to airports (typically 1-3 km), aerocities, ranging from 200 to 1,500 acres, are attracting significant interest from businesses, multinational corporations, and large companies looking to establish regional or corporate headquarters. Aside from reducing travel costs, these locations offer access to a skilled workforce. Aerocities provide a conducive environment for idea exchange, networking, and informal gatherings, making them increasingly popular with startups and established businesses alike. Kansal further states that these locations: "provide a comfortable yet laid-back environment for idea sharing, business networking, and semi-formal get-togethers; these events are quickly gaining popularity among startups and established companies.”
Driving Non-Aeronautical Airport Revenue
Aerocities play a crucial role in boosting non-aeronautical revenues (NAR) for airport operators. Traditional revenue sources, such as airline fees, passenger fees, and parking charges, are insufficient to cover airport operating costs. Consequently, airport developers and operators are exploring alternative revenue streams, including hospitality sector, real estate commercial property development, food and beverage services, lifestyle retail businesses and destination marketing programs. The COVID-19 pandemic further emphasized the need for income diversification. Globally, NAR accounts for nearly 60% of airport revenue. In India, this figure is lower, except for major airports like Delhi (60%) and Mumbai (55%). Smaller airports typically see NAR contributions of 15-25%. However, this is changing, and aerocities, with their attractive real estate prospects, are poised to play a significant role.
A Hotspot for the Hospitality Industry
Aerocities are emerging as hubs for the hospitality sector, with a growing presence of luxury and upscale hotels, corporate guest houses, long-term rentals, and serviced apartments. A study by 360 Realtors estimates the total number of branded rooms in aerocities at approximately 5,500, projected to reach around 12,000 by 2030, with a compound annual growth rate of 16.9%. Delhi Aerocity alone boasts around 4,000 rooms, with approximately 3,000 more in the pipeline. Bangalore Aerocity has a substantial pipeline of around 2,500 rooms. Hyderabad Aerocity currently has a 290-room Novotel hotel in operation, and Boston Living is developing a luxury co-living complex with 1,500 beds nearby. Upon completion, Hyderabad Aerocity is expected to be one of India’s largest real estate developments.