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Cosmopolitan to countryside: Tier 2, 3 cities emerging as epicenter of real estate boom

Tier 2 and 3 cities emerging as epicenter of real estate boom

The growing shortfall in civic facilities against the backdrop of the influx of migrants and living conditions gradually going from bad to worse have robbed the charm of living in metropolitan cities, where people have to stay as Hobson’s choice for their livelihood. Crumbling civic facilities, soaring pollution, traffic chaos, and overcrowded nook and cranny have clouded the shine of metro cities like — Delhi, Mumbai, Bangalore, Chennai, and Kolkata. People feel difficulty living in such big cities and skyrocketing prices of properties with each passing year have made their chance of owning a home a distant dream.

Affordable price

Although Tier 1 cities are clouded with 3-P: Population, Pollution, and Price, every dark cloud has a silver lining as people have shifted their spotlight from big cities to towns. The burgeoning populace from Delhi, Mumbai, and other metro cities now prefer to stay in smaller cities where infrastructure is laid with smart planning, prices are affordable, and places are more livable. As per a CBRE research report — ‘Tier-II cities: Coming of Age’– towns and small cities are poised to be the epicenter of new economic growth as they are riding the waves of infrastructure development, real estate landscape, quality of life, work environment, and sustainability. Domestic, global companies and investors want to establish their footprints in these markets.

Sustainability catches attention of global brand

Agra, Patna, Srinagar, Thane, Vadodara, Varanasi, Chandigarh, Jaipur, Kochi, Ahmedabad, Lucknow, Meerut, Dehradun, Indore, Bhubaneshwar, Visakhapatnam, Thiruvananthapuram, Malappuram, Coimbatore, Gwalior, Udaipur among others have become emerging markets for real estate players, developers, and investors as a growing tide of people is opting to settle in Tier 2 and 3 cities. As talents are not constrained to geographical boundaries, corporates are reported to be venturing into these small cities to get closer to the working force, which has opened the floodgate of job opportunities as well. Also, vis-a-vis climate changes and sustainability, Tier 2 and Tier 3 cities are considered to be more sustainable that attract the attention of domestic and global brands.

Migrant professionals heading to native

Tier 2 and 3 cities are contributing to the state and India’s GDP, and are all set to become the economic powerhouse of the country. The government’s spotlight on boosting infrastructure and connectivity has added economic boom in these small cities. Most of these cities have got their own designated special economic zones that will make them a potential place for employment. The tourism sector is also seen blooming in these small boroughs of the country. For example, Lucknow, Ludhiana, Kochi, and Amritsar have expanded their contours and they are now shining on the horizon of the country’s growth. As investments made in Tier 2 and Tier 3 cities give potential returns, they have become popular hubs for real estate. Capital appreciation and rental yields are said to be higher than those in bigger cities. Covid-19-induced Work-From-Home culture has created lots of latent demands in Tier 2 and 3 cities. The dynamic of hybrid work culture has made migrant professionals go closer to their native places in small cities, which has boosted demands in the local economy. This will spur developers to enter towns by rolling out quality projects.

Stable Indian economy  

In the coming time, India may witness a residential and commercial boom. In addition to metro cities, Tier 2 and Tier 3 cities could see a significant supply of housing projects. With efforts being put into the expansion of road, rail, and airports and widening the footprints of commercial clusters, the real estate sector finds potential markets in these locations as people love to own their dream houses. As a result, real estate developers look to leverage the buying power of people in these cities. Despite global economic turmoil owing to the Russia-Ukraine war and the cascading effect of the Covid-created lockdown, the economy of India remains a bright spot. Domestic resilience has made the Indian economy stable and competitive. The growth story of Tier 2 and 3 cities has played a pivotal role in this resilience.

 

– RAMAKANT CHAUDHARY

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