DRIVEN BY INCREASED ECONOMIC ACTIVITY, INFRASTRUCTURE DEVELOPMENT, AFFORDABLE PRICES, FUTURE GROWTH PROSPECTS, AND GROWING WORK-FROM-HOME CULTURE IN THE TIME OF THE COVID-19 PANDEMIC, TIER 2 AND TIER 3 CITIES ARE WITNESSING A SURGE IN DEMAND FOR BOTH COMMERCIAL AND RESIDENTIAL PROPERTY. MAMTA SINHA WRITES
As per ANAROCK research, there has been considerable increase in demand for property in Tier 2 and Tier 3 cities after the Covid-19 pandemic. Sensing the opportunity, some top developers are even venturing into plotted developments there.
The ANAROCK report shows that the nation’ s Top 7 listed players — including Godrej Properties, Sobha Ltd, and Mahindra Lifespace Developers — are set to develop close to 92.5 million sq ft of branded housing in the Top 7 cities, as well as Tier 2 and Tier 3 cities, in the next two years.
“Many of these are cities with a high likelihood of future growth and are seeing high demand due to their future growth prospects based on major infrastructural development. Due to Covid-19, many financially sound professionals are looking to return to their hometowns for property hunting, as these places offer not just good investment opportunity but also make sense from a liveability perspective — many Tier 2 and Tier 3 cities are blooming on the back of improved infrastructure and overall growth,” Anuj Puri, chairman of ANAROCK Property Consultants, says.
Property enquiries in Tier 2 cities like Lucknow, Jaipur, Ahmedabad, Coimbatore, Chandigarh, etc, saw significant growth after the ease of pandemic-infused lockdown and restrictions last year.
“In fact, before the second Covid wave, especially during the October to December period of 2020, ANAROCK saw a two-fold rise in enquiries for properties in Lucknow, against the corresponding pre-Covid-19 period in 2019. Interestingly, Lucknow even raced ahead of some of the top cities, including the NCR, Chennai, and Hyderabad, in terms of total enquiries received by ANAROCK in FY21,” Puri says.
What aids the real estate market in these smaller towns and cities is their affordable prices, against big cities and the superior infrastructure that many of these Tier 2 and Tier 3 cities provide.
Cities like Ahmedabad or Kochi in the south -that previously also attracted NRIs – are further seeing a rise in demand by them. Many NRIs who want to return to India are eyeing these markets.
ANAROCK’s consumer sentiment survey conducted post-Covid revealed that out of all participants who would prefer to buy in any of these Tier 2 and Tier 3 cities, 61 % are end users, while the remining are buying for investment purposes. At least 47% of these end users have a budget of less than Rs 45 lakh, followed by 34%, whose budget is between Rs 45 lakh and Rs 90 lakh.
Commenting on this trend, Uddhav Poddar, MD of Bhumika Group, says: “Real estate investor interest had previously been concentrated mostly in larger cities. However, the story of Tier 2 cities has resurfaced as a result of increased economic activity and infrastructural development in many of these areas, which is lowering outward migration to metros and resulting in a more evenly distributed real estate market.”
The growth prospects of these cities have also made developers plan their future strategy keeping these cities in mind.
Prateek Mittal, executive director of Sushma Group, says: “These areas are being developed in urban-centric ways to attract young purchasers looking for a better lifestyle — a metro lifestyle. Because the country’s big developers gravitated exclusively to the metro areas, these resource-rich cities have remained essentially undisturbed for a long time. However, the pandemic has caused real estate moguls to reconsider their plans and shift their focus away from major cities. Also, various foreign brands in commercial organizations are making their presence felt in these cities, due to the predicted lifestyle changes taking place in these cities. Thus, more developers and investors will eventually migrate to these booming cities and the value of real estate in such neighbourhoods will surge.”
There are some other factors also which are working in favour of Tier 2 and Tier 3 cities.
Kushagr Ansal, director of Ansal Housing, says: “People would prefer to have all of the con-temporary comforts in one place, like upmarket stores, colleges, hospitals, and entertainment venues, especially in the aftermath of Covid-19. Major developers from all parts of the country are al-ready flocking to these ‘prime’ towns. The current housing market favours features that address health and safety concerns, and reputable developers address this by providing residents with a controlled-living environment.”
LC Mittal, director of Motia Group, says: “Availability of affordable housing, scarcity of well-organized living options. and the migration of working professionals are reigniting housing demand in places like Chandigarh and Zirakpur. With house loan interest rates at historic lows and government incentives for homebuyers at an all time high, a surge in demand seems inevitable.”