Tier II, III cities like Nagpur, Guwahati, Surat new growth poles on the realty map

Feb 22 2014, 09:54 IST
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Tier-II, III cities during Oct-Dec quarter have seen an increase of same levels as metropolitan markets or even greater. Express Tier-II, III cities during Oct-Dec quarter have seen an increase of same levels as metropolitan markets or even greater. Express
SummaryTier-II, III cities during Oct-Dec quarter have seen an increase of same levels as metropolitan markets or even greater.

demand. “In the case of Bhopal and Jaipur, the number of new launches has dropped but absorption has shown an increase. This demand is end-user driven. Similarly, cities of Indore and Kochi have witnessed a decline in their unsold inventory as the developers have curtailed new launches,” adds Jasuja.

Revision of circle rates has also led to increased transaction values being recorded at the registrar’s office. “In the case of Bhopal and Indore, the government has revised the circle rate, and transaction values that used to be under-reported have now seen an increase. The market has significant inventory and developers are pushing sales through discounts and interest subvention schemes,” says Manish Rajoria, Regional Head-Bhopal, Indore, Nagpur, Re/Max India.

Another city, Dehradun, an administrative capital, has also seen a price increase, which can be attributed more to the limited availability of developable land parcels and the end-user demand from customers based in metros looking for holiday homes. “Dehradun has limited land pockets. Residential land close to the city and in areas where construction is permissible is limited and only some land parcels are available,” says Nazia Izuddin, president, SN Group, a Dehradun-based developer.

Given the disparate growth drivers in several of these cities, experts say the best strategy is to look for locations and developments that can lead to good capital appreciation.

INVESTMENT DESTINATIONS

“While investing in cities other than the metros, the focus should be on properties that have potential for assured rental yields and capital appreciation. This includes residential projects close to workplace catchments, industrial hubs and locations with good aspirational value,” says Om Ahuja, CEO-Residential Services, Jones Lang LaSalle India. For a prospective investor looking for opportunities in Tier II and III cities, Jasuja ranks the following cities on growth parameters:

Bhiwadi: Proximity to Gurgaon, industrial development, proposed regional rapid transit system connecting it to Gurgaon and Delhi.

Bhopal: Administrative capital, infrastructural development like upcoming BRTS and revamped international airport.

Indore: Locational advantage in central India, infrastructure development like BRTS, IT super corridor, manufacturing hubs in Dewas and Pithampur SEZ.

Jaipur: Administrative capital, growing infrastructure like metro, BRTS, proposed ring road, upcoming SEZ on Ajmer Road.

Vadodara: Proximity to Ahmedabad, industrial hubs in Makarpura, Nandesari etc, IT Park on NH-8.

Kochi: NRI interest, upcoming infrastructure like metro, widening of roads, IT parks in Kakkanaad, port-related developments like International Container Transshipment Terminal, LNG Terminal, Vytilla Mobility Hub.

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