Owing to the latest trends including demand for spacious homes, better livability, flexi-work models, and others, the residential real estate market in tier-2, 3 cities is constantly getting a boost.
The onset of pandemic significantly affected the real estate sector. Registering immense resilience and quickly adapting to the ‘new normal’, the realty sector not only rebound quickly but has been continuously reaping maximum benefits of the changed consumer behaviors, emerging trends, and evolved lifestyle patterns for sustained growth.
Owing to the latest trends including demand for spacious homes, better livability, flexi-work models, and others, the residential real estate market in tier-2, 3 cities is constantly getting a boost. The pandemic has ushered in major economic and behavioral changes in consumers and now they are playing a major role in the growth of real estate in emerging locations.
A slew of infra upgrades including last-mile connectivity, development of economic corridors, and construction of social infrastructures have had a multiplier effect on the real estate value of tier-2 cities. In addition, increased traction from several IT & ITES, BFES, BPOs, retailers, etc. has further strengthened the digital infrastructure, leading to the creation of more job opportunities. The positive trends and demand boost for residential spaces in these areas are also reflected in a NoBroker.com survey titled ‘India Real Estate Report 2020’, which shows that 82 percent of respondents plan to purchase a property in 2021.
Similarly, an ANAROCK survey also confirmed a demand surge in residential properties in tier-2, 3 cities. These positive indicators clearly tell regions like Chandigarh-Tricity, Lucknow, Indore, Kochi, Coimbatore, Jaipur, and Ahmedabad are set to become the destination-next of real estate. Furthermore, this has created a chance for real estate developers to take advantage of the untapped consumer demand.
The macro-economic changes during the pandemic have converted fence-sitters into active buyers. A majority of the workforce is currently working from homes (majorly in tier-2 cities) and as properties here are affordable, buyers are now actively making investments. The wish for a quality life away from the bustling crowded cities has also catapulted the value of newer locations. The government attention towards the sector with schemes like AMRUT and Smart City projects has also supported the development of benchmark projects here. The government has also set up a Rs 25,000-crore stress fund for stuck projects. Such favorable ecosystem coupled with buoyed sentiments of buyers is setting higher prospects for real estate growth in these smaller cities.
The pandemic has propelled drastic changes in the lifestyle decisions of buyers, which have led to a surge in growth of real estate. The demand for spacious homes has increased in the age of physical distancing, work-from-home, and homeschooling regimes. Furthermore, a majority of companies are now comprehending offering remote/ flexible/ hybrid working options to their workforces. Companies are now reworking on their operational methods and are thinking of taking the benefit of office spaces here as cost-cutting measures and also to get access to the large talent pool. This has created more jobs, leading to an increase in housing demand. As real estate prices are lower in tier-2, 3 cities, buyers too are thinking of shifting their bases here to explore the option of living in larger spaces with modern amenities and dedicated workspaces. The development of world-class health and education infrastructure is acting as a catalyst to aid their decisions.
Low interest rates, favorable government policies, and most importantly, the value of having a home for a secured future has majorly influenced the decisions for the search of housing properties in smaller cities. The Reserve Bank of India has kept the repo rates unchanged and decisions like stamp duty cuts are attracting more buyers towards this segment. Trusted and leading developers have already launched their benchmark projects to cater to the buyers’ aspirations. As the economic recovery gains momentum, the development of real estate in tier-2, 3 cities will progress in full steam.
(By Mukul Bansal, Director, Motia Group)