The escalating costs of commercial spaces in metropolitan areas have propelled commercial development in Tier 2 and Tier 3 cities. The surge in entrepreneurial endeavours and the demand for budget-friendly spaces have also contributed to this growth, says Mohit Goel, Managing Director, Omaxe Ltd, a prominent real estate player in northern India.

In an exclusive interview with Sanjeev Sinha, Mr Goel talks about the promising prospects of commercial real estate in Tier 2 and Tier 3 cities, and shares his views on affordable housing. Excerpts:

What are the key drivers behind the promising prospects of commercial real estate in Tier 2 and Tier 3 cities?

The prospects of commercial real estate in Tier 2 and Tier 3 cities are not only promising, but they are also witnessing a profound transformation. Several factors contribute to the development of commercial infrastructure in these cities. Notably, infrastructure advancements, such as enhanced connectivity through new road networks, railways, and metro systems, play a pivotal role. The escalating costs of commercial spaces in metropolitan areas have propelled commercial development in Tier 2 and Tier 3 cities. The surge in entrepreneurial endeavours and the demand for budget-friendly spaces have also contributed to this growth.

Furthermore, the influx of major retailers and corporations seeking expansion opportunities in smaller towns has further ignited the commercial real estate sector in these cities. The advent of digitization, e-commerce, and the prevalence of remote work have amplified the demand for cost-effective and compact commercial spaces. Overall, Tier 2 and Tier 3 cities offer substantial opportunities for commercial real estate development, making them attractive destinations for businesses and investors.

Also Read: 5 important things to consider before foreclosing your home loan

As a real estate developer with a substantial presence in Tier 1, 2 & 3 cities, how do you evaluate their distinct growth potentials?

Being a real estate developer with a significant footprint in Tier 1 cities as well as Tier 2 & 3 cities, it’s evident that each tier presents unique growth prospects. Tier 1 cities boast well-established markets, higher property values, and developed infrastructure, rendering them appealing to diverse businesses. Over recent years, Tier 1 cities have witnessed a robust surge in demand for larger residences and high-end properties. In contrast, Tier 2 & 3 cities offer untapped growth potential. With infrastructure improvements, mounting demand, competitive pricing, an upswing in business activities, and the entry of major retailers, these cities demonstrate substantial potential for sustained growth and investment. They represent vast untapped opportunities in residential and commercial sectors, spanning affordable and premium projects.

Faridabad is attracting significant investments in both the residential and commercial sectors. What factors underpin the city’s resurgence?

Faridabad is experiencing a resurgence primarily driven by the escalating connectivity within the region. Enhanced infrastructure and connectivity have played pivotal roles in Faridabad’s revival. The construction of crucial transport arteries like the Faridabad-Noida-Ghaziabad (FNG) Expressway and the Eastern Peripheral Expressway (EPE) has significantly reduced travel times and improved accessibility. The KGP Expressway and the Manjhawali Bridge have further bolstered connectivity, positioning Faridabad as a modern and accessible hub within the National Capital Region (NCR).

How is the affordable housing segment positioned amidst the unmet demand and existing challenges?

The affordable housing segment holds vast potential owing to substantial unmet demand. A significant portion of the population seeks affordable housing options, presenting real estate developers with a remarkable opportunity. Despite challenges such as rising property prices and the limited availability of affordable land in city centres, the demand for affordable housing remains robust. The post-pandemic era has underscored the significance of housing security, emphasizing the need for affordable housing solutions. By implementing proactive measures from the government and adopting innovative approaches, developers can address these challenges and meet the growing demand for affordable housing, ensuring housing accessibility for all.

2023 has witnessed remarkable growth in NCR’s realty sector. How do you envision the future?

The year 2023 has proven to be a remarkable one for the real estate sector across the country, with NCR standing as one of the frontrunners, as indicated by various reports. Prominent developers in the region are actively contributing to this transformation, consistently launching new projects to cater to the escalating interest of both buyers and investors. This success can be attributed to the solid foundation of the sector, the region’s infrastructure expansion, and the confidence exhibited by investors. We anticipate an even brighter future, with the real estate sector in NCR reaching new milestones, benefiting both end-users and investors alike.