Tier 2 cities are steadily emerging as favorites for the real estate market in the country, with several metropolises grappling with sizable population growth and infrastructural woes. Homebuyers and developers are now focusing more on tier 2 cities which have vast scope for Greenfield and futuristic infrastructural development for spurring employment and higher appreciation in capital and rental values.
According to Kanika Gupta Shori, the Founder and COO at Square Yards, Tier 2 cities are playing second fiddle to their tier 1 counterparts while steadily emerging as major drivers of real estate growth. She also adds that improved air and road connectivity, strategic development of infrastructure, lower pollution and traffic congestion, and comparatively moderate living costs are making homebuyers venture beyond tier 1 cities.
Other experts feel that tier 2 cities have progressed considerably with their efforts in boosting business and industrial ecosystems for future growth. These cities are also backed by the Smart City initiatives and other efforts of the Government. Upon their implementation, there will be a massively positive impact on these cities. Several tier 2 cities are seeing growth due to pro-active policies by Governments and incentives for enhancing urban development and industrialization. Many of these cities provide subsidies and tax sops along with ease of getting licenses and permits that are encouraging companies to set up there.
Upcoming initiatives like the Urban Infrastructure Development Fund and Affordable Housing in Partnership scheme will also boost real estate markets in tier 2 cities with several homebuyers choosing projects in these locations due to bigger homes, higher purchasing power, reasonable prices, and better infrastructure. Independent multifamily houses, row houses, and villas are finding traction in these markets as per several other industry experts. With work from anywhere becoming the norm, many people are shifting to tier 2 cities to purchase affordable and bigger homes without compromising on their professional commitments.
There is also growing demand for luxury and premium homes in markets like the Tri-City and also Chakan near Pune among others. Other growth hubs include locations like Bahadurgarh and other areas. Businesses are also finding it feasible to establish offices in smaller cities owing to a wider talent pool and land being readily available. This is spurring development in segments like data centres, manufacturing, and warehousing among others. Of course, there still remain a few regulatory and infrastructural gaps although they can be addressed in the long run, especially in terms of prioritizing infrastructural growth in utilities and transportation along with stable regulatory mechanisms to boost the confidence levels of investors.
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Published Date: Oct 12, 2023
