By: Biraj Sen, Director, Sashwaat Realty
Track2Realty Exclusive: Call it migration or mere attraction, the Indian Real estate is spreading its roots into cities-in-making. Though fact remains that this sector has lots to thank the tier I cities for its large scale investments, but the winds of change are here to stay. The recent economic and investment policies, initiated by the government are giving a boost to the less known lands across the Indian sub-continent. Metros are known to be the base of big players in the real estate industry, which justifies the presence of challenging projects and the flow of burgeoning investments. Yet, there has been a shift in preference to the tier II & III cities.
The real estate sector is divided in the tier system as stated above. This distinction is based on a number of factors like availability of lucrative property, standard of living determining the investment levels and returns too, etc. Based on this division the metropolitan cities like Bangalore, Mumbai, NCR form the tier I cities because of high demand; Hyderabad, Chennai, Pune, Kolkata forming the tier II cities with scope of growth and experiments; and Chandigarh, Ludhiana, Lucknow, Guwahati, Bhubaneswar, Jaipur, Ahmedabad, Surat, Nagpur, Indore, Goa, Visakhapatnam, and Baroda forming the tier III with potential demand.
The Indian real estate market is showing a trend upwards with a number of smaller cities having relatively better infrastructure and are able to support higher economic growth coming into the limelight. Another important reason behind this shift is the availability of land, untapped manpower and a need for spacious homes. Moreover, with the increasing awareness about pollution free-environment; real estate is seen to harp on new concepts like green buildings, etc. Talking about change, there are various reasons why there has been a shift from the tier I cities.
Tier II and III cities would emerge as most sought-after real estate destinations in the coming year. Factors leading to growth of these areas are the saturation of metro cities. Moreover, what we need to take note of is the fact that the primary players in the Indian real estate market do not necessarily rely on any central business location. They can expand into the length and breadth of the country; especially given the lucrative options in the tier II and III cities. Further, the liberalized FDI policies of the government have also helped in initiating investments in these markets.
Economic activity, whether industrial or service oriented is the most vital requirement for development for any industry and more so for the real estate sector. Cities like Ahmedabad, Surat, and Vishakhapatnam have shown immense developments in both commercial and residential sectors because of large investor activity. Experts believe that with the Indian real-estate sector moving higher on the growth curve, a number of state capitals and smaller cities that have relatively better infrastructure and are Cable to support higher economic growth have come into the limelight.
Today, since the demands have increased in the less developed cities, the requirements in these cities are also something that the big players have to take note of. Innovations and creative business strategies makes way to becoming a successful key to unlock these new demands. Thus, the developers are concerned that they have to play it on a Pan-India basis; which is only possible if they can re-strategize and focus on their key geographical areas. This should be coupled with a good sense of local markets and the key demand drivers. I say so simply because as mentioned earlier the demand in the metros is less of development and more of maintaining existing structures; whereas the tier II and III cities have more scope for challenging projects in both commercial and residential real estate.
…to be continued