Tier 2 and 3 cities to be showstoppers of post-COVID residential realty in India

Indian tier 2 and 3 cities have been seeing considerable demand for residential real estate as per industry experts. This has been due to several factors including availability of better price points and value additions, lower construction expenses, bigger spaces and reverse migration. Top real estate players like Alpha Corp, DLF, ATS, Emami Realty and Omaxe are steadily switching focus to monetizing their land banks in smaller Indian cities.

Co-Founder and COO at Square Yards, KanikaGupta Shori, has stated how inquiries and searches have gone up sizably in the post-COVID months for property in tier-II cities in comparison to pre-COVID months. She added that availability of better connectivity and infrastructure coupled with better job opportunities are key factors behind higher real estate demand in smaller Indian cities. She also highlighted how budgetary constraints are accelerating demand for homes in suburbs of major cities.

DLF Home Developers Limited is one of the major players looking at tapping this new demand and its senior executive director, Aakash Ohri, has stated that these cities offer more space, better investment returns, lower acquisition costs and more affordable price points. 30% of the Indian residential realty market is taken up by tier-II and III cities while 70% is held by the top 7 Indian cities. Alpha Corp is building projects in Uttar Pradesh’s Meerut and Haryana’s Karnal while Emami Realty is building a gated township at Jhansi. Alpha Corp CFO, Santosh Agrawal, has stated that people are investing in backup homes in their own hometowns or native places. People also prefer homes located in gated communities which do not require huge investments. Weekend lockdowns in UP, for instance, have led to higher traction in Haryana according to him.

Emami Realty has carried out a study where 70-75% of people surveyed across cities like Gwalior, Indore, Karnal, Panipat, Agra, Jhansi and Kanpur, preferred to invest in independent villas and developed plots as opposed to homes in high-rises or group housing societies. DLF has projects lined up for Indore, Lucknow, Shimla, Tri-City (Punjab) and Kasauli, offering ready to move units and plots alike. Omaxe CEO, Mohit Goel, confirmed new projects coming up in Lucknow, New Chandigarh, Indore and Ludhiana, while stating that tier-II and III cities will naturally see higher demand since they are majorly end-user driven housing markets.