Real Estate Industry Turns Attention to Tier 2 Cities

Tier 2 cities are steadily witnessing real estate growth in India. Areas like Bahadurgarh, the Tri-City, and even Chakan (near Pune) are finding favor amongst developers and industry players. Smaller cities are attracting more businesses, especially in segments like warehousing, manufacturing, and data centres, while infrastructural development and connectivity improvements are fostering realty growth in these cities. Saturation in the metropolises and infrastructural woes due to rapid population growth are making the real estate industry focus more on tier 2 cities as the next growth driver. 

The COO and Founder, Square Yards, Kanika Gupta Shori, states that tier 2 cities are at par with tier 1 counterparts in terms of witnessing real estate growth. She also highlights factors like lower pollution, reduced traffic bottlenecks, lower living costs, various infrastructural developments and improved air and road connectivity which are driving real estate growth in these cities. 

Several smaller cities are making efforts to attract industries and businesses with easier access to permits and licenses, higher availability of land, and a wider talent pool that is attracting several companies to set up offices in these locations. AMRUT and Smart Cities among other Government initiatives and pro-active policy measures are also benefiting these cities considerably. 

More homebuyers are now relocating to tier 2 cities in the search of non-congested environments and spacious homes at comparatively reasonable prices. Villas, row houses, and independent multi-family homes are thus finding favor amongst buyers in many such cities. They are making the switch for a better quality of life without compromising on their professional aspirations due to the ability to work from anywhere today. Several such cities also offer tax sops and subsidies to draw business investments and industries while the Government’s Urban Infrastructure Development Fund and Affordable Housing in Partnership scheme will also massively boost tier 2 cities. 

Sky-rocketing infrastructural growth is transforming tier 2 cities and several projects are coming up here likewise. Land availability and higher demand are two growth drivers which are attracting more developers to these markets. There is still a need to fill up infrastructural and transportation gaps along with ensuring better access to utilities in many of these cities. However, these deficits may be addressed in the long run in sync with swift real estate development. A better regulatory ecosystem will also inspire confidence amongst investors to focus on smaller cities. The overall impact will thus be highly positive for these markets in terms of their real estate and infrastructural growth in the near future.