While metro cities are struggling with issues like lack of space, over-population and housing development nearing saturation, it is the Tier 2 cities that have emerged as the next focused investment destinations for real estate buyers in India. Magicbricks, India’s no 1 property site, ran a poll on “Would you like to invest in Tier 2 cities?” Over 98% of the respondents agreed and showed their interest in parking their money in smaller towns and cities.
Jagmohan Sharma, a senior government employee having a residential base in Sector 37, Noida was considering investing in real estate. Sharma says, “Though I was extremely confused on where to invest – Noida, Delhi, Gurgaon or Faridabad – but to my surprise I was recommended by my friend to invest in a Tier 2 city.”
Initially Sharma was hesitant but later he not only agreed but even explained the advantages of doing so. Sharma said, “I did an in-depth research on the nearby locations and zeroed down on a few areas such as Alwar, Bhiwadi, Sohna and Jaipur Expressway. I finally purchased a plot near Jaipur on the Ajmer Highway.”
So what makes the Tier 2 cities more enticing for an investment?
- Increased attention from government: Firstly, an urban renewal and retrofitting program by the Government of India wherein, over 100 cities are identified for development as Smart Cities. The government is working in collaboration with the state governments of the respective cities to develop these existing mid-sized cities as modernized cities. The plan involves working in areas such as sewerage treatment plants, smart class rooms, more street lights, property surveillance, advanced traffic signals and many more. Once these developments are in place, these modernised Smart cities are expected to give good returns in future.
- Lower cost: When the value of land in a metro city is compared to a Tier 2 city, the price definitely varies. Value of homes in smaller cities is much lower and pricing is the key factor which has been attracting investments from home buyers across these Tier 2 cities.
- Increased economic activity: With the availability of land at a low cost, many IT/ITES, Multinational and government organisations have made their way to these smaller cities. The setting up of these companies leads to more migration and demand for housing.
- Better quality of life at a low cost: Arjun Rathod, a local real estate broker in Jaipur says, “The city is one of the main attraction among NRO tourists and NRI buyers. The primary reason behind this attraction is the availability of homes at a low cost and better life in terms of more green spaces, less traffic and pollution.”
- Growth at a double pace: With increased buyer interest and residential development the cities are developing at a fast pace. New physical and social infrastructure, upgrading of existing facilities and more public amenities such as health, security and many more are working in favour of these small towns and cities.