Tier II and Tier III cities witnessing real estate boom

The coming of affordable housing has meant a booster shot for many of the Tier II and Tier III cities. While earlier Tier I cities and theirsuburbs were looked upon as the best bet in real estate, large scale development in affordable constructions is now translating into high interest levels for Tier II cities as well.A number of these cities such as Bhubaneshwar, Coimbatore, Vadodara, Ghaziabad, Indore and Jaipur have witnessed remarkable development over the last few years.

Ashutosh Limaye, associate director, strategic consulting, Jones Lang LaSalle Meghraj, says that the common features of affordable housing — low-priced land, larger unit numbers to achieve economy of scale, smaller product sizes and reduction of aspiration-driven features are applicable in smaller cities, as well. “Affordable housing is easier in Tier II cities because the land rates are relatively low and the distance of city centres from such projectsis generally manageable. Earlier, developers in Tier II cities also aspired to deliver products that reflected Tier I lifestyles. Now, they have adapted their formats to dovetail with Tier II city requirements.

Tier III cities continue to display a preference for self-built properties, and organized developer penetration is relatively low,” he says.

Realty development has indeed meant a push for many of these cities. A number of developers, including the big names such as DLF, Unitech and Omaxe have upcoming projects in these cities. Rohtas Goel, CMD, Omaxe feels the growth has been tremendous in Tier II cities owing to the real estate industry. The developer is looking at a number of mid-segment and affordable projects in the residential segment in these cities.

“Indore, Lucknow, Sonepat, Jaipur, Rohtak and Allahabad have witnessed quite a push. Right now, it is 20% investors and 80% end users in these markets,” says Goel. Similarly, Unitech also has residential projects coming up in Mohali, Lucknow, Rewari and Bhopal among others.Going forward, these cities will be hubs of development and growth, feel experts. Cities worthy of consideration for serious long-term investors would include Nasik, Nagpur, Vadodara, Ahmedabad, Pune and Coimbatore, according to JLLM

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