Covid-19 pandemic has surely caused a slowdown in the performance of the Indian real estate, but a few trends surprisingly show a reverse effect. While metro cities are majorly affected, the demand for residential properties seems to have grown in tier II and III cities.
Following are the three main reasons for the demand for real estate properties to have witnessed a rise in tier II and III cities:
1. Migration of people from the metro to smaller well-developed cities
The traditional pattern of migration occurs from small towns towards metro cities where people migrate for better opportunities and raise their living standards. However, this pandemic has resulted in reverse migration. The wild spread of corona positive cases has made metro cities a serious threat and people have been moving to safer places i.e. smaller cities. Metro cities are almost non-functional at present with people losing their jobs and workplaces shut down. Such chaos has led to an increase in demand for real estate properties in tier II and III cities.
2. What makes properties in tier II and III cities more attractive is the affordability
The demand for properties has relatively remained stagnant or low in metro regions. Hence, the focus of several developers has now shifted towards smaller cities where they already had invested in plots and under-construction projects. More importantly, ready-to-move-in projects are high on demand and selling at a fast pace. Property prices in tier II and III cities are within the reach of customers who are looking for affordable luxury.
Mr Aakash Ohri, Senior Executive Director, DLF Home Developers Ltd. says, “Tier II and III cities have witnessed a considerable rise in demand in the recent past, primarily due to accessible pricing, more space, better returns on investment and lower cost of acquisition, mostly for ready to move in units".
3. Assurance of a quality lifestyle that is free of chaos
In cities like Jhansi, Kanpur, Gwalior, Indore, Karnal, Panipat, Shimla, Kasauli, and Agra, inquiries for properties and buying have increased compared to the pre-covid period.
Today, people living in urban India are well-informed and make smart choices. Besides the features of a property, they are concerned about the environment they choose to make their permanent residential address. They prefer to live in a locality that is safe, pollution-free, clean, green, and well-developed. The government's infrastructural push and real estate developers' initiatives have enabled many tier II and III cities in India fulfil these requirements. Hence, a rise in trend of buying homes in tier II and III smart cities had already taken place and the ongoing pandemic period seems to have only favoured the trend. A large section of homebuyers are interested in building a lifestyle away from the hustle of metropolitan areas that at the same time provide all the world-class amenities.
Mr Mohit Goel, CEO of Omaxe Ltd says, “Being an end-user driven market, the demand has picked up faster in II/III cities due to a host of reasons like government’s industry and infrastructure push, corporates looking for cheap real estate and skilled workforce that are staying back or returning and higher capital appreciation".
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