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alisha | 08 Apr 2021

What Makes Tier 2 and Tier 3 Cities The New Real Estate Destination?

What Makes Tier 2 and Tier 3 Cities The New Real Estate Destination?

Gone are the days when real estate investment in India meant only the metro cities and Tier 1 cities. The real estate sector now has a broader spectrum where Tier 2 and Tier 3 cities are step-by-step making their way into the mainstream.​

The primary concentration of infrastructure development and demand for real estate properties in larger cities was problematic earlier. High demand increased the price of the properties making it difficult for everyone to invest in real estate. The metro cities such as Mumbai, Delhi, Bengaluru, and Kolkata are also at an all-time high under pressure to accommodate all who migrate from the smaller cities.

Tier 2 and Tier 3 cities on the rise

The Smart Cities Mission of the government has already started showing positive results in the country. The mission launched in 2015 with a focus on Tier 2 and Tier 3 cities has succeeded in improving the infrastructure of several smaller cities and the government continues to do more.

The government has been tackling the problems of transportation, governance, energy supply, digitisation, technology adoption, and other urban infrastructure services. People need not move anywhere in search of a job and better livelihood.​

On the other hand, the crisis caused by the Covid-19 outbreak affected the jobs of many who were living in rental housing in prominent cities of the country. Some lost their jobs while others adapted to work-from-home culture. All in all, they went back to their hometowns. A huge population from Tier 2 and Tier 3 cities who have been working in larger cities have now developed a mindset to stay in their place and start afresh.

The improved infrastructure of small cities that the government through various initiatives delivered in the last couple of years has instilled the belief among individuals that one need not move to a bigger city in search of a job and make a living.​

Opportunities for the investors/real estate developers in Tier 2 and Tier 3 cities

The visible progress made in Tier 2 and Tier 3 cities under Smart City Mission has boosted the confidence of the real estate developers. Urban migration led to overpopulation in metro and Tier 1 cities. Therefore, even distribution of the real estate sector across various types of regions in the country will help reduce the burden.

With all the urban necessities in place, the smaller cities are appearing promising. The investors have begun to deliver commercial and residential projects. The response from the buyers' end continues to be good, indicating an upward trend in the demand and sale of real estate properties.

Chandigarh, Ahmedabad, Jaipur, Lucknow, and Kochi are some of the cities that are performing well in terms of infrastructural growth and demand for real estate properties.

One of the biggest advantages of buying properties in Tier 1 and Tier 2 cities is the tremendous availability of affordable deals at present. The fact that these smaller smart cities are still undergoing changes and development with a promising future, the buyers can make the most of this opportunity and buy properties at a relatively cheaper price. The benefit is also applicable to the developers as the land prices for them will be affordable.​


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