Modi government’s thrust to develop 100 Smart Cities is fuelling demand in the real estate sector with even small towns becoming attractive investment destinations.
Real estate developments are mostly confined to metro cities but they have now begun to expand to tier-II and tier-III cities in states like Bihar, Madhya Pradesh, Chhattisgarh, Kerala and Odisha, among many others.
Experts believe that the Smart City project is a prime opportunity for real estate companies.
As per estimates, India’s urban population is expected to surpass 850 million by 2050, of which 50% is expected to be in the age group of 19-58 years. With increasing disposable incomes and nuclear families, this will consequently lead to higher demand for housing and organised retail.
Smaller cities with high mid-income population base are the epicentre of untapped demand for residential units, experts say.
High availability of land and that too at much affordable prices compared to metro cities come as an added advantage for real estate developers.
According to NHB Residex, on a year-to-date basis, tier-II and tier-III cities have witnessed better price appreciation compared to metros.
For instance, property prices in Ahmedabad grew by 8.1%, in New Town (Kolkata) by 6.5%, Chandigarh (5.3%), Nashik (5.8%), while prices declined by 5.8% in Gurugram, Chennai (1.5%), Mumbai (3.6%), and remained constant in Kolkata.
Conducive government policies and focus on physical infrastructure like airports, flyovers, metro rail corridors and a vast network of highways and expressways, are fuelling rapid growth in smaller towns.
India’s real estate sector is expected to reach a market size of $1 trillion by 2030 from $120 billion in 2017 and contribute 13% of the country’s GDP by 2025.