The Indian real estate sector has emerged as a bright spot with immense growth potential due to the country’s growing population, urbanisation, government initiatives, and increased investor confidence. Real estate developers have consequently focussed on sustainable and affordable real estate projects to cater to the growing demand and leverage this opportunity for growth.
India has a large and growing population, which is expected to reach 140 crore by 2025. This has resulted in high demand for housing and other real estate properties and increased investment in the real estate sector.
The Indian government has also launched several initiatives to boost the real estate sector’s growth, such as the Smart Cities Mission, which aims to develop 100 smart cities across the country. This project will increase the demand for real estate, and developers can leverage this opportunity to create sustainable, energy-efficient, and technologically advanced cities.
The Housing for All scheme is another initiative that aims to provide affordable housing to all Indian citizens. Hence, tier 2 and tier 3 cities are emerging as major new investment horizons. These cities, which are smaller than the major metro cities, are experiencing a surge in economic growth and development. As a result, they are becoming increasingly attractive to investors who are looking for new opportunities.
One of the main reasons for this trend is that tier 2 and tier 3 cities have a lower cost of living and doing business compared to the major metro cities. This means that investors can get more value for their money in these cities. Additionally, these cities often have untapped markets, which can provide new growth opportunities for businesses.
Another factor driving investment in tier 2 and tier 3 cities is the government’s focus on promoting economic development in these regions. The government has implemented various policies and initiatives aimed at boosting infrastructure, creating jobs, and encouraging entrepreneurship in these cities.
Overall, the emerging economic growth and government support in tier 2 and tier 3 cities are making them attractive investment destinations for both domestic and international investors. However, investors should also do their due diligence and carefully evaluate the risks and opportunities before investing in any specific city or region.
There are several reasons why tier 2 and 3 cities are becoming popular among homebuyers in India:
Affordability: Property prices and the cost of living and housing in tier 2 and 3 cities are relatively lower than those in larger cities making them a more affordable option for home buyers. This makes it easier for people to buy their own homes or invest in real estate.
Better infrastructure: Many tier 2 and 3 cities have seen significant improvements in their infrastructure in recent years, including improved road connectivity, public transportation, and access to basic amenities like water and electricity. This has made these cities more attractive to home buyers.
Higher Rental Yields: Rental yields, which measure the return on investment generated through rental income, are often higher in tier 2 and 3 cities compared to tier 1 cities. This is due to the relatively lower property prices combined with a steady demand for rental properties.
Growing Job Opportunities: With the Indian government’s push towards decentralization and the growth of industries in tier 2 and 3 cities, there has been a rise in job opportunities in these areas. This has led to an influx of people moving to these cities and an increase in demand for housing in these cities.
Better Quality of Life: Many people are looking to move away from the hustle and bustle of big cities and are seeking a better quality of life in smaller towns and cities. Tier 2 and 3 cities often offer a more relaxed and peaceful environment, which can be appealing to home buyers. They also offer better quality of life in terms of cleaner air, less traffic congestion, and overall, a more relaxed pace of living.
Scope for Capital Appreciation and Investment Potential: Smaller cities are expected to see significant growth in the coming years, with many of them being earmarked for development under various government schemes. This has made them attractive to investors who are looking to invest in properties that will appreciate in value over time. Additionally, many tier 2 and tier 3 cities are experiencing rapid economic growth, leading to an increase in property prices and investment potential for homebuyers.
Policy Reforms: The government has introduced several policy reforms such as the Real Estate Regulatory Act (RERA), which has brought transparency and accountability to the real estate sector, making it more attractive for buyers and investors.
Overall, these factors, along with a growing trend of remote work and flexible job opportunities, have contributed to the increasing popularity of tier 2 and 3 cities as hotspots for home buyers in India. Tier 2 and 3 cities present massive untapped potential in terms of real estate development and investment opportunities.
With growing urbanisation and economic development, they are emerging as attractive destinations for real estate investments in India. Lower property prices combined with the potential for price appreciation and higher rental yields make these cities attractive for real estate investors looking for better returns.
(The author is the founder & CEO of BASIC Home Loan)
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