In tier-2 cities, cheaper of­fice ren­tals, gov­ern­ment sup­port lead­ing to real es­tate growth

Hindustan Times (Chandigarh) - Estates - - HT ESTATES - Prakruti Ma­niar prakruti.ma­niar@htlive.com

Com­mer­cial real-es­tate used to be con­cen­trated in the seven ma­jor cities, Mum­bai, Ben­galuru, Delhi, Chennai, Hy­der­abad, Kolkata and Pune, says Anuj Puri, chair­man of prop­erty con­sul­tant Anarock.

Now mar­kets in tier-2 cities: Jaipur, In­dore, Chandigarh, Coim­bat­ore and Kochi are see­ing a rise in de­mand.

Puri says this is be­cause good, af­ford­able of­fice spa­ces are now more avail­able in the smaller towns.

“Over the last year, we have seen that num­bers for leas­ing if of­fice space in these cities has gone up,” says Mu­das­sir Zaidi, ex­ec­u­tive di­rec­tor for north and prop­erty con­sul­tants Knight Frank In­dia. One of the fac­tors for this in­crease is that pro­fes­sional op­por­tu­ni­ties in these cities are grow­ing. IT com­pa­nies have shifted to cities such as Kochi and In­dore, over the last four years. “De­mand for space will nat­u­rally fol­low,” he says

Bal­birs­ingh Khalsa, in­dus­trial and branch di­rec­tor for Ahmed­abad at Knight Frank In­dia points to an­other fac­tor: e-com­merce.

“The push for Make in In­dia is also boost­ing in­dus­trial and ware­hous­ing sec­tors,” he says.

GROWTH FAC­TOR

This rise in prop­erty re­quire­ment and de­mand is also driven by the push from state gov­ern­ments.

“State cap­i­tals are the ob­vi­ous next step for de­vel­op­ment after the top seven cities see sat­u­ra­tion,” says Zaidi of Knight Frank In­dia.

Ac­cord­ing to Ram Ch and na ni, man­ag­ing di­rec­tor of ad­vi­sory and trans­ac­tion ser­vices at realestate con­sul­tants CBRE, Kochi is emerg­ing as an al­ter­na­tive IT des­ti­na­tion due to gov­ern­ment ini­tia­tives to de­velop Spe­cial Eco­nomic Zones in the city.

Data from real-es­tate por­tal Prop­er­tyWala.com, taken as an av­er­age for the five cities, showed that 35% of the re­quests were for of­fice spa­ces, fol­lowed by shops at 29% and then ware­houses at 21%.

Jay Gupta, one of the three di­rec­tors of the Jaipur-based Sankalp builders, says that their first com­mer­cial project, The Rise, was launched around a year-and-a-half ago, after the state gov­ern­ment auc­tioned off some land.

“Our project is a mix of mini shops and larger show­rooms,” he says. “Since the launch, we have re­vised our prices twice and in­creased it by around 10% due to de­mand,” he says.

Ex­perts and devel­op­ers also at­tribute a slower res­i­den­tial mar­ket – a fall­out of the three re­forms of de­mon­eti­sa­tion, GST and RERA – for in­creased in­vest­ment in com­mer­cial real-es­tate.

Ac­cord­ing to Prop­erty- Wala.com, since May 2017, there has been an av­er­age of 14% rise in searches for com­mer­cial realestate in the smaller cities.

“The mar­ket in and around Chandigarh was wait­ing to rise, given its prox­im­ity to Pun­jab, Haryana and Hi­machal Pradesh,” says Puneet Singh, sales head of the Chandigarh-based NK Sharma group of builders.

The group’s first com­mer­cial ven­ture, Rak­sha Busi­ness Cen­tre, launched in 2013 in Zi­rakpur, near Chandigarh, is near­ing com­ple­tion.

It has about 78 shops, and, “cafe chains, fast food chains have shown an in­ter­est in the prop­erty,” adds Singh.

“These cities are em­bark­ing on a growth curve and are likely to sus­tain in the fu­ture,” says Puri of Anarock.

“In ad­di­tion, lim­ited avail­abil­ity of de­vel­opable land in the top seven cities of In­dia will also work in the favour of de­vel­op­ment of smaller cities.” This in turn might fur­ther at­tract pro­fes­sion­als to the tier -2 cities.

“It may have a rip­ple ef­fect as the over­all de­vel­op­ment of so­cial and phys­i­cal in­fra­struc­ture will be or­gan­ised and of­fer higher stan­dards of liv­ing,”

Puri says. Pankaj Kapoor, man­ag­ing di­rec­tor of prop­erty re­search firm, says this con­se­quent de­vel­op­ment might not face the ex­treme prob­lems of con­ges­tion and over­crowd­ing as met­ros due to lim­ited pop­u­la­tion.

“In a smaller city, tol­er­ance for traf­fic may not be as high as in Mum­bai. So they should built smooth tran­sit sys­tems. Road­ways should be built such that traf­fic is not con­cen­trated in pock­ets ,” he says.

Com­mer­cial mar­kets in tier­2 cities are em­bark­ing on a growth curve, which will also im­pact the over­all de­vel­op­ment of so­cial and phys­i­cal in­fra­struc­ture. ANUJ PURI, chair­man, Anarock prop­erty con­sul­tants

IS­TOCK

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