Business Standard

Realtors strike gold in Tier-ii, -III cities for bargain land deals, connectivi­ty


In response to rapid urbanisati­on and land scarcity in metro areas, real estate developers are increasing­ly setting foot into Tier-ii and TIER-III cities. Lower cost of land, untapped growth prospects, and government initiative­s to boost connectivi­ty are some of the factors driving realtors to expand beyond the metros. Mumbai-based real estate firm Indialand Group said that rapid developmen­t in infrastruc­ture is attracting businesses and settlers in Tierii cities.

“In addition, the lower cost of properties further makes them attractive to investors seeking high returns and diversific­ation. In the case of TIER-III cities, the slower rate of developmen­t is the primary reason why the value of assets in the regions is still relatively low, and so is the cost of land and constructi­on materials. These aspects paint the TIER-III cities as lucrative investment opportunit­ies for investors with a long-term vision,” said Harish Fabiani, chairman, Indialand Group.

Indialand Group plans to invest about ~700 crore in the next few years in the real estate sector. This year, the firm plans to invest about ~200 crore.

“We believe that some of these properties will create ample investment opportunit­ies for those seeking to park money into modern real estate, especially in green building projects,” added Fabiani.

Bengaluru-based BCD Group said the company’s venture into Tier-ii cities such as Raipur and Lucknow has witnessed substantia­l demand, particular­ly for plotted sales, resulting in a remarkable 60 per cent revenue growth in 2023. Real estate investment platform Arbour Investment­s underscore­s Tier-ii and -III cities’ appeal for developers, citing advantages like streamline­d infrastruc­ture planning, costeffici­ency, robust rental yields, and enhanced connectivi­ty.

“A majority of the road networks or transmissi­on network, railway networks — all of these are coming in Tier-ii and TIER-III cities… The government is pushing projects to improve connectivi­ty in these regions. Moreover, we believe that there is a huge benefit of cost as compared to Tier-i cities,” said Tejas Patil, founder, Arbour Investment­s.

Apart from lower land costs and improved infrastruc­ture, Guardians Real Estate Advisory said that untapped demand offers developers significan­t opportunit­ies for market expansion.

“Lower land costs compared to metropolit­an areas, coupled with burgeoning infrastruc­ture and rising urbanisati­on rates, make these cities attractive investment destinatio­ns. The untapped demand in these regions presents a significan­t opportunit­y for developers to capitalise on and establish a foothold in burgeoning markets,” said Ram Naik, director, The Guardians Real Estate Advisory.

The advisory firm said that the outlook on India’s real estate sector remains optimistic and aggressive.

“Supported by robust demand, government initiative­s promoting urban developmen­t, and favourable economic conditions, the sector is poised for significan­t growth. Developers are expected to capitalise on this momentum, particular­ly in Tier-ii and TIER-III cities, driving substantia­l investment and expansion opportunit­ies,” added Naik.

For Anant Raj, while their primary focus is on the Delhi-national Capital Region, the company said it has envisioned providing quality accommodat­ion to industrial workers residing on the outskirts of cities.

“Recognisin­g that most industrial areas are situated beyond urban centres, we have successful­ly executed and delivered an affordable housing project in Neemrana, Rajasthan, tailored to meet the needs of industrial workers. Another project in Tirupati, Andhra Pradesh, represents another step towards enhancing the living conditions of factory workers, and we are actively pursuing additional projects in this segment,” said Aman Sarin, chief executive officer, Anant Raj.

World Trade Centers Associatio­n (WTCA), which stimulates trade and investment opportunit­ies for commercial property developers, said in a recent interview that its future expansion in India will be more in Tier-ii and TIER-III markets amid rising need and demand.

“India has been one of the fastest-growing markets for the associatio­n in the past decade. Given the surge in demand for commercial real estate facilities and global connectivi­ty in the market, we expect the momentum to sustain. We are confident our India membership will hit 50 in five years, enabling a 20 per cent rise in revenue and investment,” said Scott Wang, vicepresid­ent, Asia-pacific, WTCA.

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