With the focus on work from home, Harshit Kumar, a software engineer working in Gurgaon and paying a rent of over Rs 20,000, recently decided to buy a housing unit in a gated residential complex in Meerut. He is not the only one.
COVID-19 pandemic has led to increased demand for houses in tier-II and -III cities due to reverse migration but majority of this housing stock consists of low rises and plotted developments.
A few developers are targeting homebuyers who belong to these Tier-2 cities and are offering low-rise condominiums and affordable plots which have seen increased demand over the last few months.
A recent India Housing Report has said that over 65 percent of the flat constructions in the smaller cities (less than a million population) are either single- or double-storied flats, in comparison to 38 percent in the case of top metropolitan areas.
Flats have emerged as an affordable housing option and are a key component in the supply of rental housing in smaller towns. Almost half of the flats in smaller towns are used for residential rental purposes. As compared to metros, a higher share of flats in smaller towns (8.5 percent) is also used as employer-provided housing.
“Unlike in major cities, low rises in Tier-2 towns are popular after plotted developments,” says Manoj Gaur, managing director, Gaursons.
AlphaCorp is offering residential plots in Karnal and Meerut. It has adopted a two-pronged strategy that includes residential low-rise condominiums and commercial office spaces.
“People from metro cities are also migrating to tier 2 cities and demand for real estate is increasing. We at Alpha-Corp are targeting homebuyers from metros who belong to these cities and/or are thinking of either moving back or buying a second home for themselves, as typically their own houses in Tier-II cities have multiple stakeholders. In last few months of the pandemic, we have seen an increase in traffic more on digital platforms for tier-II cities thus increasing the response therein manifold,” said Santosh Agarwal, CFO, AlphaCorp
“In Karnal, we have recently launched affordable plots under Deen Dayal Jan Awas Yojana (DDJAY) scheme which has seen great demand. As per our internal market research, our target audience in tier-II cities prefer independent houses and low-rise apartments respectively for Karnal and Meerut,” he told Moneycontrol.
In Meerut, the company is offering 2 and 3 BHKs where sizes vary from 1453 sq ft (135 sq m) to 1743 sq ft (162 sq m) and prices range between Rs 56 and Rs 65 lakh.
In Karnal, the plot sizes vary from 900 sq ft to 8730 sq ft. Prices vary from Rs 19,000 to Rs 22,000 per sq yard depending on the location of the plot and the category.
Supertech Group, which has projects in Meerut, Dehradun and Pant Nagar, has also seen an increase in demand for its high-rise developments and plotted developments during the pandemic.
“With several companies adopting the work-from-home culture during the pandemic, many professionals from these towns are now preferring to buy houses close to their families. While the younger generation prefers high rises, seniors in these towns go in for plotted developments,” says R K Arora, chairman, Supertech Limited.
In a pandemic situation, the medical safety of low-rise development inhabitants is also a lot easier to manage. At the end of the day, high-rises are mass housing developments.
That said, in many areas of India's congested metros, high-rises are the only affordable option for people with constrained budgets - and indeed, there will usually be no options for low-rise buildings among the fresh supply coming in.
“Basically, high-rises allow builders to reduce their land costs and churn out more units on a single plot. Skyscrapers are therefore more cost-effective for buyers on a unit-to-unit basis,” says Prashant Thakur, director and head, Research, ANAROCK Property Consultants.
Mudassir Zaidi, Executive Director – North, Knight Frank India, is of the opinion that while many employees working in big cities may have gone back to their hometowns, it has not resulted in sales of residential units as work from home is still a transitory concept.
“The ramifications of work from home are still being understood. The trend of people buying houses in their hometowns is yet to be established as they already have a place to live back home,” he told Moneycontrol.
As for formats in these Tier-2 towns, buyers generally prefer low rises compared to high rises in major cities, he says.