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Predictability of growth and demand pushes small town India’s fortunes

Post-pandemic acceptability, unprecedented highway and infrastructure growth has pushed a host of end-user consumers and real estate developers to move confidently to the hinterland.

india tier 2 cities

A host of developers and consumers of all ages, social positions and aspirations are making a beeline for these newly developing cities.

Small town India is at the centre of an urban revolution. And the good news is that there is enough space for everyone to make good out of it. Pushed by the government’s urbanisation focus, more and more municipalities and municipal corporations are masterplanning them for future growth. Electrification being complete across India, power capacities are being worked out even through renewables that are easily funded and set up. The Atal Mission for Rejuvenation and Urban Transformation (AMRUT) has widened its scope and almost 4,800 cities are benefitting from its services. And making a beeline for these newly developing cities are a host of developers and consumers of all ages, social positions and aspirations.

For those like Vaishali and Munish Agarwal had lived their entire working life in large cities like Mumbai rethinking their 60s and 70s means winding up in big cities and moving to small ones like Dehradun or Jabalpur to make their new home. Small enough to find an easier pace of life but modern enough to meet their retail and entertainment requirements. They buy into peripheral large homes that fit their budgets and live a sustainable life with solar power, a vegetable patch and rain water harvesting.

For others like Nilanjan Chakravarthy the move is to Coimbatore, Pune or Kochi, where retirement villages offer like-minded people, access to medical facilities and plenty of hobby options like sport, music, painting or even dancing. Sometimes the moves are made with groups of friends whose children are away, and friends become the new family.

Young Working Population

However, the biggest driver of small cities is the post-pandemic young working population who headed out to escape the virus and found peace and solace in the hinterland. When youngsters move, can brands be far behind? Branded retail and a host of home options from apartments to villas within gated communities have come up. Available at a fraction of the cost of a house in the city, they promise a much better lifestyle. Developers have started modern, air-conditioned retail facilities, and educational and medical facilities have also put in an appearance.

So much so that large IT and consulting firms are now seeking premium commercial office spaces in Tier 1 cities like Jaipur and Lucknow. Even smaller cities like Indore, Jabalpur and Thiruvananthapuram have become options. Developers like Omaxe have now ventured into 28 cities across eight states. It is the case of both the chicken and egg coming together in one place. Demand has driven supply and supply has driven more demand for housing, offices, retail and institutional development.

End User Buyers

Buyers are no longer just investors from far-off cities putting down surplus cash to reap returns. The buyers are end users, occupants who care about water, power, sewerage, drainage and other services. This forces governments to have a proactive approach in announcing development plans and initiatives. For developers, these announcements help make a decision on where to position the real estate.

Siddharth Katyal, group director, and business strategist, Omaxe Ltd has used this planning to deliver 12.01 million square metres and enter even cities like Ratlam, Ludhiana and Faridabad. Connectivity to commercial and economic hubs is crucial so that private developments can become satellite cities. In this newly developing India, green and sustainable practices are in demand. There is mixed demand for apartments, villas and independent houses.

Allocation announcements like the Rs 10 lakh crore capex for Indian infrastructure in Budget 2023 and a vision for executing large-scale projects, give buyers the confidence that facilities such as road networks and airports can be brought to the hinterland. Public-private partnership models are evolving and the private sector is keeping a close eye on the latest industry news and consumer trends in the city, including policy changes, infrastructure developments, and other factors that may impact the real estate market and quality of life in the city.

Master Planned Cities

Unlike earlier, developers enter when the cities are already master planned. When it comes to linkages, they work closely with local authorities and relevant stakeholders to ensure that projects are seamlessly integrated with the existing infrastructure and transportation networks. For instance, the recent G20 summit focussed attention on the potential of these cities pushing a new wave of developers there.

Demographics play a big part. For instance, a city with a younger population may require high-end residential properties featuring state-of-the-art amenities and cutting-edge connectivity options, such as high-speed internet and smart home technologies. Conversely, in a city where people are looking for retirement homes, developers build senior-friendly homes that prioritise comfort and safety.

As masterplans and dashboards become the new tools of governance, predictability and planning nodal facilities like ports, waterways and logistics hubs allow advance planning of new commercial destinations. With a promise of infrastructure development by the governments, a healthy infusion of foreign and domestic funds available to the private sector and regulation by the Securities and Exchange Board of India, Real Estate Regulatory Authority and Gati Shakti, small town India is ready for the boom.

E Jayashree Kurup is a writer-researcher in real estate and Director Real Estate & Cities, Wordmeister Editorial Services. Views are personal, and do not represent the stand of this publication.

E Jayashree Kurup
E Jayashree Kurup is a writer-researcher in real estate and Director Real Estate & Cities, Wordmeister Editorial Services. Views are personal, and do not represent the stand of this publication.
first published: May 25, 2023 10:36 am