THURSDAY, 2 SEPTEMBER 2021 12 NEW LONG STORY LIVEMINT.COM

WILLREPORTAGE COVID | TALKING POINTS | IDEAS | INSIGHT BREAK | THE BOTTOMLINE THE TIER-2 REALTY JINX?

India’s organized real estate market is metro-centric. But smaller towns are suddenly in vogue.

After being under lockdown for a year, the importance of a home is clear. Gated communities and villas are doing well, and those who can’t buy a home are buying plots. HT

Madhurima Nandy , Lucknow, Coimbatore, Thiruvan- population of about 850,000 blue-collar mint cities has a unique selling proposition— Developers Association of . “The [email protected] anthapuram and Nagpur will all see a rise in workers. Land prices in Tirupur moder- SHORT Lucknow for its improved connectivity ongoing second wave (which is more pro- BENGALURU flex office stock, the report said. ated a bit and even though no government STORY with Delhi, Indore for its civic infrastruc- longed in the southern state) has damp- Awfis’ founder and chief executive offi- incentives were on offer, buying sentiment ture, and Coimbatore due to its medical ened the spirit. We are waiting for the dust ome October, once its employ- cer, Amit Ramani, said that in the next 6-18 continued to remain high. facilities and because it is a base for many to settle,” he added. ees are fully vaccinated, con- months, a lot of firms will have some pres- Deepak Viswanathan, founder and chief WHAT high-net worth individuals (HNIs). Zackeria is, however, hopeful that the sumer durables major Usha ence in smaller cities, even if the initial executive director of Tirupur-based Mere- “Fast digitization, post-covid work cul- momentum will pick up. Like in many International Ltd intends to requirement is small. “It indicates a strate- stone Properties Pvt. Ltd, said there is a visi- The ‘work from anywhere’ ture, and companies preferring local talent other cities, those who can afford to buy a get a small team up and run- gic shift. Companies want to leverage local ble surge in the demand for plots in Tir- culture, reverse migration of have all contributed to this trend,” said home are looking at larger 2,500-4,000 sq Cning out of a co-working centre in Zirak- talent in the so-called Bharat geographies. upur and the nearby city of Coimbatore workers to their home towns and Mani Rangarajan, chief group operating ft homes in Kochi. pur, a satellite town on the outskirts of The requirement is (from) a broad mix of among middle-class buyers. cost rationalization have pushed officer of Elara Technologies which owns Bengaluru-based developers such as . logistics, new-age fintech and healthtech “The work-from-home culture and the many firms to seriously consider Housing.com, Proptiger.com and Mak- Sobha, Prestige Group and Puravankara Zirakpur is a strange location to have an firms and IT and tech employers too,” cost difference between metros and non- a tier-2 strategy in recent months. aan.com. “But are all tier-2 cities doing are all present in Kochi and have had vary- office for a Gurugram-headquartered firm Ramani said. Awfis has recently opened a metros have made regional natives buy a well? No,” added Rangarajan. The unique ing degrees of success. Sobha has ongoing such as Usha. “If you want to grow your new co-working centre in . home here (Tirupur) rather than, say, in selling proposition matters. residential projects in Kochi, Kozhikode, business, you need to be strategically The firm also plans to open workspaces in Bengaluru. After being under lockdown for AND Delhi-based Omaxe Ltd believes that Thrissur (all in Kerala) and Coimbatore (in located. Zirakpur has great connectivity Indore, Chandigarh and Bhubaneshwar. a year, the importance of a home is clear. there will be stiff competition in the Tamil Nadu), and has plans to expand its and is close to national highways, and it is If offices shift, demand for new homes Gated communities and villas are doing Analysts say that the increased months ahead as more metro-focused presence in non-metro cities. “We are open part of the (Chandigarh-Panchkula-Mo- will inevitably crop up. Until now, India’s well, and those who can’t buy a home are job creation will create a trickle- developers enter smaller property markets. to exploring new non-metro cities (too) if hali) tri-city area,” said Manmohan Bhu- real estate market has been skewed buying plots,” Viswanathan said. down effect in several tier-2 The firm is in the process of launching and the opportunity is exciting,” said a Sobha tani, sales administration head, Usha Inter- towards just a handful of metros— “Covid-19 has driven a lot of latent towns, leading to a rise in delivering projects in Indore, Chandigarh, spokesperson. national. Metropolitan Region, Delhi-NCR, Benga- demand in tier-2 and -3 cities,” said Ana- demand for housing, workspaces Lucknow and Faridabad across the product But despite all the buzz, major metros What is left unstated is a set of new post- luru, and , along with rock, a real estate consultant, in a recent and warehouses. spectrum—plots, low-rises and regular still retain their allure. And many develop- pandemic realities that have compelled tier-1 cities such as and . report. “This demand is driven by apartments. ers expect that sentiment will revive firms to reconsider forgotten geographies. These seven cities account for about 70% of improved economic growth, infrastructure “Besides (the) unprecedented demand, quickly in the big cities. As a result, some The persisting allure of ‘work from any- the overall organized residential market in development, lower cost of living and more MOREOVER we are (also) seeing consumer needs evolve developers such as Godrej Properties where’, reverse migration of employees to terms of volume. attractive real estate prices in these cities. in tier-2 and -3 cities at a time when many remain focused on the metro market, their home towns and cost rationalization While a few real estate firms, such as DLF However, it is the new work-from-home According to a recent report by people expected these markets to shrink. pointing out that there is enough and more have all come together to push many firms Ltd and Godrej Properties Ltd (GPL), have dynamic which has worked most strongly Ficci and real estate services firm Buyers want more refined products, not demand in the top cities. to seriously consider a tier-2 strategy in grown into pan-India developers with in their favour as they continue to attract CBRE, cities including Kochi, just essential homes,” said Rajan Gupta, “The ongoing industry consolidation has recent months. The essential thrust of this presence in multiple cities, a big chunk of migrant professionals riding on the work- Ahmedabad, , Chandigarh, vice-president of business development led to a meaningful decline in (the) number strategy: diversify base locations, open their housing projects remain focused on a from-home option,” the report added. Indore and Coimbatore will see a and corporate strategy at Omaxe. of active developers over last few years. smaller offices, hire local talent where pos- few core geographies. But this could Bengaluru-based Puravankara Ltd has rise in flex office stock. “There is (a) shortage of supply com- Therefore, we feel that the growth oppor- sible and retain those who have relocated change soon and smaller cities such as launched a plotted project in Coimbatore pared to the demand, and prices in some tunity within metros is still significant,” to their home towns. The ‘Bharat’ foray is Mohali (Punjab), Mangaluru (Karnataka), this year. A project in Kochi is also in the cities have shot up by 12-13%. Rohtak, for said Mohit Malhotra, managing director temporary in some cases. Usha, for Rajkot (Gujarat) and Ludhiana (Punjab) offing in Kerala. “Non-metro sales have been much quicker in smaller cities, prop- example, has seen a two-fold rise in prices and chief executive officer, GPL. instance, plans to rent 50 seats from Awfis, may very well be the new site of action. seen continued buoyancy across markets. erty analysts said. According to data from in just the last 2 years,” he added. “However, we will be open to any unique a managed workspace provider, instead of Ready-to-move in inventory has done very Liases Foras, a real estate research firm, business opportunity from a plotted or acquiring any new real estate. The Zirak- TIER-2 DYNAMICS well,” said Abhishek Kapoor, chief execu- housing project launches saw a 338% jump POST-COVID REALITIES marquee development in the adjacent mar- pur base will be the 85-year-old consumer n Tirupur, a major textile and knitwear tive officer, Puravankara. in the April-June 2021 quarter compared to ased in Kochi, Kerala’s core property kets, which may offer geographical and durables firm’s first-ever managed office Ihub of Tamil Nadu, the covid-19 pan- Many home buyers are also exploring the year-ago period. Sales rose by 55%, pri- Bmarket, Najeeb Zackeria says that operational synergies to us.” space. demic and the subsequent lockdowns, options in the peripheral areas of cities, as marily led by cities such as Rajkot, Manga- nearly 1.2 million Keralites have returned Once covid recedes from memory and Property analysts believe that as more along with the work-from-home culture, they tend to offer a larger floor space at a luru and Ludhiana. to the state from the Gulf region following some kind of normalcy kicks in, analysts firms walk down a similar have left behind a distinct more competitive price. the outbreak of covid-19. suspect that people may path, the increased job mark on homebuying India’s largest real estate developer DLF METROS VS NON-METROS While this return influx return to the metros. creation and expansion Until now, India’s real estate patterns. said that it has witnessed a sharp rise in the he pandemic struck after a prolonged resulted in a temporary Some analysts believe that Smaller property mar- will create a trickle-down market has been skewed Following the first cov- sales of residential projects in Lucknow Tlull in the residential sector. For sev- spike in home sales post there will be stiff competition kets, where project sizes effect in several tier-2 id-19 wave in 2020, the (Uttar Pradesh), Indore (Madhya Pradesh), eral years prior to 2020, high home prices the lockdown in 2020, and profit margins are towns, leading to a rise in towards just a few metros— Union government Shimla (Himachal Pradesh) , Kasauli (Him- and liquidity issues had taken a toll on both led by non-resident Indi- in the months ahead as more thinner, would then have the overall demand for Mumbai Metropolitan Region, announced several achal Pradesh) and the tri-city area in Pun- developers and homebuyers. Surprisingly, ans (NRIs) and returnees metro-focused developers to capture the mindshare housing, workspaces and incentives, including an jab. “We are also getting inquiries from however, the battered housing sector wit- from West Asia, the local of large developers warehouses. This will Delhi-NCR, Bengaluru, extended moratorium on customers in metros who are looking to nessed a sudden and sharp recovery from demand has lagged. enter smaller property through some unique inevitably bring big town loan repayment. Several relocate and from non-resident Indians September-October in 2020, as people “We haven’t launched selling proposition. developers to India’s Chennai and Hyderabad industry owners in Tir- who want to buy a home for their families,” seemingly understood the importance of any project since March markets For now though, small towns. A recent upur promptly invested said a DLF spokesperson. owning a home. 2020 but now we have a smaller towns have their report on the future of workplaces by the in land parcels, leading to a price bubble of Data from the financial presentations of Housing.com, which has witnessed web couple of new residential projects lined up brief, uncontested moment under the sun. Federation of Indian Chambers of Com- sorts. Local property developers were the top seven listed realty firms reveals that searches for homes on its portal surge by in Kochi. But construction costs have gone “Very few branded developers have been merce & Industry (Ficci) and real estate ser- forced to hike prices even though the buy- they are gearing up to launch nearly 92.5 50-60% this year, is in the process of up and along with GST, homes have actively present in tier-2 cities. But now, vices firm CBRE showed that the expan- ing power was limited. Only those who had million square feet of residential space launching operations in 14 tier-2 cities. become far more expensive. Meanwhile, conversations have started and (many) sion of flexible workspaces in small cities, bought land before the outbreak of cov- within the next 1-2 years. A large chunk of Based on search data, there has been a the income level of buyers remains stag- realty firms are looking out for land,” said which was largely a tier-1 phenomenon so id-19 could afford to launch new projects. this new footprint will come up in tier-2 spike in demand in Jaipur, Lucknow, nant,” said Zackeria, managing director of Prashant Thakur, senior director and head far, will be demand-led. Driven by the avail- The second covid wave in the spring of and-3 cities, which are the new growth pre- Indore, Coimbatore, Nagpur, Nashik, Vis- Kochi-based Abad Builders Pvt. Ltd and of research at Anarock. Whether the trend ability of local talent and infrastructure, 2021 left an altogether different mark on cincts, Anarock Property Consultants said. hakhapatnam and Goa, among others. executive committee member of the Kerala continues, and for how long, is the real Kochi, Ahmedabad, Jaipur, Chandigarh, the city, which is home to a large, floating The post-second wave recovery has also Property consultants say that each of these chapter of the Confederation of Real Estate question.