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Rajan Ahuja
C/o Realty & Verticals
J4/2, DLF- II , Gurgaon
e mail :-
rajan.ahuja@gmail.com
info@realtyverticals.com |
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Anatomy of Tier-II Investments
After reaping the growth
prospects in these so-called Tier-I cities, real estate companies are now
heading to the tier-II and tier-III cities. While Tier II-cities have rapidly
emerging real estate markets with proven and heightened demand drawing
in more investments, Tier-III cities are those where considerable potential
demand is forecasted and the real estate markets are yet to be recognized.
These small cities and towns are described as ‘‘emerging centres of growth’’
as they are now giving a thrust to India’s booming economy.
Anatomy of emerging centres
of growth: attractive to the developers, retailers and IT/ITES are their
low real estate costs, availability of land for development and untapped
manpower pool. Also the sustaining GDP growth, expanding service sector,
rising purchasing power and affluence is contributing to the real estate
developments in these cities. A number of of the foremost developers like
Hiranandani group, Godrej Properties, DLF and Parsvanath have shown interest
in the Tier-II and Tier-III cities to fuel their future growth.
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Braced with their competitive
business environments, human resources availability, telecommunications
connectivity, quality of urban infrastructure, transparency of governance
and availability of real estate, cities like Hyderabad, Chennai and Pune
are emerging as highly smart business locations ahead of tier-III cities.
IT/ITES contributes nearly 80% of total office space demand, this has fuelled
the demand for real estate activities in Tier-III cities. The Indian IT/ITES
sector is thus exploring these towns in a bid to stay globally competitive.
And the rise in rentals
and cost of labour in Tier-I and Tier-II cities like Delhi, Mumbai, Bangalore
and Pune, the Tier-III cities like Chandigarh, Jaipur, Nagpur, Lucknow
and Kochi have surfaced as alternative commercial centres where off-shoring
facilities could be reallocated. |
Even the retail sector in the
larger cities in India is reaching a saturation point, global retailers
are increasingly setting up shop in smaller cities to cash in on the first
mover’s advantage. This has added up to the demand for commercial space
in Tier-II and Tier-III cities. Growth of organised retailing has translated
into real estate growth in these emerging locations.
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