India post Independence has experienced a rapid surge in urbanisation. This has been fuelled by the adoption of a mixed economy and the growth of the private sector. The transformation has led to a significant increase in the urban population, as per data from the country’s census reports and international organisations.
According to the 1901 census, a mere 11.4% of India’s population resided in urban areas. However, this number jumped to 28.53% by the 2001 census, indicating a substantial shift towards urban living. As of 2017, the World Bank reported that the urban population in India had further climbed to 34%, reflecting the ongoing trend of urbanisation. Projections by the United Nations paint a clear picture of the future, with an estimated 40.76% of the country’s population expected to live in urban areas by 2030. This forecast highlights the continued momentum of urbanisation in India and the increasing appeal of urban centres for its citizens.
However, in a dynamic shift, the Indian real estate landscape is experiencing a major transformation, with Tier 2 and 3 cities emerging as lucrative hubs for development. These cities have witnessed a surge in the popularity of townships in recent years, offering a fresh perspective on urban living and revolutionising the entire real estate industry.
Experts believe that Tier 2 and 3 cities, typically found in industrial corridors, hold substantial potential for future economic growth and real estate development. As these cities see improvements in infrastructure and the expansion of industries, they become attractive destinations for investment. With the availability of affordable spaces and increasing job opportunities, their growth potential as promising real estate markets in India is further strengthened.
Meeting the Demand for Affordable Housing
A pivotal factor driving the rising prominence of townships in Tier 2 and 3 cities is the pressing need for affordable housing. Large metropolitan centres have been tackling escalating housing costs and limited land availability, pushing potential homeowners to explore alternative options. The relatively untapped development areas in these smaller cities have become a beacon for real estate investments. Townships in these regions present a wide array of housing choices, catering to diverse needs and budgets, from economical flats to lavish villas.
Transformative Infrastructure and Services
The allure of townships in Tier 2 and 3 cities is further enhanced by the well-planned infrastructure and comprehensive services they offer. Unlike chaotic urban centres, these smaller cities have the advantage of meticulously designed developments. Townships boast well-connected road networks, dependable utilities, and modern amenities such as schools, hospitals, shopping malls, and recreational facilities. This thoughtfully crafted infrastructure ensures residents have seamless access to all essential services, elevating their living experience.
Promoting Sustainable Living
A notable feature of townships in Tier 2 and 3 cities is their emphasis on sustainable living. Many of these developments have been purposefully designed with environmental considerations in mind. Green spaces, rainwater harvesting systems, and energy-efficient structures are incorporated to promote a greener and healthier lifestyle for residents. The burgeoning awareness and importance of sustainable living among modern homeowners have further cemented the appeal of these townships.
Government Initiatives Fueling Growth
The government’s commitment to urban development in Tier 2 and 3 cities has played a significant role in propelling the growth of townships. Initiatives such as the Smart Cities Mission and Pradhan Mantri Awas Yojana have laid the foundation for integrated townships that house residential, commercial, and recreational spaces within self-sustaining communities. With proactive government support and developer incentives, a conducive environment has been created, hastening the development of townships in these cities.
The Future of Indian Real Estate
As the real estate market in India undergoes a metamorphosis, townships in Tier 2 and 3 cities are poised to be the game-changers. The year 2023 is expected to witness a notable shift in investment focus towards Tier II and Tier III cities in India. With specific cities like Visakhapatnam, Trivandrum, and Coimbatore showing great promise in different sectors, these regions are set to become major drivers of economic growth and real estate development.
In other regions, cities like Ludhiana, Ambala, Lucknow, Patna, Siliguri, Bhubaneswar, Indore, Jaipur, and more have experienced remarkable growth as manufacturing hubs. As a result, these cities have emerged as promising locations for the establishment of warehousing clusters.
The thriving manufacturing sectors in these areas have made them attractive choices for businesses seeking efficient warehousing and distribution centres.
Offering an attractive blend of affordability, robust infrastructure, contemporary amenities, and sustainable living options, these townships have become the preferred choice for discerning homeowners. The government’s continued emphasis on urban growth and investment encouragement in these cities ensures that townships will remain the driving force shaping the future of real estate in India. With more people seeking a balanced and rewarding lifestyle, the rise of townships in Tier 2 and 3 cities is set to define the trajectory of the real estate market in the country.
(The author, Aditya Kushwaha, CEO and Director Axis Ecorp.)
