Metros are on the way for Jaipur, Kochi, Pune, Chandigarh, Ahmedabad, Kanpur, Ludhiana, Bhopal, Indore, and Faridabad.
The overcrowding in Tier I cities have compelled people to move out to open spaces with wider infrastructure and healthy environment. A change in the real estate trends is visible in cities like Jaipur, Chandigarh, Indore, Nasik, etc. Mohali and Agra are even considered a favorite destination for global investors. Developers like Tata Housing, Lodha Builders, Raheja, Ansal Housing and DLF have launched projects in these smaller towns.
Sahara Infrastructure and Housing have recently launched a number of integrated township projects across Tier II and III cities in Pune, Aurangabad, Jodhpur, Gwalior, Bareilly, Solapur, Porbandar, Katni, and Kashipur spread over 900 acres. Seven more integrated projects are already under construction in Lucknow, Jaipur, Indore, Nagpur, Ahmedabad, Satna, and Coimbatore.
Rajeeb Dash, Tata Housing Development Company Ltd has entered into long- term plans in these cities. Focusing on Pune and Bhubaneswar, their premium development, Ariana in Bhubaneswar, a housing project catering to different segments of the society commenced its construction recently. Phase 1 of the project will be completed in another three years. Rajeeb Dash, Head – Marketing of the firm confirms that Tata is looking to sustain growth over a long time in these tier cities since these are growing faster with infrastructure much better than in Tier I cities. “The cities are lucrative and have lots of captive consumption; a lot of people outside the city are investing in properties in the city where they would like to go back after their careers”. Ariana, designed by an international architect from Hong Kong is going to have gold certified green homes with all modern amenities intact.
Ansal’s hi-tech residential township, the 3500 acres Sushant Golf City in Lucknow will have an international standard 18-hole golf course, luxury villas with designer landscaping.
BijayAgarwal, Sattva Group has already forayed into Tier II cities with two housing projects in Coimbatore and Jaipur, the construction of which was supposed to commence by April 2013. With plans to foray into Nagpur and Vizag too, Mr. Bijay Agarwal, Chairman of the Sattva Group and Managing Director of Salarpuria Sattva Group maintains that their reason to venture into tier II has been because of the immense scope that it provides. “If we have to talk about Vizag and Coimbatore their infrastructure is no less than Tier I cities. With good hotels, good roads, good water, people are now moving to these places where they can get everything”, he adds. It will be a while though before the Sattva group ventures into Tier III cities which according to Mr. Agarwal ‘are still lacking in infrastructure’.
Best Western International Inc, the world’s largest hotel chain from USA has planned to open 66 new hotels in India in the next 4-5 years and with a special emphasis on tier II and tier III cities where according to the company’s president ‘quality hospitality is just emerging’. Amritsar, Baddi, Gurgaon, Jaipur, Katra, Manesar, Aurangabad, Bhubaneswar are some of the cities that have been found apt for these.
V-Gopal For Prestige Group, the cities of Mysore and Mangalore are the ones in these tiers that are soon going to see some projects. Their brand is coming up with its famous Forum mall in both the cities, which are going to be completed by Dec 2014. While an apartment building by the group will be ready in Mangalore by mid 2015, the group is presently negotiating for land for high quality homes in Mysore. Mr. V Gopal, Executive Director – Projects & Planning of the firm admits that Mangalore is a little richer city than Mysore and through the Forum mall, the group is aiming to bring in some form of leisure and entertainment to both the cities. “With enough of potential and with infrastructure much better than what it was before, Mangalore can take good quality housing. The business is improving there, there are lots of offices, and factories to support these housing. The roads have started improving and are better than what they were before and the power situation presently will be able to support the kind of infrastructure we are giving. Rest, we will need to wait and see for 2-3 years,” opines Mr. Gopal.
Govt Support and Initiatives
Tier II and Tier III cities can also face many constraints like easy approval of FDI for projects in these cities. This can be made easier by the Government through policies and tax level initiatives and benefits that could entice people to stay back in the city.
The government has shown strong support to these cities by trying to upgrade the urban infrastructure by upgrading the MRTS, airports; introducing SEZs etc. Also proactive government policies for residential developments in towns like Baddi in Himachal Pradesh and Pantnagar and Rudrapur in Uttaranchal, have led to immense development of these places.
At the inauguration of the 20th National Quality Summit 2012, Chief Minister of Karnataka Mr. Jagadish Shettar elaborated on the State Government’s plan to improve tier II and tier III cities to promote them as ‘innovation centres’.
Mr. Dash maintains that it is with the help of Government that they are entering the markets since Ariana is a project that Tata Housing has ventured into, in the PPP mode with the Local government.
Accepting that it is majorly due to the State Government’s efforts that these cities are growing so well, Mr. Agarwal adds, “After Hyderabad, Vizag is the city where the state government has put in a lot of efforts. The roads, the new airport, good hospitals – all this could have not been possible without the Government’s initiative. Whenever builders like us are stuck anywhere in the projects, the state government has offered total cooperation and made ample efforts to get a solution immediately to avoid any delays. They might not have made any policies which have directly affected these cities but have helped in their own ways.”