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Real estate: Growth moves beyond the metros

The contribution of the commercial and housing boom to the construction industry, which in turn impacts GDP numbers in a big way have been well discussed. What is probably not as avidly discussed is the fact that the growth rate derived from sub industries such as retail, hospitality, entertainment (hotels, resorts, cinema theaters), economic services (hospitals, schools) and information technology (IT)- enabled services (like call centres), etc is beginning to hit a wall in the main metros. The future clearly points to opportunities outside these traditional cities.

As one witnesses a saturation in the economic growth and construction opportunities in major cities of India, it’s the tier II and III cities that emerged as the key drivers of growth in the sector this past decade. Despite low public investments, these cities promise great potential.

The metro cities are facing impediments such as slow and uneven development of urban infrastructure, increasing operational costs, land paucity amid escalating land values and exorbitant real estate prices, shifting the focus to the emerging hubs i.e. the tier II and III cities of the country. The biggest reason for this shift in focus is the gigantic gap between availability and demand. The metros are dwindling under the burden of space, time and infrastructure.
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