look news india
India’s corporate and real estate markets are witnessing a major structural change. Increasing traffic, high cost of living and expensive office rents in traditional metro cities like Delhi-NCR, Mumbai and Bengaluru are now forcing multinational companies (MNCs) and Global Capability Centers (GCCs) to turn to smaller cities. Tier 2 and Tier 3 cities like Lucknow, Jaipur, Indore, Coimbatore, Chandigarh, Bhubaneswar and Visakhapatnam are now emerging as the new economic hub of India. Along with the expansion of office space, these emerging cities are also witnessing a record-breaking surge in the sales of premium and luxury homes.
Why are small cities becoming the first choice of global companies?
There are several strong economic and practical reasons behind the move of foreign companies and Indian IT giants to Tier 2 and 3 cities:
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Low Operational Cost: Compared to metro cities, commercial office space rents are 40 to 50 percent cheaper in Tier 2 cities. This reduces the overhead expenses of companies significantly.
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Excellent talent pool locally: Youngsters coming out of top engineering colleges, IIMs and universities are now exploring career options in their home states. Companies are easily getting skilled workforce at the local level.
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Better work-life balance and less attrition: Unlike the daily hour-long traffic jams in metropolitan cities, travel time in small towns is extremely short. This increases the productivity of employees and also reduces the attrition rate.
Boom in residential market: competition to buy houses
As corporate offices open up in these cities and well-paid jobs increase, the demand for homes in the local real estate market is reaching new heights.
According to reports from property consulting firms, residential property prices in Tier 2 cities have seen an average annual growth of 15 to 25 per cent in the last two years. While earlier, only plots and independent houses were prevalent in small towns, now projects with amenities like gated communities, high-rise luxury apartments, club houses and swimming pools are being sold in abundance.
Why is the glow in metro cities becoming dull?
Major metro cities of the country are currently facing severe infrastructure pressure (Infrastructure Saturation). Skyrocketing housing prices, pollution, water crisis and extremely expensive living are becoming uncomfortable for middle class professionals.
Following the hybrid and remote work culture, a large number of professionals are preferring to settle down in their home towns, where they can buy a luxurious villa in a tier 2 city or a spacious 3/4BHK luxury apartment at the price of a small 2BHK flat in a metro city.
Picture changed due to expressway and airport connectivity
Huge investment in infrastructure by the central and state governments has given new impetus to this transformation. Logistics and mobility have become much easier with improved high-speed expressway networks, dedicated freight corridors and the opening of new airports in Tier 2 cities under the Regional Connectivity Scheme (UDAN).
The country’s big real estate developers like Tata, Godrej, DLF and Shobha have also now started launching a major part of their big projects in Tier 2 cities.