Non- Metros (Tier-2) & Tier-3 Cities- Why investing here makes sense!!

Continuing from my previous blog named Realty Growth- A Perspective of Metros (Tier-1), Tier2 & Tier-3 Cities….. Where we attempted to understand as to how we can understand the tremendous growth opportunities for the Realty Industry in the Tier-2 and Tier-3 cities, let us now look at why investing here is not just profitable but also a prudent decision to make.

These roughly about 50 T1 and T2 Cities accommodate for over a million in terms of population and some of these are growing as fast as the bigger Metro and Cosmo cities of the country. Many of these are also under the ‘Smart Cities’ Campaign, and hence attracting major investments for the corporate sector and as well as from private investors!!

Schemes like Atal Mission for Rejuvenation and Urban Transformation (AMRUT). Providing basic services (e.g. water supply, sewerage, urban transport) and Swachh Bharat Mission, etc. will also boost the living standards these cities considerably.

Due to such schemes, these non-metros will improve rapidly on their infrastructure and the quality of life they offer. Concurrently, Intercity Air-connectivity is also set to improve along with high-speed trains introduced and newer Rail Corridors being planned the time needed to travel to such cities is set to reduce considerably.

Also, better education and health facilities with improved social infrastructure will deliver a significantly improved ambiance for business and commerce to flourish.

Apart from state capitals and the future Smart Cities, non-metros with access to IT talent and a good presence of IT/ ITeS occupiers – for example Mysore, Tumkur, Coimbatore and Kochi – will develop rapidly. That said, there will be divergent rates of growth within this group of non-metros, so they will not all deliver uniformly. Much depends on the performance of local governance bodies, and whether they will be able to display the same efficiency as the states and Centre when it comes to implementing government programmes. Currently, cities such as Nagpur, Surat, Jaipur and Indore are seeing very proactive measures being taken by their local governance bodies. This kind of performance will be one of the main yardsticks with which to measure future growth – and therefore investment potential.

With all this said, I believe Tier-2 and Tier-3 are not alternates for Tier 1 or the metros. Both have a role to play in the overall growth of the sector. And an investor should follow sound judgement and discipline to identify the right product. However, non-metros have lower entry levels, and as the micro-locations within these markets upgrade, demand for real estate will reach higher levels!! Thus proving that none of the non-metros will prove to be a bad speculation for long term investors!!

Do join me in my efforts to understand the ground realities, as I share them with you in a journal, as I discover them along. Share, if you found the above interesting!!

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