Future of Real Estate in Tier-II and Tier-III Cities

The Real Estate Sector has been the considered as the Rib and Backbone of the Indian Economy and has been a major contributor in the Economic Growth. It is evident from the very fact that the Real Estate Sector contributes 8.53% of the total GDP and also witnessed growth rate to the tune of 30%. It is also significant to note that this sector has emerged as the fifth largest destination of foreign investment, although there are certain restrictions on foreign investment in various fields of the Realty Sector.

The approach followed by Real Estate Developers have played a vital role in changing the face of India from being an under-developed country towards accelerating its way to a developed country by developing the state of art Infrastructure Developments, Buildings, Townships, Shopping Malls, Retail Malls not only in the urban towns of the country but in the Tier II & Tier III towns as well.

“Our Main Aim is to give Virtual Hands in Economic and Political Stability of the Tier-II & Tier-III Cities as well as help in improving the Social and Economic Growth of the whole as well as an individual”

– Mr. Ashu Gaur (Brand Adviser, Happy Homes Group)

This effort of developers has not only been useful in changing the face of India but infact has been providing sustenance to 250 ancillary industries. The road doesn’t end here as this sector has also been a good employer, by being the second largest employment generator in the economy where the top five real estate players employ more than 2.00.000 employees at different locations and being the highest employer to the BPL families.

“Real Estate is quite an Unorganized Sector and in the Unpredictable Market Scenario, there is strong need of Self Motivated Developers to enter into Premium and Affordable Housing or Commercial Segment, with the focus not just restricted to Noida or Gurgaon but also to Tier 2 and Tier 3 developing hubs like Lucknow, Kanpur, Mohali, Neemrana, Bhiwadi etc”

– Mr. Ashu Gaur CMD, Eixil Group (Branding & Business Development Company, India)

Nowadays with the changing attitude of people from living on rent and preferring sustainable livelihood towards owning their property the real estate sector has witnessed huge demand for the residential projects .The demand for Commercial Development is also growing at a fast pace due to a paradigm shift from unorganized retail towards organized retail coupled with MNC’s interest in establishing offices here in India. Going forward, the scenario would be no different as at present there is a shortage of almost 27 million dwelling units and the Indian Real Estate Business which is estimated at USD 15 billion is likely to be USD 90 billion by 2015, predicts ASSOCHAM.

The housing start-up index, which is now at a pilot stage, shows that new housing units in cities such as Kolkata, Chennai and Bangalore are showing lesser growth than the tier II and III cities like Lucknow, Indore, and Patna etc. This is due to the mere fact that these classes of cities possessing growth in various segments as well as peoples are leaning towards the lifestyle of metro cities. And at last we can’t ignore the government policies for this type of a dynamic change.

Fresh investments in the economy have been overshadowed by the upcoming general elections despite improved economic conditions. Economic and political stability are the vital catalysts for revival of the real estate sector in India. In addition, revival of this sector also depends on the regional policies like VAT, Land Acquisition and other Regulatory Policies. In this current scenario where the Rupee is still on the higher side, inflation is yet to reach comfort level and the Indian financial system is caught amidst liquidity trap, developers can’t meet the burgeoning demand from customers without the government’s support.

Thus in concluding we want the government should intervene in reducing the Repo Rate , liquidity ratio, CRR ,to lessen the burden on the developers as well as investors .The RBI should also intervene by reducing Bank repo rates to another 100-200 basis points and to further reduce CRR in order to infuse additional liquidity in the cash starved market. Also for the prosperity of the sector at general and customers at large the government should facilitate the efforts of real estate developers by providing minimum infrastructure guarantee under habitation policy, relaxing guidelines on foreign investing in Indian Realty, reducing risk weight-age and by giving the sector industry status coupled with reduction and uniformity in stamp duty. Immediate need is also to do away with the restrictions on real estate loans. Firmly believing with our continued growth driven strategies all-government, banks, bureaucrats and media we will be able to withstand any type of market conditions and would be playing key role in taking Indian economy to next level.