The Indian real estate sector is bracing itself for a very new post-COVID-19 world. One significant trend may be reverse migration spurring housing demand in Tier-2 & 3 cities, says the ANAROCK report India Real Estate: A Different World Post COVID-19. Currently, the top seven cities account for almost 70 per cent of India’s residential market, with the remaining 30 per cent accounted for in Tier-2 & 3 cities. This ratio may well change in times to come.
Cities like Lucknow, Indore, Chandigarh, Kochi, Coimbatore, Jaipur and Ahmedabad would be the main beneficiaries of the reverse migration of professionals who have lost their jobs in the metros, or are likely to. These returnees will benefit from the cost of living and superior infrastructure that many Tier-2 and Tier-3 cities provide.
Anuj Puri, Chairman, ANAROCK Property Consultants said, “Reverse migration is already very visible among migrant labourers, and this trend can further percolate to skilled professionals who have been or may be off-rostered. Smaller towns and cities would consequently see a spurt in housing demand. Primary demand may skew towards rental housing – purchase demand would initially come from local investors keen to meet the rental demand.”
Referring to the likely return of the Non-Resident Indians (NRIs) owing to the global downturn, he added, “Many NRIs will also return to India amidst dwindling job prospects, particularly in the US and European nations which account for nearly 70 per cent global cases. For them, the top seven cities would be the best options but many will consider smaller cities where they can be close to their families. Finding suitable employment for reverse-migrating Indians in smaller cities may prove to be challenging.”
ANAROCK’s recent consumer survey taken during the lockdown period indicates that of the respondents who preferred to invest in Tier-2 & 3 cities in 2020, 61 per cent are end-users and almost 55 per cent are aged under 35 years. At least 47 per cent of respondents are focused on affordable properties priced within Rs. 4.5 million, followed by 34 per cent who are looking for mid-segment homes priced between Rs. 4.5-9 million. The residential segment will see a manifold increase in demand for townships projects which offer a controlled environment. In terms of supply, township projects have less than 5 per cent overall share in the top seven cities as on date.
Further market consolidation is expected with the increased preference for branded developers. Financially strong organised players are likely to occupy 75-80 per cent market share in the coming years.