Saturday, 7 May 2022

Millennials driving realty growth in Tier 2 & 3 cities

New trends are constantly shaping up the real estate sector as demand continues to grow across segments and locations. Various factors such as reverse migration, flexible work options, learning from home, and the desire for ample open and green spaces have turned the tide in favor of Tier 2 & 3 cities. A large chunk of the young workforce or millennials is now investing in real estate in Tier 2 & 3 cities for opulent living, work-life balance, well-being, and future security.

Additionally, a wish to stay close to family, connectivity upgrades, and vibrant social infrastructure have also made Tier 2 & 3 locations a favorite investment spot for millennials. A survey done by ANAROCK revealed that out of all participants who prefer to buy in Tier 2 cities, 61% are end-users while the remaining are buying for investment purposes.

Mohit Goel, Managing Director, Omaxe Ltd, says, “The housing sector has been doing tremendously well over the last couple of quarters in both metros and Tier 2/3 cities. Sales and new launches have witnessed increased traction setting record growth. Lower interest rates, improved market sentiments, and reduced risk of further disruptions have created a strengthened growth environment and attracted home buyers, including millennials.”

According to a recent survey, homeownership has become a priority for millennials. A majority of people, 55 percent who voted for real estate as the best asset class for investment, were in the age bracket of 25-35 years.

Santosh Agarwal, CFO and Executive Director, Alpha Corp, says, “The residential sector has gone through myriad changes, and pandemic-led trends such as reverse migration, hybrid work culture, work from home, remote learning, and the desire for large open spaces and greenery have propelled housing demand in Tier 2 cities. Better scope of appreciation and rising job opportunities are also attracting the millennials to invest in these regions. Factors like large-scale infrastructure, accessible price bracket, and well-developed social infrastructure have highly influenced the new-age homebuyers to invest in Tier 2 cities. Stable electricity supply and web connectivity in most parts of India have also helped in this trend.”

The residential realty sector has experienced a tremendous boost recently. Low home loan rates, favorable policy measures, stamp duty cuts, and rising disposable incomes have encouraged millennial investors to shift from renting to buying homes. Data accumulated by Nobroker.com shows a jump of at least 66 percent in millennial homebuyers compared to per-Covid times.

Mukul Bansal, Director, Motia Group, says, “Millennials are discerning homebuyers. In the post-Covid era, the significance of owning a home has risen exponentially amongst millennials who are keen on going ahead with big-ticket purchases bringing a sense of security. The transforming lifestyle, change in priorities, and the desire for homes that offer large open spaces along with modern amenities are attracting these millennial homebuyers to Tier 2 & Tier 3 cities.”

As property prices in Tier 2 cities are low as compared to bustling metropolises, the demand is constantly on a rise for these regions. Besides, Tier 2 & 3 locations offer less pollution, more greenery, proximity to the workplace, lower crime rate and cost, and ease of living. For these reasons, millennials are actively moving to these emerging locations.

Also, the presence of well-developed social infrastructure such as shopping centers, schools, hospitals, cinema halls, and community centers is further amplifying the growth of these regions. The government’s focus on developing special economic zones, industrial corridors, expansion of metro, rail and road networks, airports, and commercial clusters have highly influenced and enhanced the real estate value of these emerging areas.

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