Real estate developers heading to Panipat, Ludhiana, Nagpur & more
- Real estate firms are now eyeing fresh markets by expanding into Tier 2 and 3 cities to kickstart new projects.
- This trend is particularly prominent in northern and western India.
- Developers are concentrating on low-rise and plotted developments due to the local populace's preference for these formats.
AdvertisementIndian real estate developers are looking beyond metros and big cities. Between January 2022 and October 2023, real estate developers acquired roughly 3,294 acres of land across the country. And, 44.4% of these transactions occurred in Tier 2 and 3 cities, accounting for 1,461 acres spread across 17 separate deals, says JLL, a real estate and investment management company.
This trend is particularly prominent in northern and western India, with Panipat, Ludhiana, Nagpur, and Panchkula accounting collectively for 75% of the total acquired land in these cities.
Developers flocking to Tier 2 and Tier 3 cities
Real estate firms are now eyeing fresh markets by expanding into Tier 2 and 3 cities to kickstart projects. The data reflects the success of reputable developers in finalizing numerous land deals in response to rising customer demand and increased purchasing power.
Buyers in Tier 2 and 3 cities are seeking quality homes and there is demand for such projects.
For instance, DLF's inaugural project in Panipat sold out within an hour of its launch. Godrej Properties sold out phase 1 of its plotted development project in Sonipat within two days of its launch. In southern India, plotted residential projects were introduced in cities like Ambur, Mahabalipuram, Coimbatore, Trichy, and Mysuru.
Driven by the remarkable residential sales in emerging cities, developers are also acquiring land to create future supply pipelines. Developers such as Godrej Properties, M3M, Eldeco Group, and Omaxe Group have either entered or expanded their presence in these burgeoning markets through recent land acquisitions.
“If Tier 2 and Tier 3 cities are developed with proper infrastructure, both physical and social, definitely people would want to love because otherwise home prices are very expensive in the Tier 1 cities. Plus there is also organic demand within the Tier 2 and Tier 3 cities from people who are already staying there,” says Samantak Das, chief economist and head of research and REIS, India, JLL.
Land Transaction Snapshot of Tier 2 and 3 Cities: Jan 2022-Oct 2023
|Total number of land deals||17|
|Value of land transactions||₹4,918 crore|
|Area of land transacted||1,461 acres|
|Area of land transacted for proposed residential developments||Approximately 1,339 acres|
|Estimated residential development potential||Approximately 64 million sq ft|
|Estimated sales potential of the proposed residential development||₹21,000 crore|
|Area of land transacted for plotted developments||1,015 acres|
|Value of land transactions for plotted residential units||Over 3,163 crore|
Horses for courses
It's noteworthy that a significant portion, 91.6% (1,339 acres), of the acquired land is earmarked for prospective residential developments, with a major emphasis on plotted residential units.
Developers are concentrating on low-rise and plotted developments due to the local populace's preference for these formats. Approximately 1,015 acres have been designated for plotted developments, valued at over ₹3,163 crore.
“Plotted developments have all the infrastructure, like parks, shopping centres and so on. People earlier would have been staying in their own self built houses, probably as joint families. Now people want to have independence and so they want to move into their own apartments,” says Sen.
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