The report identifies 10 non-metro cities as the new growth vectors in India in the coming years based on their real estate landscape, work environment, quality of life and sustainability.
New Delhi: Tier-II cities will continue to play a vital role in the country’s growth story as per a report by retail estate consultancy CBRE. The report analyses retail and office real estate development in 10 key cities: Chandigarh, Jaipur, Ahmedabad, Kochi, Thiruvananthapuram, Lucknow, Indore, Bhubaneshwar, Visakhapatnam, and Coimbatore.
According to the report, these cities will be the new growth vectors in India in the coming years based on the parameters of real estate landscape, work environment, quality of life and sustainability.
The various business clusters across tier-II cities offer a mix of non-SEZ and SEZ establishments with average quoted rentals starting from Rs 30-40 sq. ft. a month to INR 60-80 sq. ft. a month.
The majority of Tier II cities have established high streets, but recently malls have been launched in these towns by developers including Phoenix, Nexus, K Raheja Corp, and Lulu.
In the past year, brands including Wooden Street, Birkenstock, Biba, Uniqlo, Tim Hortons, and Tasva by Aditya Birla Fashion have opened their stores in tier-II cities. Many other brands too are exploring expansion to these cities.
According to the report, the quality of life in these cities is well supported by the relatively affordable cost of living compared to tier-I cities, along with an increasing presence of healthcare facilities and educational institutions. There is also rising investor interest over recent years, with various plans announced by domestic and global firms to establish their footprint in these markets.
“The implementation of focused policy reforms and strategic infrastructure initiatives by the state/central government has resulted in consumer preference leaning towards suburbs / smaller cities. This is evidenced by the entry and expansion of flex operators and the increasing footprint of industrial establishments,” Anshuman Magazine, Chairman & CEO – India, South-East Asia, Middle East & Africa, CBRE, said.
“The growing urban sprawl is likely to spread beyond tier-I cities so that tier-II cities take on the mantle of the future. Recognizing this need, the government started undertaking measures to plug in the prevailing infrastructure/business gaps that would boost the development of these cities,” he added.
Adding Ram Chandnani, Managing Director, Advisory & Transactions Services, CBRE India, said, “Major tier-II cities are key to the imminent real estate boom. They now boast of flourishing central and secondary business districts, with some even having established peripheral business clusters. Prominent developers are now making a beeline for these cities, propelled by demand from domestic and global corporates, flexible space providers, start-ups, ed-technology firms, etc.”