The rental housing segment saw a big move over the past years where more people chose to opt for homes that are beyond the city limits or completely moved to Tier 2 and 3 cities across India. This sort of reverse migration out of the big cities is becoming more prominent today with people looking to purchase homes at these locations.
The new post COVID world has accelerated this trend and housing demand in Tier 2 and 3 cities has grown sharply. Cities that are seeing a peak in demand include Lucknow, Coimbatore, Jaipur, Ahmedabad, Cochin and Chandigarh to name a few. Its not that the metros have lost their sheen, they still command 70% of real estate buys. But the attractiveness of a less crowded city with a lower cost of living is driving people to invest into homes outside city limits and in Tier 2 and 3 cities.
There is also a forecast that India will be several NRIs returning due to job losses post COVID and this might also help spur rental and purchase demand in the housing sector. The affordable housing option is the one that is seeing the highest demand. There are also several townships in planning in the outskirts of the city that are coming fully equipped with workspaces, schools, hospitals and entertainment centres. This is driving more people to consider moving away from the crowded metros into a more relaxed setting without really fully giving up on the luxuries.
The initial demand might be spurred more towards rental properties but there is also a growing voice for purchasing mid-segment homes in Tier 2 and 3 cities. With COVID calling for social distancing, crowded cities and metros are not the bests places to be during pandemic times. Many offices are also decentralizing their operations and offering remote work or satellite office work to their employees, thus enabling people to work from Tier 2 and 3 cities itself.
This demand is not just because of the pandemic but has become more significant and has gained momentum because of the pandemic and metros have been bursting at the seems to accommodate the growing population. Townships earlier never formed a great part of the demand cycle for real estate but have now seen a bigger spurt in customer interest as they seem to offer the best solution for working near a metro without living through the crowded roads every day.
Senior citizens are also opting for housing either in Tier 2 and 3 cities or in out of city locations that are more peaceful. There is a huge demand for independent senior living homes and many of the affordable housing formats are best suited for this requirement. Senior homes in Tier 2 and 3 cities are in higher demand today.
Keeping all these factors in mind, this would be the best time to invest into housing properties located outside city limits and also Tier 2 and 3 cities.