Indian real estate developers are shifting their focus beyond the traditional metros and big cities. According to JLL, a real estate and investment management company, between January 2022 and October 2023, developers acquired approximately 3,294 acres of land across the country. Of these transactions, 44.4% occurred in Tier 2 and 3 cities, totaling 1,461 acres spread across 17 separate deals.
This trend is especially noticeable in northern and western India, with Panipat, Ludhiana, Nagpur, and Panchkula accounting for 75% of the total land acquired in these cities.
Real estate firms are now targeting new markets by expanding into Tier 2 and 3 cities to initiate projects. This reflects the success of reputable developers in finalizing numerous land deals in response to increasing customer demand and purchasing power.
Buyers in these cities are seeking quality homes, leading to significant demand for such projects. For example, DLF’s inaugural project in Panipat sold out within an hour of its launch, while Godrej Properties sold out phase 1 of its plotted development project in Sonipat within two days.
This growing demand has led to developers acquiring land to create future supply pipelines. Companies like Godrej Properties, M3M, Eldeco Group, and Omaxe Group have expanded their presence in these burgeoning markets through recent land acquisitions.
Samantak Das, chief economist and head of research and REIS, India, at JLL, believes that if Tier 2 and Tier 3 cities are developed with proper infrastructure, both physical and social, more people would be inclined to move there due to the high home prices in Tier 1 cities.
A report from JLL also reveals that the majority of the acquired land (1,339 acres) is designated for prospective residential developments, with a focus on plotted residential units. Approximately 1,015 acres have been designated for plotted developments, valued at over ₹3,163 crore.
Overall, the real estate landscape in India is changing, with developers looking beyond the major cities as they capitalize on the demand for quality housing in Tier 2 and 3 cities.
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