Tier II and Tier III cities on integrated township radar
Four developers reveal what holds next for the real estate industry
Tier II and Tier III cities are rapidly developing and reforming boundaries to closely located towns, with improved road connectivity and frantic economic activity, the stage is all set for these cities to witness the concept of integrated townships. What this essentially means is that instead of the regular run-of-the-mill colonies developed by government bodies or local developers, people will now want to enjoy the luxuries of modern living: plush markets, schools, hospitals, entertainment facilities - all in the same compound especially in the aftermath of COVID-19.
So what can people expect from such forays? Township is the largest format of real estate at least 100 acres of development. The bulk of the construction in an integrated township is residential (30-40 per cent), roads and parks are 15-20 per cent, houses for economically weaker section comprises 5-20 per cent, and rest is commercial. A township is a place that is self-sufficient with physical infrastructure (roads, power, sewer, etc) and social infrastructure (schools, hospitals, retail, entertainment areas, mass transit system, etc). Townships in India have varied in size. They range from (1) 100 acres to 500 acres (2) 500 acres to 3000 acres (3) Above 3000 acres. These townships are not just comprehensive residential hubs but are meant to provide a new way of life. It is life amidst the very best of nature coupled with strategic location and ultra-modern facilities.
Major developers from around the country are already eyeing these ‘prime’ cities.
The latest trend observed among millennials is to look for projects that provide environmental sustainability. The young generation is conscious about the world around them and wants their place to be in sync with the environmental concerns. “We have noticed that this generation is inclined towards buying homes in integrated townships. It is the 'in thing' for them to stay at a place that takes care of all the needs such as schools, shopping / entertainment, and healthcare. Many millennial are inclined towards these townships as the place has office spaces which provide them the option of walk-to-work or cycle-to-work. With many corporate likely to move towards tier II and III cities, demand for townships is going to increase. It is very clear that this generation wants to own a home as early as possible and that is why they want a place which is completely livable even if it is in the outskirts of a city,” says Prateek Mittal, executive director, Sushma Group.
“The rise in demand for homes in the post-covid scenario will veer towards facilities in a home that address health and safety concerns. This is addressed in integrated townships due to the controlled living environment they offer to its residents. Reasonable land prices, scarcity of organized living options and migration of working professionals, etc are some of the reasons that could reignite demand in cities like Lucknow, Chandigarh, Ludhiana, etc. With home loan interest rates at their historic low and government subsidy to home buyers, the acceleration in demand seems certain,” says Mohit Goel, CEO, Omaxe Ltd. Omaxe is currently developing 9 townships at various locations and has delivered several townships in the past.
The reason Integrated Townships will succeed in these cities is that most of the colonies here are either badly planned or unauthorized, which means hardship such as poor sewerage, inadequate electricity, and security issues. Kushagr Ansal, director, Ansal Housing & president, CREDAI Haryana, says, “The continuing cost pressures characterising India’s Tier I cities are encouraging more companies to actively look at Tier III cities to satisfy their future requirements for the offshoring of business processes. These cities provide cost advantages of 15 per cent-30 per cent over Tier I and II cities through lower labour and real estate costs and reduced staff attrition rates and this gap is expected to widen further. Thus, more jobs mean people in these cities need upgraded lifestyle and townships are the formats that they are looking at.”
Residential markets across various tier-II or tier-III cities have witnessed heightened activity which is expected to grow more after the Corona scare, leading to a push in commercial realty as well. “Lower price points for properties is one of the most formidable reasons for the changing outlook of real estate here, which includes inclination towards living in integrated townships. Industries are open on moving to smaller towns, as an exercise for a cost- effective expansion and also due to the land congestion and high rental & property rates in metros”, says Raman Gupta, director - branding & construction, GBP Group.