News & Views on Indian Real Estate

Friday, January 18, 2008

Spill-over effect on the Tier III and IV cities

Widespread economic activity and rampant urbanization has led to the transformation of smaller towns and cities into vibrant growth centers

The tier III and IV cities have been demarcated based on per capita income levels, infrastructure, and population base.
These cities are state capitals and other commercially important cities that are experiencing improving quality of life, infrastructure thrust, and positive economic sentiments. The improving economic conditions have impacted the demand for residential, commercial, entertainment and hospitality sectors and this has led to considerable alteration of the real estate landscape of these cities. The change has attracted many national as well as foreign developers to these small towns to offer lifestyle-oriented services and products. While the residential sectors in these cities are on an upswing, most of the smaller towns are yet to have an organized or defined office and retail market.

The accelerated pace of urbanization has already begun to strain the capacity of the Tier I and II cities. which has ultimately lead to a spill-over effect on the Tier III and IV cities. These smaller cities, which present tremendous potential for economic and social development, now need to gear up to provide for increasing population by expanding their infrastructure and housing capacities correspondingly. In anticipation of the pent-up demand, a number of prominent developers have already launched township projects in various smaller cities like Kochi, Mysore, Lucknow, Jaipur