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Guj's three cities among top ten Tier II retail hotspots: JLLM report

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Vinay Umarji Mumbai/ Ahmedabad
Last Updated : Jan 25 2013 | 2:50 AM IST

Riding on the back of large consumer base that is wealthy, brand savvy and disposed to spending, three cities from Gujarat including Ahmedabad, Surat and Vadodara have been ranked among the top ten retail hotspots in a report on Tier-II cities by Jones Lang LaSalle Meghraj (JLLM), a real estate consulting firm.

Their strong potential is driven by a combination of large market size and solid economic growth.

Both Ahmedabad and Surat are flush with consumers with high levels of disposable income, as demonstrated by the large number of households in the SEC A and B categories found in those cities. Surat, the capital of India’s diamond industry, has a relatively large population of affluent consumers.

Ahmedabad has more SEC A and B households than the tier II cities of Pune and Hyderabad, the report states. Moreover, the report adds that Ahmedabad tops the list for current retail market activity followed by Chandigarh and Ludhiana.

Ahmedabad, as the largest city of the India30 has the most extensive retail provision, with characteristics closer to those of Tier II cities, it says.

The latest report from JLLM's World Winning Cities Research sets out to provide fresh insights into the long term real estate opportunities and risks across India’s Tier III cities. The research highlights 30 cities – the India30 – which will be the focus of new real estate activity outside of India’s major metros over the next decade. According to JLLM, the India 30 will set the benchmark by which other Tier III cities will be measured.

"Real estate is not going to vanish and still remains to be one of the key drivers of our economy. These three cities have contributed tremendously to the real estate market through retail ventures. Key drivers like high level of disposable income and brand preferences will play further role in these markets in spite of slowdown.

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While the short term correction that will play out in Ahmedabad’s retail sector is a fact, the market will excel in the long term. These markets still hold lot of investment potential due to their inherent strengths," said Anuj Puri, chairman and country head, Jones Lang LaSalle Meghraj.

Of the 30 tier III cities, Ahmedabad figures among top five cities that stand out due to rapid growing real estate markets given the city size, market reach and connectivity.

The three cities also score in terms of commercial affordability as compared to metros like Mumbai and Delhi.

As against Mumbai, these cities are 15-20 per cent less costlier. Affordability, both in terms of real estate and labour, is the principal driver behind many corporations having a presence in Tier III markets, the report states.

Ahmedabad, alongwith Jaipur, also stands out among the India30 in terms of the number of industrial clusters. While Ahmedabad is widely regarded as having a small yet diversified economy, Jaipur is considered to be a hotbed for tourism.

On one hand, Jaipur has a wide variety of clusters including electrical equipment, garments, jewellery/gems and handicrafts, while on the other hand Ahmedabad features clusters of an industrial nature and produced high value products such as pharmaceuticals, industrial machinery, and electronics.

What makes Ahmedabad further promising according to the report is that among the Tier-III cities, it is the only city that has planned both a metro rail system and bus rapid transport system (BRTS).

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First Published: Feb 04 2009 | 12:51 AM IST

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