Real estate companies are trying to cash in on the demand for residential and office space in Tier-II and Tier-III cities. Most of them have ambitious projects in this financial year.
DLF, the largest realty firm in the country, feels with economic growth faster in the smaller cities, there will be more demand there. Its DLF Garden City project in Indore has been a major success, with the first phase being sold. The company is planning to launch the second phase during the current financial year.
“We have sold 500 plots that we launched in the first phase of our operations and are in the process to start the second phase. The response we got from Indore was really encouraging,” said Rajeev Talwar, Group Executive Director, DLF Ltd.
DLF feels the growth in Tier-II and Tier-III cities is triggered by the fact that prices are comparatively quite low in these cities. “One can buy a property at a reasonably low price (there),” he says.
Ansal Properties also has ongoing residential projects in Jaipur, Jodhpur, Agra, Ajmer, Kundli and Panipat, among others. In this financial year, the company plans to launch a million sq ft area in a commercial project in Lucknow, which will have office buildings and a shopping mall.
“The demand in Tier-II and Tier-III cities has seen an upsurge and this year we will be investing Rs 200 crore on the Lucknow project. Apart from this, our ongoing residential projects in Tier-II and Tier-III cities will keep on developing,” said Pranav Ansal, Vice-Chairman and Managing Director.
Omaxe has 40 residential and integrated township projects in Tier-II and Tier-III cities. These projects are primarily in Haryana, Uttar Pradesh, Rajasthan, Madhya Pradesh and Punjab.
Says Rohtas Goel, Chairman and Managing Director: “In the last fiscal, we sold a total area of 10.44 million sq ft, of which 9.65 million sq ft were sold in Tier-II and Tier-III cities. The total value of sold area is Rs 1,525 crore, of which Rs 1,250 crore was generated from the sale of projects in Tier-II and Tier-III cities.”
In this financial year, it plans to launch a slew of projects in cities such as Allahabad, Patiala, Chandigarh, Indore, Bhiwadi and Lucknow. The company is expecting sales value of Rs 2,000-2,500 crore from these projects in this financial year.
“The availability of land at affordable prices in these cities, backed by the demand for organised realty, is the key to the success of real estate in Tier-II and Tier-III cities,” adds Goel
Industry analysts feel the demand for residential space has shown growth and will keep growing if the prices are right.
“The Tier-II and Tier-III cities are witnessing growth in the residential segment. One can also witness demand in Tier-II cities for office space, primarily from the call centres and Business Process Outsourcing companies,” said Anuj Puri, chairman and country head with the realty consultancy of Jones Lang LaSalle Meghraj. Puri feels developers should be cautious and put the prices of residential properties between Rs 30 lakh and 40 lakh if they want to see the same demand in residential space in Tier-II and Tier-III cities.
