Allure of offbeat towns: After DLF, M3M plans Rs 2,700 cr Panipat project

India's major real estate players have found the next opportunity outside India's largest metros.  Data provided by JLL, a real estate investment management company, shows that developers acquired 3.294 acres of land across the country between January 2022 and October 2023, of which 44 per cent of transactions occurred in Tier 2 and 3 cities.

Panipat, Ludhiana, Nagpur, and Panchkula collectively account for 75 per cent of the total acquired land in these cities as buyers in Tier 2 and 3 cities are now seeking quality homes.

 With shrinking spaces in metros, off-beat locations like Panchkula, Meerut, and Sonipat have emerged as refreshing alternatives to the chaotic metropolitan lifestyle. Another reason why homebuyers are now looking for homes in off-beat destinations is the changing work-from-home phenomenon and the urge to live in quiet and quaint places, far from the chaos and pollution. 

 

Key locations in North India that have caught the attention of buyers and developers alike include Panchkula, Sonipat, Panipat, Karnal, and Meerut. Leading developers like DLF, Godrej, Mapsko, Signature Global, Trident Realty, and M3M India have launched projects across these off-beat locations owing to the rising demand. These smaller cities around Delhi like Meerut, Karnal, and Alwar will soon connect to Delhi and Noida via  new rapid train corridors that are separate from the congested century-old railroads.

As seen in the table, Panipat haas wtinessed the largest share of acquired land in the last 22 months by real estate players.

"Buyers too are looking to purchase quality homes in Tier 2 and 3 cities. Established real estate players entering these cities have enhanced the home buyer confidence, as these developers have a good track record and strong execution capabilities, along with access to institutional capital. These developments have proven successful and are very well received by the buyers. This can be seen with the recent success of developers in these cities," noted the JLL report.

Moreover, as more people embraced the charm of these off-beat towns, they grew not just in terms of infrastructure but also in soul. Local businesses thrived, culture flourished, and a sense of belonging permeated the air. Homebuyers found themselves not just investing in real estate but investing in the spirit of a community.

“If Tier 2 and Tier 3 cities are developed with proper infrastructure, both physical and social, definitely people would want to love because otherwise home prices are very expensive in the Tier 1 cities. Plus there is also organic demand within the Tier 2 and Tier 3 cities from people who are already staying there,” said Samantak Das, chief economist and head of research and REIS, India, JLL.

Within two days of its launch, Godrej Properties' first phase of its planned development project in Sonipat was sold out. 

In October 2023,  DLF's 10-acre Panipat project in Haryana reportedly was sold out within an hour of launch, generating Rs 200 crore in sales.  The project was sold at 15-25% premium compared to its competitors. The buyers of these premium plots predominantly comprise residents of Panipat and nearby areas, including the Delhi NCR region

Now, Delhi NCR-based real estate developer M3M India plans to invest Rs 2,700 crore in developing a 333-acre township in Panipat, with a potential top line of Rs 5,000 crore, according to the company. 

The firm has obtained a license to develop the 'M3M City of Dreams' township in Panipat, and the plotted development will have more than 2,100 plots ranging from 140 to 1,000 square yards. M3M India has already sold over 700 plots, amounting to about Rs 1,100 crore, as per the company's statement. The township will feature approximately 400 expandable villas, 3,000 uber-luxury floors, and 150 farmhouses. The project will include amenities such as community parks, cycling tracks, restaurants and cafes, retail spaces, schools, temples, and sports facilities, among others. M3M aims to deliver this project within the next 15-18 months

In southern India, geographies such as Ambur, Mahabalipuram, Coimbatore, Trichy and Mysuru roped in developer attention for plotted residential projects.

Developers are concentrating on low-rise and plotted developments due to the local populace's preference for these formats.

“Plotted developments have all the infrastructure, like parks, shopping centres and so on. People earlier would have been staying in their own self-built houses, probably as joint families. Now people want to have independence and so they want to move into their own apartments,” said Sen.

DLF has also decided to capitalize on the growing demand for luxury residential projects and launched a new project called The Valley Gardens in August 2022 in Panchkula. Spread over 34 acres,  it has launched a limited collection of luxury independent floors which is supplemented by the ecosystem of The Valley. The property prices for The Valley Gardens witnessed a significant appreciation as well, soaring to Rs 9,000 per square foot within a short span of time. As per DLF’s annual results, the company sold independent floors in this project worth Rs 1,150 crore in FY 22-23. 

DLF is now expected to launch  another project in Panchkula, which will be low-rise independent floors that are part of DLF's larger ecosystem The Valley, which was launched in 2010.

Some developers are also planning to launch holiday homes as people in metros are looking for second homes in vacation destinations like Shimla, Rishikesh, Goa, etc.

Land Transaction Snapshot of Tier 2 and 3 Cities: January 2022-October 2023