Spiritual tourism to infra: 17 tier-II/III cities are next realty hotspots

Coimbatore, Indore and Kochi, amongst others emerged as locations having high potential as satellite office markets.

Colliers, a real estate consultancy, has identified 17 cities that have the potential to become real estate hotspots. The growth is being driven by a shift to hybrid work models and companies setting up satellite offices in smaller towns. Other factors include spiritual tourism, increased digital penetration, infrastructure development, and government initiatives. The report predicts that the Indian real estate sector will reach $1 trillion by 2030 and $5 trillion by 2050.

Colliers, a real estate consultancy, has identified 17 cities that have the potential to become real estate hotspots. The growth is being driven by a shift to hybrid work models and companies setting up satellite offices in smaller towns. Other factors include spiritual tourism, increased digital penetration, infrastructure development, and government initiatives. The report predicts that the Indian real estate sector will reach $1 trillion by 2030 and $5 trillion by 2050.

High- impact emerging real estate hotspots (Top 17 out of 30 high potential cities in India)

 

 In its report Colliers has identified over 100 such emerging cities to determine their real estate demand and growth potential over next 5-6 years. After detailed analysis Colliers identified 30 potentially high growth cities from the universes of 100 plus cities. The report further says that 17 out of these 30 cities will emerge as real estate hot spots.

Temple towns like Amritsar, Ayodhya, Varanasi, and Tirupati are set to benefit from spiritual tourism, supported by infrastructure improvements and government policies.

Bolstered by government policy support and infrastructure developments, spiritual tourism is poised to be a critical growth driver for the development of several temple towns in India. Upgrades in infrastructure and enhanced connectivity through improved roads, flagship trains, and new airports have the potential to attract organized real estate players to these spiritual destinations in the long term, specifically across hospitality and retail segments. Identification of high impact locations with respect to spiritual tourism involved analysis of multiple parameters including sanctioned allocations under various government programs, annual tourist footfalls in primary pilgrimage site, upcoming plans of real estate developers and land price appreciation.

These destinations are expected to attract investments in hospitality and retail sectors, catering to growing tourist footfalls.

Cities like Amritsar, Ayodhya, Jaipur, Kanpur, Lucknow, and Varanasi are set to benefit from improved infrastructure and rising economic activities. These locations are strategically positioned to capitalize on enhanced connectivity and government initiatives, making them attractive destinations for real estate investments.

Patna and Puri in the eastern region are identified as potential growth centres, bolstered by infrastructure upgrades and increasing commercial activities.

Dwarka, Nagpur, Shirdi, and Surat in the western region are expected to see robust growth driven by industrial development and infrastructure expansion.

Coimbatore, Kochi, Tirupati, and Visakhapatnam in the southern region are emerging as key hubs for residential and commercial developments, supported by strong local economies and infrastructural enhancements.

"As tech giants and innovative start-ups tap into the skilled talent pools of emerging hubs, smaller cities are on the brink of a transformative boom in both office and residential markets. Office rental arbitrage, typically 20-30% lower and relatively affordable housing market in these locales creates a win-win scenario for companies and employees alike. This surge in demand is set to ignite a wave of interest from leading real estate developers, ushering in an influx of high-quality supply in these markets. Moreover, the rise of flex spaces in these vibrant hubs will seamlessly bridge the demand- supply gap for premium office spaces, fostering a new era of growth and opportunity," said Vimal Nadar, Senior Director & Head of Research, Colliers India.

Indore in central India stands out with its strategic location and growing industrial base, making it a prominent destination for real estate investments.

The National Infrastructure Pipeline (NIP) and PM GatiShakti projects are pivotal in driving equitable growth beyond Tier I cities.

The shift towards hybrid work models is fuelling demand for office spaces in smaller cities. Locations like Coimbatore, Indore, and Kochi are witnessing increased interest as satellite office markets due to lower rental costs and affordable housing options, attracting both companies and skilled talent.