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    Reverse migration may spur housing demand in Tier 2 & 3 cities post COVID-19

    Reverse migration may spur housing demand in Tier 2 & 3 cities post COVID-19

    Reverse migration may spur housing demand in Tier 2 & 3 cities post COVID-19
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    By Ankit Gohel   IST (Updated)

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    The coronavirus-induced lockdown has given birth to a new problem of ‘reverse migration’ in the country. However, this issue can turn into an opportunity for the beleaguered real estate sector in Tier 2 and 3 cities. These cities may see a spur in housing demand going ahead.

    The coronavirus-induced lockdown has started ‘reverse migration’ in the country. More and more people are heading to their villages and home towns in the hope of a more sustainable life. This phenomenon can turn into an opportunity for the beleaguered real estate sector in Tier 2 and 3 cities as these cities may see a spur in housing demand going ahead.
    According to the latest report by ANAROCK Property Consultancy, currently, the top 7 cities account for almost 70 percent of India's residential market, with the remaining 30 percent accounted for in Tier 2 and 3 cities. This ratio may well change in times to come.
    Cities like Lucknow, Indore, Chandigarh, Kochi, Coimbatore, Jaipur, and Ahmedabad would be the main beneficiaries of the reverse migration of professionals who have lost their jobs in the metros or are likely to. These returnees will benefit from the cost of living and superior infrastructure that many Tier 2 and Tier 3 provide, the report titled 'India Real Estate: A Different World Post COVID-19' said.
    “Primary demand may skew towards rental housing – purchase demand would initially come from local investors keen to meet the rental demand. Many NRIs will also return to India amidst dwindling job prospects, particularly in the US and European nations which account for nearly 70 percent global cases. For them, the top 7 cities would be the best options but many will consider smaller cities where they can be close to their families,” said Anuj Puri, Chairman - ANAROCK Property Consultants.
    However, finding suitable employment for reverse-migrating Indians in smaller cities may prove to be challenging, Puri added.
    ANAROCK’s recent consumer survey taken during the lockdown period indicates that of the respondents who preferred to invest in Tier 2 & 3 cities in 2020, 61 percent are end-users and almost 55 percent are aged under 35 years. At least 47 percent of respondents are focused on affordable properties priced within Rs 45 lakh, followed by 34 percent who are looking for mid-segment homes priced between Rs 45-90 lakh.
    “The residential segment will see a manifold increase in demand for townships projects which offer a controlled environment. In terms of supply, township projects have less than 5 percent overall share in the top 7 cities as on date,” the report said.
    Further market consolidation is expected with the increased preference for branded developers. Financially strong organized players are likely to occupy 75-80 percent market share in the coming years, it added.
    Meanwhile, in the office real estate, social distancing norms may increase the per capita office space allocations even as a segment of employees will work from home. During the last decade, per capita office space allocation reduced from 100-125 sq. ft. to 75-100 sq. ft. in the pre-COVID-19 period of January 2020.
    “Safety and hygiene will become the top priority, even as contactless operations and automation will increase. Decentralization of operations to ensure business continuity will be a trend reversal from prominent consolidations over the past few years,” ANAROCK said.
    Further, in retail, online businesses will gain momentum. The eCommerce giants have already added over 5,000 people to their delivery fleet during the lockdown period. Their consumer base expanded to senior citizens who have embraced technology in the COVID-19 era. Mall revival will come with caveats. With hygiene and sanitation taking centre stage, malls which can offer these will benefit most in times to come, it added.
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