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During the ten years starting from 2010, the real estate sector witnessed a massive transformation, especially in markets like Pune, Bengaluru, Hyderabad, Delhi-NCR, etc. However, due to the lack of sufficient land banks and high prices, these cities are now close to saturation. Consequently, over the next decade beginning from 2020, many emerging cities are likely to become sought-after destinations.
Best cities to buy a home in 2020
Given that the government’s ‘Smart City 2.0 mission’ is set to be launched in 2020 across the country, the future looks promising for real estate, maintains Nimish Gupta, FRICS – MD, south Asia, RICS. Infrastructure projects like ‘Bharatmala’ and ‘Sagarmala’, the construction of new airports under the UDAN scheme, as well as the healthy absorption of commercial spaces, will drive the residential market in cities other than Delhi, Mumbai and Bengaluru, he adds. “The Sagarmala and Bharatmala initiatives, undertaken by the government to enhance infrastructure in terms of logistics, highways and roads, aim to build strategic economic corridors in India. These initiatives will be advantageous for cities like Kochi, Agra, Kota, Nagpur, Pune, Indore, Vizag and other coastal cities. The fact that the government of India is focusing on creating 100 airports, will also provide a platform to bring the north-east, into the overall development plan,” says Gupta.
According to experts, cities that are business capitals, will continue to generate revenue for the country and attract investment. Agra, Patna, Bhubaneshwar and Vijayawada are likely to emerge as potentially attractive markets, along with Srinagar and Jammu, as social conditions here ease with time. Shimla and Dehradun will feature among key markets, while Greater Noida’s real estate market will receive a boost owing to the Jewar International Airport. Indore, which is presently a commercial and education hub for Madhya Pradesh and Jaipur and houses a lot of manufacturing units, should rise as a residential destination. Kota will drive the student living/housing segment, because of the presence of good education infrastructure. Other cities that are likely to emerge as leading realty destinations include Surat, Rajkot, Ahmedabad, Nashik, Raipur, Shillong, Mysore and Coimbatore.
How fast will the emerging cities grow, in 2020?
Gupta lists the expected price in probable leading realty destinations in the new decade as follows:
- Ahmedabad’s residential market is estimated to grow between 20%-25%, by the end of the decade.
- Bhubaneshwar and Vizag’s residential markets may see an escalation of 25%.
- Nagpur is expected to grow at 30%-35% at the end of the decade.
- Agra, Vijayawada, Patna, Raipur, Mysore, Greater Noida, Nashik and Kochi may grow at 25%-30%.
- Shimla, Dehradun and Coimbatore could grow at 20%.
- Rajkot will witness an increase of 10%-15%.
- Surat and Pune are likely to grow at 15%-20%.
Cities that fall under the government’s Smart Cities program, have already seen growth in real estate prices over the past few years, even though comprehensive urban development is yet to take place.
Real estate segments that will see growth in the new decade
New real estate models, such as ‘shared accommodation’, are likely to evolve over the next decade, with further segmentation in terms of student housing and work/job related shared accommodation, says Niranjan Hiranandani, national president, NAREDCO. “Demand for rental housing will grow, as new rental laws result in this segment becoming a good option for investors. So, while demand increases, supply will be across different segments. Two of these segments – ‘shared accommodation’ and ‘rental housing’, will see maximum appreciation,” suggests Hiranandani.
Commercial realty will also grow, in cities where residential properties are being developed. For example, in Indore, wherever residential pockets are being built, the retail segment is also witnessing development. Commercial and residential realty, in turn, will spur advancement in healthcare, education and hospitality segments. The logistics and warehousing segments will also thrive in cities driven by the Sagarmala and Bharatmala programmes.
Real estate slowdown to spur high demand, when the market normalises
Going into the next decade, the real estate sector is now in an environment where regulatory norms have brought in transparency in transactions, accountability on the part of the developer and a degree of safety in the buying process. “Buyer sentiment is gradually improving and fence-sitters are turning into buyers. The slowdown in the last three years of the previous decade, resulted in delayed demand, which will return to the market and translate into higher-than-average sales as we move into the new decade,” concludes Hiranandani.