The COVID pandemic has brought about extreme ambiguity and has been quite stressful to human beings due to an abrupt halt in all the economic activities. India is currently experiencing a situation of widespread unemployment which results in people frantically trying to return to their hometowns and some have started to plan for reverse migration in the hope of a sustainable life. This phenomenon can be seen as an opportunity for the real estate sector as there could be an upsurge in housing demand in tier 2 and tier 3 cities. Currently cities like Ahmedabad, Cochin, Chandigarh, Coimbatore. Jaipur, Rajasthan, and Indore account for nearly 70% of India’s residential markets and the remaining 30% for tier 2 and 3 cities, this ratio could change post-COVID times.
Many NRIs are also expected to return amidst diminishing job prospects, to India. They would experience a major lifestyle change and to adapt smoothly, the metros or the 7 cities are recommended. But again, there could be chances of investment in tier 2 and 3 cities as they want to remain closer to their families and job. With social distancing and work-from-home culture being popular, the probability of urban professionals moving to tier 2 and 3 is also likely. As it holds the advantages related to the cost of living and the comfort of living in a smaller city. The phenomenon of reverse migration is prevalent even among the migrant laborers, this could also include the skilled section laborers who are unable to meet the uncertainties posed by COVID moving back to their hometowns.
According to Anarock’s recent consumer survey conducted during the lockdown, the respondents preferred to invest in tier 2 and 3 cities in 2020. Among the respondents, 61% are end-users, and almost 55% are aged under 35 years. Nearly 47% of respondents are focused on affordable properties valued within Rs 45 lakh, followed by 34% who are looking for mid-segment homes valued between Rs 45-90 lakh. The residential segment will see an increase in demand for townships projects which offer a controlled environment. Further, market consolidation is likely to increase preference for branded developers. Financially strong and organized players are likely to occupy a 75%-80% market share in the coming times.
In the office real estate, per capita office is expected to increase keeping the social distancing norms in mind. And also, since there is an increase in employees working from home, a similar office environment will have to be set at home as well. In the retail business, e-commerce is expected to gain momentum as senior citizens have also embraced technology and are satisfied with its convenience.