The top 17 high-impact emerging real estate hotspots in India are Amritsar, Ayodhya, Jaipur, Kanpur, Lucknow, and Varanasi in the north; Patna and Puri in the east; Dwarka, Nagpur, Shirdi, and Surat in the west; Coimbatore, Kochi, Tirupati, and Visakhapatnam in the South; and Indore in central India.
India is rapidly becoming the third-largest economy globally, and its emerging cities are expected to be crucial to the country’s economic development. According to Colliers’ Equitable Growth and Emerging Real Estate Hotspot report, India is predicted to have eight megacities and nearly 100 cities with a population of one million or more by 2050. The next wave of urban growth in these places will be driven by infrastructure development, tourism, digitization, and changing office landscapes.
The top 17 high-impact emerging real estate hotspots in India, according to the report, are Indore in Central India; Patna and Puri in the East; Dwarka, Nagpur, Shirdi, and Surat in the West; Amritsar, Ayodhya, Jaipur, Kanpur, Lucknow, and Varanasi in the North; and Coimbatore, Kochi, Tirupati, and Visakhapatnam in the South. In the top 17 cities, residential was considered the high-impact segment in 13 cities, warehousing in 10 cities, and retail in 13 cities. These cities’ high-impact segments are residential, warehousing, and retail.
The report lists other high-impact segments: office, hospitality, senior living, and data center. Seven cities identify the hospitality industry as their high-impact segment, while only four identify offices as such. Data centers and senior living were identified as the segments with the greatest impact in seven cities.
It is interesting to note that better infrastructure, reasonably priced real estate, qualified labor, and government initiatives are all helping smaller towns become vital contributors to India’s economy. According to Colliers India CEO Badal Yagnik, “this growth is set to propel the real estate sector to an estimated $1 trillion by 2030 and potentially $5 trillion, a 14-16 percent share in GDP by 2050.”
Additionally, the National Infrastructure Pipeline (NIP) and PM GatiShakti’s flagship infrastructure projects are expected to lead the dispersion and expansion of growth centers beyond tier-1 cities due to improved connectivity and increased manufacturing activity. The growth of factories and MSMEs is anticipated to lead to the rising demand for warehouse space in developing hotspots along infrastructure corridors.
Why is there an increase in tier-2 cities’ demand for real estate across all segments?
The report claims that businesses are embracing the hub and spoke model more frequently due to the growing popularity of hybrid working, setting up satellite offices in smaller towns. The likely causes include factors like the situation with technology today, the startup ecosystem, the talent pool of highly qualified individuals, planned and ongoing infrastructure improvements, and the area’s closeness to well-established office markets. Kochi, Indore, and Coimbatore are a few cities with lots of potential as satellite office markets.
Employers and employees gain from office rental arbitrage along with the generally cheaper and more reasonable housing market in these areas, which ranges from 20% to 30%. According to Vimal Nadar, Senior Director and Head of Research at Colliers India, “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.”
The increase in real estate activity in smaller towns can be attributed to increased digitization in the warehousing and data center industries. E-commerce is expected to support the expansion of online retailers as they grow, leading to distribution hubs, fulfillment centers, and warehouses in key locations.
The growth of data centers and smart infrastructure in these developing cities will also be fueled by the increase in data consumption, leading to these towns’ allure as real estate investment destinations. Jaipur, Kanpur, Lucknow, Nagpur, Patna, Surat, and Visakhapatnam were listed in the report as the cities most likely to see an increase in digitalization-driven real estate activity.
Another factor supporting the idea that spiritual tourism is a major growth engine for the Indian temple towns is this. Long-term organized real estate players may be drawn to these spiritual locations by improved roads, flagship trains, and new airports, among other forms of infrastructure and improved connectivity. This is especially true for the hospitality and retail sectors. Regarding the growth spurred by spiritual tourism, Amritsar, Ayodhya, Dwarka, Puri, Shirdi, Tirupati, and Varanasi have merged as cities to watch out for.
Finding high-impact locations for spiritual tourism required analyzing several factors, such as approved allotments under different government initiatives, yearly visitor numbers at major pilgrimage sites, future real estate development plans, and land price growth.