Covid-19 opens door to housing demand in Tier-II cities

Housing demand is gaining momentum in Tier-II and Tier-III cities due to the Covid-19 pandemic, which is nudging people to shift to their hometowns from virus-ravaged metros.

The reverse migration of corporate workforce and increased flexibility due to remote working are being seen as the key drivers for this surge in residential housing demand, hitherto restricted to the top 8 cities in the country.

In addition to this, some of the companies in IT and technology space are looking towards setting up offices in Tier-II cities, according to Housing.com.

“Companies are now preferring hub & spoke model for their expansion," Mani Rangarajan, Group COO, Housing.com, told DH.

"They are looking at having one large office in the cities and many smaller offices in Tier-II and Tier-III cities, where they can accommodate employees from those cities. This is going to be a new trend as companies think they can work in a low-risk environment.”

He said many Tier-II cities such as Mangaluru, Tumakuru, Chandigarh, Vadodara, Indore, Ludhiana, Amritsar, Vijayawada and Visakhapatnam have seen strong growth for housing in the last few months. “Lower cost of living and improving infrastructure including internet connectivity are contributing to the rise in demand for housing in these cities,” Rangarajan said.

Opening of smaller airports under the UDAAN scheme has encouraged corporates to look at opening smaller offices in smaller cities, he added.

Companies like TCS, Wipro, Amazon and OYO have shown interest in opening offices in cities like Kochi, Jaipur, Indore and Coimbatore, he said.

Several real estate companies like Brigade Enterprises, Embassy Group and Ozone Group have started building integrated townships towards Devanahalli on the outskirts of Bengaluru.

“We are seeing a very good demand for apartments in our Ozone Urbana project, which is an integrated township project near the international airport. As all amenities such as shopping centres, school, hospitals and corporate offices are located within the community, there is an uptick in demand for houses in this project,” S Vasudevan, Chairman & MD, Ozone Group said.

“The interest in smaller cities has been gradually increasing and the share increased to 27% in the first half of 2020, as compared to 18% in the same period in 2019," Housing.com said.

Cities such as Agra and Amritsar witnessed an impressive growth of more than 100% in virtual residential demand compared to pre-Covid-19 times, while Vadodara, Ludhiana, Mangaluru, Chandigarh and Lucknow saw more than 80% growth in residential demand in the same period.

In contrast, the top 8 cities have witnessed a relatively lower growth in virtual demand for residential spaces over the pre-Covid period.