The Hindu Business Line : Realty cos shift focus to non-metros

With the purchasing power in non-metros going up coupled with major metros reaching saturation , realty companies seem to be making a beeline for places such as Visakhapatnam, Kochi, Ludhiana, Jaipur and Coimbatore.

Consider this. DLF Retail Developers has 30 per cent of its projects coming up in the non-metros; the board of Ansal has taken a call to focus more on Tier II cities; and Parsvnath has project exposure of Rs 3,500 crore in such towns against a total project kitty of Rs 9,000 crore.

"Real estate development is now catching up in the Tier-II cities as well, with hectic activity in places such as Kochi, Visakhapatnam, Ludhiana, Chandigarh, Jaipur, Sonepath, Coimbatore, Surat and Ahmedabad," said Mr Sanjay Verma, Joint Managing Director, Cushman and Wakefield India.

Mr Verma said the pattern of realty development would vary across cities.

"There are places with large English speaking population that will attract IT and ITES companies. For instance, Chandigarh, Jaipur, Kochi, and Visakhapatnam are likely to see more commercial development. Cities such as Panipat and Ludhiana, where disposable income is high, will see residential investment," he said.

However, it will still take time for investments in smaller cities to overtake those in the metros.

DLF Retail has 22 malls under construction, of which 70 per cent are in metros and the rest in A Class cities such as Jallandur, Ludhiana, Jaipur and Kochi.

"We will be willing to look at places like Lucknow, Indore and Allahabad in future," its Executive Director, Mr Ajay Khanna, said.

According to him the heightened interest in these locations was fuelled by the affluent population in A-Class towns looking to their peers in metros, when it came to lifestyle.

Agrees, Mr Dinesh Chandiok, CEO and ED, Ansal Properties and Infrastructure Ltd, whose company has 75 per cent of its ongoing projects in Tier-II cities, compared to 45 per cent two years ago.

"Favourable factors such as a pent up demand, lesser competition, lower project cost and increased margins coupled with high purchasing power make non-metros an attractive development destination," Mr Chandiok said.

Parsvnath Developers too is spreading its wings in 20 cities to places such as Rajpura, Derabasi, Malirkotla, Ludhiana and Pathankot for integrated township projects; and to Dehradun and Hardwar for commercial and residential projects.

"People from outside come and buy property in Delhi. We feel they are waiting for an opportunity to purchase property in their own towns," said Mr Pradeep Jain, Chairman of Parsvnath.

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