Now that the worst of the Covid-19 pandemic is over, the demand fundamentals of the India story are again focused on all cities with sufficient economic activity. Economic activity has many facets, including the industrial and service sectors and incentive-driven programs by the State Government.
In Gujarat, which has seen considerable industrial progress, the key cities of Ahmedabad, Surat and Vadodara come readily to mind. Baddi in Himachal Pradesh and Pantnagar and Rudrapur in Uttaranchal attracted a lot of residential developers that met with success, thanks to proactive government policies.
In the South, Coimbatore, Visakhapatnam and Kochi are seeing a lot of investor activity due to their economic activity. Towards the West, Nasik, PCMC and Nagpur are noteworthy examples. The Pimpri-Chinchwad Municipal Corporation, which has over a million citizens living and working there, adjoins the Pune Metropolitan Region but is a major economic powerhouse in its own right.
In PCMC and similar non-metro cities, developers tend to locate their projects close to industrial and IT hubs, targeting specific workforce segments and pricing their products accordingly. Large integrated townships - which require large land parcels - are suited only for less congested non-metropolitan and satellite cities. Again, PCMC is a prime example - it is home to some of India's best integrated townships.
India has over 40 non-metro cities with a million-plus population, and some of these are growing as fast as their tier I counterparts. Several have been selected under the Central Government’s Smart Cities mission and will attract investments ranging from INR 1,000-1,500 Cr in the next five years. Other missions like AMRUT, Swachh Bharat Mission, etc., will also help these cities considerably.
Thanks to such government schemes, these non-metros will improve rapidly in terms of infrastructure and the quality of life they offer. Job creation will, of course, be a primary driver for the future real estate demand in these cities. Simultaneously, the inter-city air connectivity in many of them is set to improve, thanks to a new aviation policy.
In the PCMC, the development of the metro rail and the Pune Ring Road are major game-changers. Economic activity depends a lot on the ease with which people and goods can move.
Due to high property prices in Indian metro cities, property investors have started exploring non-metro and suburban satellite cities more enthusiastically. The residential asset class will see maximum growth thanks to the various developments on the policy front and the massive investor interest in these cities.
Also, better education and healthcare facilities are coming up in many of these cities even now. The rapidly improving social infrastructure creates an improved environment for businesses, as well.
Apart from state capitals and the future Smart Cities, non-metros with access to IT talent and a good presence of IT/ ITeS occupiers – for example, Coimbatore and Kochi, and PCMC with its ready access to the Hinjawadi IT Park – will develop rapidly.
How each city performs obviously depends on the performance of local governance bodies. Currently, cities such as Nagpur, PCMC, Surat, Jaipur and Indore are seeing very proactive measures taken by their local governance bodies. The high level of town planning in Pimpri-Chinchwad Municipal Corporation puts it on par with other highly-planned cities like Chandigarh and Navi Mumbai.
This kind of performance is one of the main yardsticks to measure future growth and investment potential.
Some of the larger non-metro cities have quality developers who provide world-class amenities and facilities in their projects. For example, some of the more prominent integrated townships in PCMC have international-grade specifications. Now is an ideal time for institutional investors to identify such projects by credible developers.
This last point is vital for investors to take note of. In the non-metro cities, local developers play a more significant role than national developers who do not have local expertise. Local developers who have demonstrated that they understand their geographies are the best bet for serious investors.