A Colliers report highlights the anticipated real estate boom in 17 high-potential Indian cities. These cities, including spiritual centers like Ayodhya, Varanasi, Puri, Dwarka, Shirdi, Tirupati, and Amritsar, are expected to see substantial growth due to supportive government policies and focused infrastructure development. This growth is fueled, in part, by the burgeoning spiritual tourism sector, attracting organized real estate players to these destinations. The improved connectivity and infrastructure, including enhanced road networks, new train routes, and airport expansions, particularly benefit the hospitality and retail sectors.
Emerging Real Estate Hotspots
Colliers India pinpointed 30 high-growth cities out of 100, projecting accelerated real estate development in the next five to six years. Among these, 17 cities are expected to witness rapid growth across multiple asset classes. The selection process involved analyzing various factors, from government program allocations and pilgrim traffic to developer plans and land price trends.
These 17 hotspots are distributed across India, reflecting equitable growth:
- North India: Amritsar, Ayodhya, Jaipur, Kanpur, Lucknow, Varanasi
- East India: Patna, Puri
- West India: Dwarka, Nagpur, Shirdi, Surat
- South India: Coimbatore, Kochi, Tirupati, Visakhapatnam
- Central India: Indore
Specifically, Amritsar, Ayodhya, Dwarka, Puri, Shirdi, Tirupati, and Varanasi have been earmarked as key cities to watch for growth driven by spiritual tourism.
Factors Driving Growth
India's urban landscape is evolving rapidly. Apart from its existing megacities, the country is projected to house nearly 100 cities with populations exceeding one million by 2050. Key factors, like infrastructure enhancements, ongoing digitization, increasing tourism, and shifts in office dynamics, will propel this urban growth spurt.
“Affordable real estate, skilled labor, better infrastructure, and government initiatives are propelling smaller towns to become dynamic contributors to India’s economy. The real estate industry is expected to grow to $ 1 trillion by 2023 and possibly $5 trillion by 2050, accounting for 14-16% of the GDP.
Further growth is expected within alternative asset classes, accommodating data centers, senior housing, and second homes. The rise of hybrid work models has also influenced the real estate sector, with companies increasingly adopting hub-and-spoke models and setting up satellite offices in smaller towns. Colliers employed stringent criteria for selecting potential satellite office locations, including an assessment of start-up activity, technology adoption, skilled labor availability, planned and existing infrastructure quality, and proximity to established office markets. Specifically, Coimbatore, Indore, and Kochi demonstrated significant potential in this burgeoning satellite office market.
Transforming Smaller Cities
The influx of major tech companies and innovative start-ups into these emerging hubs is poised to revolutionize office and residential real estate markets in smaller cities. Office rental costs are typically 20-30% lower in these areas, offering significant advantages to employers and employees. The increased demand will draw interest and investments from notable real estate developers who will bring a surge of high-quality projects.
Vimal Nadar, senior director and head of research at Colliers India, notes, “Moreover, the emergence of flexible spaces in these hubs will effectively close the gap between supply and demand for premium office spaces, promoting a new era of growth and opportunity.”
Overall, India's real estate sector appears well-positioned for sustained growth, bolstered by enhanced infrastructure and supportive policy changes. These developments are attractive to both local and foreign investors who seek favorable market conditions. This, coupled with resilient economic activity and strong consumer confidence, indicates a very positive long-term outlook for Indian real estate.