Investing in Tier II Cities
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20 March 2019 - 14:00, by , in NRI, No comments

Tier II cities are becoming a choice of destination for investors in search of affordable options that earn higher rental yield in comparison with metro cities which have relatively higher investment size and seem less favourable in terms of the rental they yield. The new age investors are looking at Tier II cities in a new light for the following reasons:

Increased Infrastructure Development

One of the key drivers of growth for many states is the improving infrastructure of these states. Developments like metro rail in Tier II cities and improved connectivity with the rest of the country especially with the national capital or the nearest metro station have made them attractive among the investors. Frequent trains, better roads, highways and airports are boosting the growth of these cities.

Improved Job Prospects

Along with infrastructure and commercial development, more and more businesses are setting shop in these cities creating new job opportunities and financial strength to enable people to invest in real estate. These cities offer lower operational costs, higher availability of office spaces at better rates, ease of doing business and also incentives for electricity, relaxation in approvals, cheaper land resources etc. With more employment opportunities, tier II cities offer great potential for those investors who would like to earn rental returns from their investment.

Affordable Market

Tier II cities are much more affordable in comparison to metros. These cities are not just offering high-end property for earning returns but also have plenty of affordable options for those planning to test waters. For instance, cities like Jaipur, Pune, Lucknow, Coimbatore, and Mysore are being hailed as some of the most affordable markets to make a purchase to get value-for-money.

Low Cost of Living

Tier II cities are a preferred option for buying retirement homes. In general living in smaller cities attracts less over heads as compared to living in metro cities. Apart from the cost perspective, the cities now have improved healthcare facilities, cleaner environment and growing urbanisation to meet the needs of those planning to retire in peace.

Matching up with Metro Cities

Though these cities boast of an affordable lifestyle, they are a growing market for premium and luxury retail brands. Jaipur, Pune, Chandigarh are already witnessing the mall culture and many renowned international brands have opened up to cater to the potential audience in these cities. This brings them in line with the metro cities which hold preference for investment because of the growing employment or urbanised lifestyle. The small city investors who hail from emerging markets may find better investment deal in a Tier-II city than in a metro where property values are sky high but the space inside is shrinking.


See Also: Changing Environment of Indian Real Estate

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