Surge in Demand for Housing in Smaller Cities Post Lockdown

• @kw
• 12 Jan 2020

A typical trend in housing market is being observed after government announced relaxation in lockdown imposed since February, 2020. In smaller cities the demand for housing increased almost three folds in August 2020 compared to the demand during the same period in 2019. This may be due to accumulated demands from house buyers during the period of complete lockdown which spanned from February to June end in 2020.However there are other reasons also for this sudden shift in the trend. In this article we shall try to analyze the reasons.

The demand for housing in Tier II & Tier III which are also called ‘shadow cities’ adjoining bigger cities of India. The Delhi NCR which is now considered to be fastest growing area and gradually its nearby areas are also becoming more attractive than before with expansion in development projects and growth of industries. Attractiveness of these areas is becoming more prominent after nationwide post lockdown. The government policy for affordable housing and improving infrastructure in smaller cities are expected to attract attention of investors and property developers.

It has been realized by global industries (MNC’s) that India’s rural population will generate huge consumption pattern in next few years. It is quite evident from the fact that global giants are very keen to enter Indian rural market as the consumption patter in the rural area are changing very fast with modernization of technology, digitization and communication network. The current pandemic situation has also brought structural changes in business models which are now focusing more on penetration strategies. With the emphasis on shadow cities the market is now becoming more potent for adapting to modern living styles which includes modern housing projects and retail experience. The future scope of growth in Real Estate housing and commercial projects is very high.

Due to Pandemic situation many companies especially from Information Technology and other service sector which can be operated remotely have allowed their employees to work from home. This is causing employees to migrate to their homes in villages and sub-urban areas. It is expected that the trend of working from home will continue and the migrants will look for better living conditions. Even online classes for regular schools and colleges as well as private coaching are becoming a regular feature and expected the trend will sustain. Excellent internet connectivity and various software have made it possible to adopt to this new ways of working. The growth of virtual demand for residential property in smaller cities has been growing since August 2020. Analysis of data shows significant increase in demand for buying and also renting a home in the ‘shadow cities’.

New Development areas near Delhi NCR saw more than 80% increase in demand for residential housing post COVID situation. The locations which were not much in demand have suddenly started getting importance. Ghaziabad extension area such as Raj Nagar Extension and areas near Hindon Commercial Airport are now much in Demand and many housing projects are coming up in these areas. This has also given boost to the demand for Commercial constructions. The Mall concept is now even spreading towards outskirts of the city area. 

The demand for housing in the top eight cities have got severely affected by the pandemic and have witnessed slow growth in demand for spaces for residential accommodation. Industry expert estimate that the new trend will make investment proposals and interest of real estate developers  more focused on Tier II and Tier III cities and  many service industries specially from IT & ITES, Insurance and other service  sectors will shift from metro cities to these ‘shadow cities’.