.... there has been a noticeable rise in the participation of the tier-II and tier-III cities in the recent past.

The trend is welcomed by the market, as smaller cities continue to demonstrate a robust growth in terms of business activities. Thanks to the strong levels of domestic demand and low cost of living, residents of these cities are well placed to save more and buy homes.

The fundamentals

Properties in the tier-II and tier-III cities come with a significantly lower base and therefore the ticket sizes are much lower as compared to the large cities. Land prices are much lower and so does the cost of construction and labour. This is why, the overall cost of developing housing projects in these cities is significantly lesser than the tier-I cities.

Naturally, the housing properties in these projects enjoy the cost advantage. Sample this: One can get a 1500-sq ft 3BHK apartment in the prime areas of tier-II cities like Ahmedabad or Bhopal at Rs 35-50 lakh whereas the same would cost not below Rs 70-80 lakh in any large city like Noida, Gurgaon or Bangalore.

Being a part of national-level programmes such as ‘Smart Cities’ and ‘Atal Mission for Rejuvenation and Urban Transformation (AMRUT)’, the tier-II and tier-III cities have accelerated levels of infrastructure development. Developments like these definitely spell good for their respective housing and real estate markets.

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