The Covid-19 crisis that impaired realty sentiment in major cities could prove to be an opportunity for certain small towns.
The economic meltdown has resulted in job losses across the globe and made sustenance difficult for many immigrants, with their relatives in India coercing them to return to their hometowns. This trend is likely to spike residential demand in tier II and tier III cities, say developers.
The Non-Resident Indians (NRIs) category is expected to be another huge draw, say developers, with many NRIs returning to their homeland due to dwindling job prospects, especially from the US and EU countries.
Sachin Nagpal, Spokesperson, GBP Group said the pandemic has made people more inclined to stay closer to their hometowns. “With people moving back to their hometowns in smaller cities due to Covid-19, the demand for organised housing is set to rise in tier II and tier III cities. Along with the housing segment, reverse migration is bound to attract investors to these smaller cities offering them good returns and further stimulating demand for commercial spaces including office and retail spaces,” he said.
Noting that reverse migration is not limited just within the country, Nagpal said NRIs from across the globe are also returning to India due to uncertain job prospects. This would add to the potential demand for commercial spaces emerging in smaller towns.
Pradeep Aggarwal, Chairman, Signature Global and Chairman, Assocham – National Council on Real estate, Housing & Urban Development, said affordable housing is an attractive option for people coming back to tier II and tier III cities due to dwindling job prospects in metros.
“Affordable prices coupled with a range of amenities will surely attract end-users. NRIs returning to India will also be staying here, for some at least till the time international travel becomes safer. The new residential segment coming up in these small towns is likely to garner considerable interest from them at this time, given the advanced lifestyle requirements most of these projects offer,” said Aggarwal.
Uddhav Poddar, MD, Bhumika Group, said reverse migration to tier II and tier III towns is expected to spur demand for A-grade residential premises, office, retail, entertainment and mixed use asset classes in tier 2 towns. “We have the NRIs coming back due to an uncertain global market. They will get attracted to A-grade projects. Tier 2 towns in the states of UP, Rajasthan, Bihar, Jharkhand and Orissa would be some of the main beneficiaries of this pattern," he said.
Prateek Mittal, Executive Director, Sushma Group spoke particularly about Tricity’s realty market, “There is a lot of NRI population in neighboring states of Punjab and Haryana and when it comes to reverse migration, Chandigarh will emerge as the most attractive destination. The other reasons behind the rising demand of housing in tier 2 cities is the price point. If one adds the income tax rebate coupled with PMAY subsidy benefits, the home loan interest approximately matches the amount paid for monthly rent," he said adding this would make people want to buy their own homes rather than rent a property.
Mittal said there are only 31 months of unsold inventory in Tricity as compared to the average 44 or 45 months of unsold inventory across India.
Ankit Kansal, Founder & MD, 360 Realtors confirmed reverse migration is here to stay. “Many labourers are even now going back to their villages in UP, Bihar, Rajasthan and MP. However, after monsoon some are expected to come back. Developers need to plan accordingly and have to utilise their existing workforce as well as locals in the neighborhood more optimally,” said Kansal.
Some real estate developers have taken care of a portion of their migrant workers by providing them financial help apart from taking care of their basic amenities.
While Andhra Pradesh has some 3,000 to 4,000 real estate projects stalled at various stages across the state, the Pune chapter of CREDAI has decided to train and hire youth across the state in Pune’s real estate and construction sector in order to bridge the gap left by the exodus of construction workers.
Suhas Merchant, President of CREDAI-Pune Metro said around 70 per cent of the migrant labour population in the State has gone back to their hometown during the Covid-19-induced lockdown.
Given the massive labour shortage plaguing the construction sector across the State and the uncertainty regarding when these migrant labourers would return, the initiative from CREDAI-Pune Metro called 'Kushalta', will train around 50,000 youth across villages and towns and transform them into skilled workers.