Tier-II Indian cities emerge as major realty growth engines: PropEquity

Report by the firm cites surge in absorption and supply of quality residential properties across price brackets in Ahmedabad, Vadodara, Nashik, Gandhi Nagar and Jaipur

Ahmedabad, Vadodara, Nashik, Gandhi Nagar and Jaipur are the top tier-II cities in respect of the growth of the residential property market, according to recent report published by real estate data analytics and consultancy company, PropEquity. The report adds that the spurt has been driven by rapid urbanisation, industrialisation and growth of the IT industry.

The study, titled 'Tier-II: Residential Overview', states that there has been a surge in absorption and supply of quality residential properties across price brackets in these cities. The report has tracked performance of the residential segment in various tier-II cities from FY18 to FY22.

“Real estate activity in tier-2 cities is fast catching up with that of tier-1 cities. Interestingly, Ahmedabad’s residential real estate market size of Rs 83,390 crore has outshone some tier-1 cities like Chennai and Kolkata, whose market sizes were Rs 52,554 crore and Rs 38,440 crore, respectively, at the end of FY22. It is also interesting to observe that the market share of Tier-I cities is about 4x the share of Tier-II cities in the last five fiscal years,” Samir Jasuja, Founder and Managing Director, PropEquity, was quoted as saying in a press release.

“Post Covid lockdowns, tier-2 cities have been witnessing job creation at a decent rate and many tech and other sector companies are encouraging work from home for employees for at least the next few years. This has led to great traction in tier-2 housing projects due to their attractive pricing and potential for a higher upside in terms of return on investments,” said Abhishiekh Andlay, Founder, Andlay Estates.

Ahmedabad: Home sales in Ahmedabad stood at 39,046 units in fiscal 2021-22, a growth of 26 per cent over financial year 2020-2021. When compared to fiscal 2017-18, a growth of 32 per cent was witnessed in the city. The supply of homes in Ahmedabad stood at 39,195 units in financial year 2021-22, up 14 per cent year on year (YoY), on the back of rapid urbanisation, industrialisation and growth of the IT industry.

The unsold stock of homes stood at 62,047 units at the end of FY22, almost the same as FY21. The inventory overhang will take about 24 months to clear at the current rate of absorption of houses.

Vadodara: The No. 2 ranked city witnessed a growth of 25 per cent YoY in home sales at 17,285 units in FY22. When compared to financial year 2017-18, the surge was 20 per cent. The supply of new homes stood at 15,046 units in fiscal 2021-22, up nine per cent over the previous financial year.

Vadodara's housing stock stood at 27,070 units at the end of FY22, down eight per cent YoY. It will take 19 months to clear at the current rate of sales, the PropEquity report said.

Nashik: Sales in third ranked Nashik stood at 10,806 units in fiscal 2021-22, up 15 per cent YoY. New home supply in Nashik stood at 13,037 units in the 2021-22 fiscal, up a staggering 68 per cent over the previous year. Housing stock in the city was 15,837 units at the end of FY22, up 17 per cent YoY. It will take 17 months to clear at the current rate of sales.

Gandhinagar: Sales in fourth ranked Gandhi Nagar stood at 7,650 units in FY22, up 10 per cent YoY. New supply of homes in Gandhi Nagar stood at 6,361 units in FY22, down 30 per cent YoY.

Jaipur: Fifth ranked Jaipur saw sales of 7,676 units in FY22, up as much as 42 per cent over FY21. New home supply stood at 7,022 units in the financial year 2021-22, a massive increase of 78 per cent YoY.

The stock of homes in Jaipur stood at 14,529 units at the end of fiscal 2021-22, a marginal dip of 4 per cent YoY. It will take 23 months to clear at the current rate of sales, the PropEquity study said.