Mumbai: With sentiments in the realty sector improving, retail investors are focusing on projects in smaller towns and cities due to better growth prospects. According to property consultant JLL, these cities have witnessed a much higher investment of $6,192 million as compared to $1,296 million in metros from 2006-2017.
With high urbanisation, a rising young population base, increasing disposable income levels, rising aspirations and increasing proportion of nuclear families, JLL expects new opportunities to continue in Tier II and III cities.
“Metro’s have almost peaked. The potential for capital appreciation in tier II and tier III cities are much better than leading cities. This is driving small individual investors to actively look at projects in upcoming cities and towns,” said Ramesh Nair, CEO & country head, JLL India.
A study conducted by CII along with JLL showed that investment opportunities are emerging in newer sectors such as student housing, senior living, warehousing and rental housing, which are expected to see continued growth momentum. Warehousing had already started seeing big-ticket investments. As part of the $500 million deal, the Canada Pension Plan Investment Board (CPPIB) acquired a majority stake in IndoSpace, the warehousing and logistics real estate arm of Everstone Group. Looking ahead, JLL said that rental housing too would evolve as the sector matures and will play an important role in urban housing.
Another area that is gaining traction among investors in recent time is Proptech — the convergence of property and technology. Investors will look to put in money in technology-enabled firms in the real estate transactions space. Rapid urbanisation, presence of a large section of middle income population, upscaling of technology and presence of a strong secondary and rental market will add to the growth of Proptech in the country,” JLL added.
In the commercial realty segment, JLL believes that that the diversification of occupier base will increase with non IT space absorption picking up momentum that will minimise the risk.