As the world moves towards a "new normal" post COVID, the real estate sector would also be making the same journey in an entirely different post COVID-19 world. While there is a lot that has changed for worse, one positive for the sector is the possible trend of reverse migration spurring housing demand in Tier II and III cities, according to a recent report.
According to 'India Real Estate: A Different World Post COVID-19' report by Anarock, the top-seven cities account for almost 70 per cent of India's residential market, with the remaining 30 per cent accounted for in tier II and III cities. However, this ratio may well change in times to come.
"Cities like Lucknow, Indore, Chandigarh, Kochi, Coimbatore, Jaipur and Ahmedabad would be the main beneficiaries of the reverse migration of professionals who have lost their jobs in the metros, or are likely to. These returnees will benefit from the cost of living and superior infrastructure that many tier II and tier III provide," the research report said.
According to Anuj Puri, Chairman, Anarock Property Consultants, reverse migration is already very visible among migrant labourers, and this trend can further percolate to skilled professionals who have been or may be off-rostered.
"Smaller towns and cities would consequently see a spurt in housing demand. Primary demand may skew towards rental housing – purchase demand would initially come from local investors keen to meet the rental demand. Many NRIs will also return to India amidst dwindling job prospects, particularly in the US and European nations which account for nearly 70 per cent global cases," he explained.
For them, the top-seven cities would be the best options but many will consider smaller cities where they can be close to their families, Puri said.
According to the survey, out of the total respondents who preferred to invest in tier II and III cities in 2020, 61 per cent are end-users and almost 55 per cent are aged under 35 years. At least 47 per cent of respondents are focused on affordable properties priced within Rs 45 lakh, followed by 34 per cent who are looking for mid-segment homes priced between Rs 45-90 lakh.