5 Reasons Why Tier-II Cities Are Worth The Investment

Not just metros and Tier-I cities, the real estate investors are now gaining confidence in Tier-II cities as well. These are becoming a choice of destination for investors looking for affordable options that could get them higher rental yield when compared with metro cities where property values are more than the rental yield earned.

MakaaniQ lists five reasons that make Tier-II cities worth the investment for new-age real estate investors:

Rapid infrastructural development

Infrastructural development has become one of the key drivers of growth for many states. One such development is coming of the Metro rail in Tier-II cities including Lucknow, Ahmedabad, Kochi and Jaipur. Not just inter-city, improved connectivity with rest of the country, especially with the national capital or the nearest metro city is another advantage for Tier-II cities to gain attraction among investors. This includes frequent trains, better roads and highways and even airports.

More jobs coming up

Along with infrastructural development, commercial development that makes residential real estate popular in Tier-II cities. More and more businesses setting shop in these cities give rise to more job opportunities and also, the financial strength for people to invest in real estate. The ones that set up shop here find Tier-II cities cheaper in terms of operational cost, availability of office spaces and ease of doing business, they even get incentives for electricity, relaxation in approvals, cheaper land resources etc. With more employment opportunities, tier II cities offer great potential for those investors who would like to earn rental returns from their investment. For instance, Maharashtra government relaxed several regulations, norms to push commercial development in Pune and Aurangabad. While Pune is India's premium IT hub, Aurangabad is leading in the automobile sector.

Affordable market

Tier-II cities are affordable when compared to metro cities. These cities are not just offering high-end property for earning returns it has plenty of affordable options for those planning to test waters. For instance, cities like Jaipur, Pune, Lucknow, Coimbatore, Mysore are being hailed as some of the most affordable markets to make a purchase to get value-for-money.

Low cost of living

Not just for earning rental income, Tier-II cities are also considered to buy retirement homes in as well. The reason? Living in smaller cities is comparatively less expensive than what a person on an average would spend when living in a metro city. Apart from this, improving healthcare facilities, cleaner environment and urbanisation make Tier-II cities a preference for the ones retiring. Cities such Nagpur, Chandigarh, Jaipur are considered to be some of the inexpensive Tier-II cities to live in. Pune, known as the retirement hub, boasts a high standard of living because of its proximity to Mumbai, health care facilities and its connectivity to rest of the country.

Matching up with metro cities

On one hand, where these emerging cities boast an affordable lifestyle, these also are growing market for premium and luxury retail brands, too. Cities including Jaipur, Lucknow, Pune, Chandigarh are already witnessing the mall culture where renowned international brands are setting up shop to cater to the potential audience. This brings them in line with metro cities which were mainly preferred for investment because of the rising employment demand or for the urbanised lifestyle. Those small city investors who hail from emerging markets may find better investment deal in a Tier-II city than in a metro where property values are sky high but the space inside is shrinking.