Millennials from Tier II Cities Are Aiming Big
The participation of tier-II cities Millennial is on the rise as the smaller cities continue to demonstrate a robust growth in terms of buying real estate properties.
According to recent industry reports, millennial comprise of one-fourth of the total workforce in Asia Pacific and are prominent source of spending power, as well as dedicated investors, but are the kind who are not given to high risk. Hence holding a conservative nature on their hard-earned money, they seek value for money in their investment avenues.
Rapid economic growth has also led to a substantial increase in the size of the middle class in India, and the rising household incomes resulting in higher disposable incomes. About 600 million people are under 25 years of age. Research says that the middle class will account for 59% of India’s total consumption by 2025. The trend in rising income levels and propensity to spend is not limited to metros, but has also spread across tier II cities as well.
Millennial are following the classic trend of home ownership pattern, they stay with parents first, then become renters, then homeowners. Millennial from tier II cities stay closer to their roots, save more and have a better lifestyle.The imminent features &services that millennial of tier II cities are looking for are:
• Safety of all occupants
• Commuting distances to work, school and other activities.
• Vicinity to social activities such as parks, gymnasiums, etc.
• Vicinity to friends and families
• Planning of the apartment unit.
• Amenities provided by the developer
• Natural light and ventilation.
• Potential for appreciation.
“Developers, in their aspiration, make their homes more attractive to the buyers, started providing ‘special amenities’ which includes gymnasiums, clubhouses, swimming pools, RO Water, Video Phones and some even are providing private elevators and parking into their apartments. Over time, people get used to some of these features which become an essential parameter for the future home buyer.” ArchitectAmol Prabhu, Partner -Shashi Prabhu Associates
Generation shift Impacts sales strategies
Most of the young generation prefers to deal with renowned developers who have a proven track record for consistent quality and reliability along with timely delivery of projects. Being tech-savy, they are conscious buyers and prefer to research thoroughly on the product before buying it. Moreover, the millenial are social media fanatics and therefore, the real estate industry is also adapting to market themselves digitally, trying to maintain an active presence on social media and their websites.
The biggest outcome of this change has been that the developers have started thinking like the younger generation. As a result of which, we see more of online, geo targeted lead generation campaigns these days, apart from the conventional ones. India’s aspiring youth and rising middle class from small towns are likely to overpower the real estate market, build brand loyalty with the developers and adapt to a fast-changing market environment.
“The ROI and growth rate is always surging, making the investment worthwhile. With real estate, the overall infrastructure of a specific locality also increases and the ROI grows even more. This pure calculation has been one of the major driving forces for the younger generation to look into real estate investments. Also, change of lifestyle and aspiration are another factor that we cannot neglect.” says Mr Rishi Jain, Executive Director, Jain Group.
Scenario of Real estate market inTier-II cities
Being a part of national-level programmes such as ‘Smart Cities’ and ‘Atal Mission for Rejuvenation and Urban Transformation (AMRUT)’, the tier-II cities have accelerated levels of infrastructure development. Developments like these definitely spell wellfor real estate markets. One can purchase a home in tier-II cities such asBhopal, Ahmedabad, Lucknow, Patna, Jaipur, Bhubaneswar,Surat, Coimbatore, Chandigarh, Indore and Kochi.
From an investment standpoint, these cities offer better prospects. Research shows tier II cities have witnessed better price appreciation compared to metros. For instance, property prices in Ahmedabad grew by 8.1%, in New Town (Kolkata) by 6.5%, Nashik (5.8%), Chandigarh (5.3%) while prices declined by 5.8% in Gurugram, Chennai (1.5%), Mumbai (3.6%), and remained constant in Kolkata.
The housing properties in tier II cities enjoy the advantage of cost. One can get a 1500-sq ft 3BHK apartment in the prime areas of tier-II cities like Ahmedabad or Bhopal at Rs 35-50 lakh whereas the same would cost not below Rs 70-80 lakh in any large city like Noida, Gurgaon or Bangalore.
Age group of most home buyers from Tier II cities is 25 to 35 years for MMR market.
Most of the purchases are happening in sub-INR 2.5 to 3 croresegment.
This generation is investing during promotions, special payment plans, pre-launches and launches
The lead generation grew by a huge 242% during the first quarter of 2018 compared to the first quarter of 2017.
Tier II cities, such as Bhopal, Ahmedabad, Lucknow, Jaipur, Bhubaneswar, Surat, and Indore offer better prospects