Developers capitalise on tier II villa craze for real estate gains

Tier II villa boom: Increasing interest in villas in Tier II cities is driving a boom in the real estate sector, as developers capitalise on lower land values and higher profit margins in these areas. The surge in demand for housing, particularly villas, is attributed to rising property prices in top cities, enhanced economic activities, and the presence of robust amenities like schools and hospitals in Tier II cities. Luxury villas in Tier II cities are priced between Rs 1 to 2 crore, significantly lower than the starting prices in cities like Delhi (Rs 7.5 crore) and Mumbai (Rs 75 crore), say experts.

Villa investment hotspots

Cities such as Ahmedabad, Surat, Nasik, Jaipur, Mysore, Kochi, Thiruvananthapuram, and Chandigarh have experienced substantial demand for villas. "The appeal lies not only in residential purposes but also in the potential for lucrative investments, attracting homebuyers and developers alike," said Jetaish Gupta, Co-founder, Adore Group. 

Lower property rates and the availability of well-located land parcels contribute to the popularity of villas in these cities.

In the period from January to September 2023, 35 prominent domestic and international retail brands expanded into 14 Tier II cities, indicating a growing interest in high-street brands. Lifestyle choices and long-term investments are driving the rising interest in villa ownership, with people seeking personalised and expansive properties for future appreciation. The real estate cycle is expected to maintain upward momentum, with villas anticipated to witness increased traction in the coming years.

Pan-India villa surge

The demand for villas extends beyond Tier II cities, with a report by NoBroker revealing a 32 per cent increase in demand in Bangalore, followed by 25 per cent in Delhi NCR, 30 per cnt in Mumbai, and 27 per cent in Hyderabad compared to pre-COVID years. The luxury segment is witnessing heightened demand for spacious and upscale properties, not confined to metropolitan areas. Plotted developments and villas are preferred, reflecting a broader trend toward diversification in the real estate market, as homebuyers seek residences and strategic investment options in regions beyond major urban centres.