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India’s Tier II Cities Can Be Next Gold Mine for Branded Homes

By Taran Chhabra

Not very long ago, a lavish living space with topline amenities such as valet services, private yoga deck, spa and wellness centre, wine cellar, cigar lounge and in-house dining would have looked like a distant dream for many Indians. Exclusive, luxury and lavish living is not new to the country, but it was mostly limited to the very few, mostly business tycoons, celebrities, and sportsmen.

Things have changed. As the economy shifts into top gear, affluence has become more democratic. A new crop of rich individuals, comprising the C-suites, consulting mavens, self-made business-men/women, start-up founders, and creative wizards are increasingly coming on the scene. Like every walk of life, the new cohort of confident and well-heeled individuals are also influencing the property market.

There is a significant jump in demand for aspirational and well managed living. The pandemic has further taught people the importance of living unique lifestyles centred around meaningful social interactions, holistic wellness and overall comfort. This is fuelling demand for branded homes in India, which is disrupting the premium property market place very fast. Branded homes have existed in the past, but it is in the last three or four years that the niche concept has become more mainstream.

Buyers are now willing to pay a premium to get access to top notch amenities and facilities. While opulent social lifestyle is important, the significance of overall wellness, comfort, and a curated living is also taking centrestage.

According to research by SKYE, the market for branded homes is sized at around ₹27,000 crore in India, comprising 10 per cent of the global supply lines. Volume wise, it is pegged at around 2,900 units. Both hospitality and non-hospitality players are actively participating in the space.

Potential for India’s Rising Tier II Cities

Branded homes are mostly a metro affair, with Delhi-NCR contributing to around 54 per cent of the supply. This is followed by Mumbai (14 per cent) and Bangalore (12 per cent). Pune also contributes a healthy 9 per cent.

To believe, however,  that the segment will continue to prosper only in the bigger cities might not be a prudent idea. The non-metros in India look equally appetizing to the concept.

Cities such as Chandigarh, Ahmedabad, Indore, Cochin, etc. have grown enormously over the years, bridging their gap with bigger metros. Their residents enjoy relaxed living, better employment opportunities, improved healthcare services, and elevated living standards. 

Dotted with swanky malls, glitzy commercial towers, modern townships, suburban transit lines, airports, 5-star hotels, etc; they offer a lifestyle which at par with metro. Many start-ups and well-established corporates are now readily moving to Tier II cities lured by increase in potential opportunities. Besides, most of these cities have unrivalled family wealth. Average workforce is well-travelled and aware.

This also means, just like their peers in metros, lifestyle upgrade is a key motivator in Tier II cities. This is feeding demand for luxury and comfort.  There is visible appetite for professionally managed properties that can offer more relaxed and engaging lifestyle.

This makes branded homes a viable option in such places as well. It should not be a surprise if we actually start seeing such projects breaking ground in the next two or three years.

People there are investing generously in latest branded watches, cars, and apparels. Similarly, they won’t be hesitant to pay extra for premium housings, provided right values are delivered.

Tier II cities are also understanding the significance of smart investment, which means they will be intrigued by the idea of long-term asset creation. Branded homes can be a very good investment choice in the longer run. Presence of brands ensures no compromise on immaculate design, aesthetics, and lifestyle features. It also means reaping higher appreciation, thereby giving better ROIs in the mid to long term timeline. There are also possible opportunities for long rental, corporate leasing, medical vacations etc. which can unlock new streams of cash flow.

The author is Director, SKYE Hospitality

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