Where should your next real estate investment be? 17 hotspot cities experts recommend and not what you expect

Emerging Real Estate Hotspots

Colliers has pinpointed these cities as the next big real estate hubs:

North: Amritsar, Ayodhya, Jaipur, Kanpur, Lucknow, Varanasi
East: Patna, Puri
West: Dwarka, Nagpur, Shirdi, Surat
South: Coimbatore, Kochi, Tirupati, Visakhapatnam, Indore

These cities are expected to experience rapid development across various property types, including offices, warehousing, tourism, residential, and senior living. Key drivers of this growth include a shift towards decentralized work environments and a growing preference for tier-two cities.

Factors Driving Growth

Badal Yagnik, CEO of Colliers India, highlights four main factors driving this analysis:

Workspace Evolution: Changes in workspaces are leading to a demand for office spaces in smaller cities.
Infrastructure Growth: Significant infrastructure developments in various corridors are boosting real estate prospects.
Tourism: Spiritual tourism is particularly propelling growth in cities like Amritsar, Ayodhya, Dwarka, Puri, Shirdi, Tirupati, and Varanasi.
Digitalization: Increased internet penetration is transforming cities like Jaipur, Kanpur, and Lucknow into digital hubs.

Specific Trends in Emerging Cities

The report details several trends across these emerging hotspots:

Satellite Office Markets: Coimbatore, Indore, and Kochi are becoming strong markets for satellite offices.
Digitalization: Jaipur, Kanpur, Lucknow, Nagpur, Patna, and Surat are witnessing heightened digital activity.
Spiritual Tourism: Cities such as Amritsar, Ayodhya, Dwarka, Puri, Shirdi, Tirupati, and Varanasi are set to benefit from spiritual tourism.

Future Outlook and Infrastructure Projects

By 2050, India is expected to have nearly 100 cities with populations exceeding one million, in addition to its eight mega-cities. National Infrastructure Pipeline (NIP) and PM GatiShakti projects are pivotal in driving growth beyond Tier I cities. Enhanced connectivity and manufacturing activities are expected to spur demand across warehousing and residential segments in these emerging hotspots. The shift towards hybrid work models is also increasing demand for office spaces in smaller cities.

Digital Penetration and Real Estate Activity

Digital penetration is turning smaller towns into hubs for data centers and smart infrastructure. Cities like Jaipur, Kanpur, and Lucknow are anticipated to see significant real estate activity driven by e-commerce and data consumption, leading to the development of fulfillment centers and warehouses.

Temple towns like Amritsar, Ayodhya, Varanasi, and Tirupati will benefit from spiritual tourism, supported by infrastructure improvements and government policies. This will attract investments in the hospitality and retail sectors.

Vimal Nadar, Senior Director & Head of Research at Colliers India, notes that tech giants and innovative start-ups tapping into the skilled talent pools of emerging hubs are setting the stage for a transformative boom in both office and residential markets. Office rental arbitrage, typically 20-30 percent lower, and affordable housing in these locales create a win-win scenario for companies and employees alike.

India’s real estate future looks promising, with smaller cities playing a crucial role in the sector’s growth. Investors and developers should keep an eye on these emerging hotspots to capitalize on the upcoming opportunities.

(Article based on Colliers Report, published on June 18, 2024)