2024 will be another landmark year for the realty sector. As developers explore untapped growth areas, the coming year promises to fulfil the aspirations of India’s smaller cities, says Yash Miglani, MD of Migsun Group.
In an exclusive interview with Sanjeev Sinha, Mr Miglani talks about the real estate’s growth trajectory in 2024 and what made 2023 a remarkable year for the sector in Tier 2&3 cities, as he outlines the promises and opportunities that lie ahead, especially in non-metro towns and cities as infrastructure development, affordability, and changing dynamics take centre stage. Excerpts:
As the realty market in major metro cities gets costlier, real estate developers are strategically expanding their footprint in Tier 2 and Tier 3 cities. These are untapped growth pockets, showcasing a dynamic real estate landscape of evolving aspirations and demographics in India’s smaller cities. The thrust primarily is on residential development as 91.6% of the land has been acquired primarily for this purpose, primarily in low-rise and plotted formats. Tier 2 towns like Lucknow offer substantial opportunities for self-occupation and investment.
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2023 has been an excellent year for the realty sector in metros and Tier 1 & 2 cities. What growth trajectory do you foresee in 2024, especially in non-metro towns and cities?
2024 will be another landmark year for the realty sector. As developers explore untapped growth areas, the coming year promises to fulfil the aspirations of India’s smaller cities. The growth in these cities can be attributed to infrastructure development, such as new roads, rail, and other amenities, which have improved connectivity. Additionally, the rise of realty prices in the metro cities has pushed development to Tier 2 and 3 cities where affordable spaces are in demand. Large corporations and industrial houses are also moving to Tier 2 and 3 cities for affordable infrastructure, office spaces, warehouses, co-working, retail, and more. The state government’s boost to infrastructure development and efforts to incentivise economic activities coupled with low cost of living are further propelling realty’s growth in these cities.
How should real estate developers envisage their role in transforming the landscape of affordable housing, particularly in Tier 2 and 3 cities?
Real estate developers are actively participating in government housing initiatives and have been key players in providing affordable housing to middle-income individuals. In Uttar Pradesh, they are partnering with the state government under initiatives such as Pradhan Mantri Awas Yojana (PMAY) in Ghaziabad and Uttar Pradesh Awas Vikas Parishad (UPAVP) in Lucknow. But there is a need to do much more. Central government initiatives such as SWAMIH or Special Window for Affordable and Mid-Income Housing need a renewed thrust. Rising land prices and input costs are other hindrances to affordable housing. The demand is enormous, and the market is ready; all we need to do is to manage supply-side hiccups.
Let’s discuss commercial prospects in the Tier 2 and 3 cities. How do you see it panning out, especially in the context of massive thrust on the residential segment?
Tier 2 and 3 cities in India, often located in industrial corridors, are brimming with untapped potential for economic growth and real estate development. Rising commercial property prices in metropolitan areas have become a significant push factor for businesses to explore Tier 2 and 3 cities. We see a substantial opportunity in the commercial retail space because it lacks good “A Grade” developers and “A Grade” spaces for retail and office use. Of course, the demand and the population are both promising. The budgetary provision to promote urban infrastructure development in Tier 2 and 3 cities will further aid commercial real estate growth prospects.
You recently launched a project in Lucknow under the Pradhan Mantri Awas Yojana (PMAY). What was the project cost and are you also planning any commercial project there?
We launched this project last year and invested Rs 1,000 crore to develop a 3,200-unit high-rise apartment complex in Lucknow under PMAY. The project is located on a 16-acre land parcel at Shaheed Path, offering affordable units at a per sq ft price not exceeding Rs 4,500. Additionally, three lakh sq ft has been earmarked for commercial development. We also plan to extend Migsun’s footprint to different cities, leaving an enduring legacy across India.