Today, was reading news at Times Of India which quoted Confederation of Real Estate Developers' Association of India (CREDAI) survey report to note that four tier two cities, Coimbatore, Salem, Trichy and Madurai, will be the emerging hotspots and drivers of Tamil Nadu economy in the coming years. Well, this mirrors with another report published in Economic Times during the month of May 2015 which mentioned that the “top cities are no longer the preferred choice for real estate investment by young professionals, according to a recent survey by property research firm Track2Realty”. The ET report mentioned that “More than half of the respondents, about 57%, say they would prefer to stay in rented apartment in prime cities like Delhi, Mumbai, Pune, Kolkata, Bangalore and Ahmedabad and invest in cities like Lucknow, Jaipur, Ahmedabad, Surat, Patna, Ranchi and Bhopal for better appreciation potential. As many as 70% with disposable income find a hill station or holiday home outside metro better to invest than to buying a second home within the city. Better return on investment in tier II and III cities, low rental values in metros and shifting job locations for youth were cited as the major reasons for this growing trend of investments in smaller cities.” The TOI report reflects the Govt’s mood to invest in Tire II cities. “tier II cities have never got their due though they collectively contribute more than 50% to the state economy's growth, said CREDAI Tamil Nadu president Ramesh Bafna. "Each one of the four tier II cities has a potential to attract investments to the tune of Rs 50,000 crore, provided the government, industrial bodies and developers give a collective push," he said. Promotion of tier II cities would help put brakes on migration of villagers to the state capital, said Akshaya MD T Chitty Babu. "All our tier II cities have adequate infrastructure to absorb big time investment. As large tracts of land are available at cheap rates, it makes economic sense to set up manufacturing hubs in these cities," said Babu.”
Interestingly, another global report published by the Wall Street Journal in mid of January 2015 focuses on a trend which predicts a shift of Millennials from urban life to suburbs in USA. It states “a survey based on responses from 1,506 people born since 1977, found that most want to live in single-family homes outside of the urban center, even if they now reside in the city.” The survey, which was released at the association’s convention in Las Vegas, found that 66% want to live in the suburbs, 24% want to live in rural areas and 10% want to live in a city center. One of the main reasons people want to relocate from the city center, she said, is that they “want to live in more space than they have now.” The survey showed 81% want three or more bedrooms in their home. Though the report states “The survey results, though, could be skewed because they included only millennials who first answered that they bought a home within the past three years or intended to do so in the next three years. That excluded young people who intend to rent for many more years, which is a large and growing group, in part because of hefty student debt and the tight mortgage-lending standards of recent years.”
This reminds me of a focus group conversation which we have organized with 30 something young IT professionals in Chennai and Bangalore who had a prevalent dream of “becoming farmers.. soon”. Everybody wanted to have a “home” near to city (say, 2 hours of drive) and many even invested in purchasing lands. Well, they also stated that the ‘dream’ might be only to have a ‘weekend home’ cause the facilities they are habituated with (wifi, malls, AC, smooth roads, good restaurants etc.) might not be available in suburbs.
In India, the millennials are still rooted with ‘city dream’ but the 30+ wants to “shift”, at-least in weekends. Though Govt. plans to build better infrastructure but it seems to be far fetched dream cause, a city not only needs the infrastructure but also the ‘mindset’ to become liberal and accept ‘change’. This might be a rare phenomenon in SEC II cities.