Crisil reports smaller cities as the new focus for developers

According to the research report by Crisil, titled 'Real(i)ty Next: Beyond the Top 10 Cities of India", large real-estate developers are getting attracted to the smaller cities due to the price stability and growth prospects provided in these areas. The affordability in smaller cities, as the prices in the areas have not risen much, are leading the developers to shift their focus from metro cities towards the smaller cities. As per the report, the price increase in the smaller cities was noticed to be 10-12% over the years up to April 2011, while it rose by 25-30% in the large cities, in the same period.

Many large developers have already established themselves in Bhopal, Lucknow, Indore, Jaipur, Nagpur and Coimbatore, and they are on a spree of acquiring lands in these regions for future projects and this led to increased land banks there.
Further, the report has predicted that certain smaller cities will witness a rise in the sales of new residential apartments in 2012 and these cities include Bhopal, Bhubaneswar, Coimbatore, Indore, Jaipur, Lucknow, Nagpur, Surat, Vadodara and Visakhapatnam. The approximate amount was recorded to be Rs 18,000 crore in 2012. The report further added, “In contrast, prices are likely to increase only in four of 10 large cities–Ahmedabad, Bengaluru, Chandigarh, Chennai, Hyderabad, Kochi, Kolkata, Mumbai, National Capital Region and Pune."

Commenting up on the research, Prasad Koparkar, head, industry and customised research, Crisil Research said, “The proportion of buyers taking home loans is relatively lesser in these smaller cities. A gradual increase in penetration of home loans would boost demand. Moreover, a shift in preference from independent houses to apartments will also support volumes."

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