Considering an investment option in real estate? Are you looking for flip-and-fix opportunities? The real estate sector is one of the most lucrative investment options today. The value of land continues to appreciate and so does investment in different types of properties such as apartments, villas, homes, gated communities and so on. With cities and urban areas becoming saturated, the price of property has naturally become more expensive. This has pushed investors and builders alike to look beyond prime areas and penetrate untapped markets. Investment in small towns is
Realty Investments in Small Towns
The real estate sector’s growth is determined by the socio-political and economic conditions of the country. Living in the metros with an upscale lifestyle is a dream for many. It is an expensive reality and the current trends only seem to push the prices higher. This narrows the options in terms of buying and realizing a return on investment. However, real estate investment is no longer confined to the big cities. Investors have been exploring the potential of investing in small towns, where you can live a comfortable life at a lower cost. That is a marriage made in heaven!
If you already have a property in a metro, then you are better off investing your next property in developing cities and towns, with potential. This way, you will realize a better capital appreciation over time even if the current property value stagnates. Research indicates that there has been a 45 percent appreciation of real estate properties in Tier II cities. On the other hand, Tier I cities do not show explosive growth.
Based on economic trends, it has been observed that Tier II cities are likely to outdo the Metros due to the following changes that are shaping the market:
· Economic Growth: The IT boom continues to dominate the economy. There has been increased development in manufacturing, IT and non-IT services, including financial services to name a few. This attracts foreign investments due to the lower cost of land and labour, leading to the creation of further developmental opportunities.
· Multiplier Effect: When the economy grows, there are multiplier effects as a result such as the development of the residential sector, employment opportunities, including social infrastructure amenities.
· Affordable Real Estate Costs: In the initial stages of development, the real estate prices are very affordable. This is a good time to invest in plots, villas, apartments or any real estate opportunities.
· Better Quality of Life: Small towns offer a better quality of life at an affordable cost of living. This has been a huge attraction for non-resident nationals and other investors, who are looking to escape the chaotic city life and take a break in the long run.
Overall, it is prudent to invest in such Tier II cities when there are multiple benefits such as availability of property, competitive pricing and long term capital appreciation. It is important to ride the wave and diversify your investment in the right basket.