Tier II Cities Prove Good Investment Options
When we talk about real estate investments, a city or locality is considered good for investment when the return on investment (ROI) is high in a short period. One of the key aspects that determine the ROI is the appreciation of capital values in the locality. Tier-II cities across India are now proving to be good prospects for investments due to good appreciation.
Good appreciation in Cities
The National Housing Bank’s Residex is an important tool that determines how the prices are shaping up in a given area. The residex has been monitoring 26 various cities across the country since 2007. These cities include both Tier-I and Tier-II cities. Price appreciation is calculated based on actual transactions across various localities in these cities.
The residex recently released the data of Q4 2013 across 16 cities including Nagpur, Dehradun, Kochi and Vijayawada. The price was compared to the data of Q3 2013. The data also compared capital values of some Tier-II cities in comparison with that of Tier-I cities. The data available shows a good appreciation in Tier-II cities such as Bhubaneshwar and Nagpur compared to cities such as Mumbai, Bengaluru and Chennai.
Nagpur sees highest appreciation
From the data collected from the Housing residex, it is seen that Nagpur witnessed the highest appreciation of 8 per cent, followed by Guwahati with 7.8 per cent and Pune with 7 per cent. Some of the other tier-II cities that witnessed good price appreciation include Surat (6.2 per cent), Patna (6 per cent), Bhubaneshwar (4.7 per cent), Faridabad (2.5 per cent), Indore (2.2 per cent), Bhopal (1.4 per cent), Raipur (1.3 per cent) and Dehradun (1.1 per cent). Cities such as Vijayawada, Lucknow, Jaipur, Chandigarh, Coimbatore and Kochi however witnessed a fall in capital values.
In comparison, Tier-I cities such as Mumbai, Delhi, Bengaluru and Chennai witnessed lower appreciation in capital values. Pune witnessed the highest appreciation with 7 per cent, followed by Chennai with 3.8 per cent, Bengaluru with 3.7 per cent, Delhi with 3.2 per cent and Ahmedabad with 2.5 per cent. Kolkata witnessed a decline of 1.5 per cent.
The higher appreciation in Tier-II cities show that there is a growth in demand for localities in these cities due to the growing infrastructure, connectivity, affordability and social amenities. The growth in capital values in most of the Tier-II cities indicate that these cities are good bets for investments.
