Virtual housing demand grows in tier 2, 3 cities: Report
Online enquiries and virtual demand for housing units is gaining momentum in the tier 2 and tier 3 cities post the nationwide lockdown, according to a report by Housing.com.
The report titled “Time for Internal Globalisation – Small Cities Setting the Tone for Revival” noted a surge in virtual residential demand from ‘shadow cities’ (Tier 2 and 3 cities). The recently launched Virtual Residential Demand Index states that the demand from small cities had been increasing steadily but saw a significant spike in August 2020.
Overshadowing the metros, the index jumped to 210 points for ‘shadow cities’ compared to 150 for the metros post the nation entering into Unlock Phase 4.0
“Reverse migration of the corporate workforce and increased flexibility due to remote working is one of the key drivers cited for this surge in virtual residential demand,” the report said.
It noted that, though development in tier 2 and 3 has moved at a snail’s pace, the current pandemic driven crisis, has brought structural changes, which has notably accelerated the process of deeper market penetration in ‘shadow cities’ across sectors.
Driven by the thrust of increasing digitisation, and an aspirational consumer cohort in the ‘shadow cities’, these cities now are exhibiting a readiness for big brands across the categories of fashion, luxury cars, jewellery and real estate among many others, it said.
The disruption in the economy and job uncertainty caused by the coronavirus pandemic led to a significant ‘reverse migration’ of the population — both informal migrant population and employees in the formal service sector who have either lost their jobs or are working remotely.
“This reverse migration, with workforce moving back to their hometowns or smaller cities is one of the key drivers that is rallying the growth of not only the e-commerce platforms but is also surging the online search traffic for buying and renting residential spaces in the ‘Shadow Cities’,” the report said.
“On our Housing.com platform during the last few months, we have seen a noteworthy increase in interest levels for residential properties especially from non-metro cities such as Amritsar, Chandigarh, Vadodara, Nagpur, Vijayawada and Coimbatore,” said Dhruv Agarwala, Group CEO, Housing.com.
The ‘Virtual Residential Demand Index’ shows this trend more saliently post May 2020, he added.
As per the report, the interest in the smaller cities has been gradually increasing and the share increased to 27 per cent in the first half of 2020, as compared to 18 per cent in the same period in 2019.
Cities such as Agra and Amritsar witnessed an impressive growth of more than 100 per cent in the virtual residential demand over pre-Covid times, while cities of Vadodara, Ludhiana, Mangaluru, Chandigarh and Lucknow saw more than 80 per cent growth in the residential demand in the same period.
In contrast, the top eight cities have witnessed a relatively lower growth in virtual demand for residential spaces over the Pre-Covid period.
Agarwala said: “Reverse migration driven by remote working could have “powerful reverberations” on the future of residential demand.”