Five cities from south India top the best Tier-II cities list

  • HT Estates Correspondent, None
  • Updated: Sep 18, 2015 21:05 IST
General view of Kochi city, Kerala in south India

Kochi has emerged as the top Tier-II city in India due to increased housing demand and project execution. Regionally, southern cities are at the top followed by western and central cities. Jaipur in the north is at number six. The city, along with Indore, achieved the highest sales in the year of project launches among all Tier II cities in the country, according to the annual report by PropEquity on the top 19 Tier- II cities in India.

Kochi, proposed to be one of the smart cities, is fast becoming home to emerging software companies. Kochi has also pipped the state capital Thiruvananthapuram, which finished at number five in the PropEquity report. Kochi bagged the top positions because of its superior connectivity, economic activity, project delivery track record and low inventory, the report said. The city also saw the highest absorption in new launches.

Overall, the top six cities have achieved very close cumulative numbers (in the range of 12.3 to 13.6), based on which rankings have been calculated. On a regional level, it is not just Kochi, which has done well from the southern region. Vishakapatnam is at number three, Thiruvananthapuram at number five, Mangalore at number seven, Goa at number nine and Coimbatore at number ten. Kochi is followed by Nashik at number two and Vadodara at number four, both from western region.

The top 10 rankings consist of six cities from south India, two from west India, and one each from central and north India. Only one city from north India, Jaipur, stood sixth. The 10 parameters on the basis of which the cities have been selected include price, supply, absorption, inventory, and new launch trends. The study looked at execution delays and the size of the market in value terms.

The study also found that the total market size of the 19 Tier II cities in terms of annual sales stood at R32,600 crore, which is 20% of the total market size of 14 Tier-I cities. Overall, the new residential supply in the top 19 Tier-II cities has fallen by an overwhelming 64% in the last two years, as against a fall of 40% in top 14 Tier I cities, in the same period.

Residential absorption in the 19 Tier-II cities has fallen by 17% in the last two years, as against a fall of 32 % in the top 14 Tier-I cities, in the same period. The Tier-II markets are clearly end- user driven, says the report. The launch prices of Tier-II cites increased at an annual rate of 9% over a period of two years compared to 10% for Tier-I cities.

“Kochi has done relatively well on several parameters including absorption in new launches, construction, committed to construction completed, and CAGR of absorption. These reasons helped the city get the top rank in our study. Although Tier-II and Tier-III cities have performed well, they too have been affected by the slowdown,” says Samir Jasuja, MD and founder of PropEquity said.

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