Including Tier 2 cities in smart cities list will help bring in foreign funds

Real estate markets in cities such as Varanasi, Agra, Kanpur, Jalandar that have made it to the list of 27 smart cities announced recently will also lead to improvement in the realty market in these areas

The inclusion of Tier 2 cities and satellite towns of metro cities such as Varanasi, Agra and Kanpur in Uttar Pradesh and Jalandar in Punjab in the list of 27 smart cities announced last week will improve the overall quality of life with the introduction of state-of-art infrastructure and technology and also help bring in foreign funds to the cities. Realty market sentiments will also improve, say experts associated with the international property consultancy Colliers International.

The inclusion of Tier 2 cities such as Varanasi in the smart cities list will help bring in foreign investments.(Getty Images/iStockphoto)

“The planning of smart cities in India will bring benefits to the country, providing an opportunity for suppliers to offer better products. Inclusion of Tier 2 cities and satellite towns of metro cities in the list of smart cities will siphon funds into these smaller cities improving their overall quality of life. If the Smart Cities Mission is executed with focus and regulation, it will also usher in foreign capital in these cities as investors will have more confidence investing in successful business models.” says George McKay, South Asia Director, office and integrated services at Colliers International India.

Currently, real estate investment potential is limited to Tier I cities, but smart cities would mean advancement of real estate in Tier 2 cities as well. Commercial and residential space is getting scarce in Tier I cities like Mumbai and Delhi leading to congestion and higher densities. Upgrading of technology in commercial space offering services such as high-speed internet, smart workstations and automated systems along with competitive rates may push some enterprises to expand to Tier 2 cities. Smart city transport projects will also improve connectivity from Tier I to Tier 2 cities making them viable for businesses. Residential markets will also thrive if new businesses come in Tier 2 cities, says the international consultancy.

Recently, 27 cities were selected under the Smart Cities Mission, bringing the total to 60 cities. Maharashtra topped the list with five cities, Tamil Nadu and Karnataka were second with four cities each followed by Uttar Pradesh with three cities. These cities will receive Rs 200 crore from the Central government in the first year and Rs 100 crore over the next few years.

Five cities in election-bound Punjab and Uttar Pradesh, including Prime Minister Narendra Modi’s constituency of Varanasi, have made it to the Centre’s third list of smart cities that will get funding for initiating urban reforms.

The new cities are from 12 states and have proposed an investment amounting to Rs 66,883 crore under their respective smart city plans. The amount includes Rs 42,524 crore in area-based development (79% of the total) and Rs 11,379 crore (21%) in technology-based pan city solutions.