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By 2050, India is expected to have nearly 100 cities with populations exceeding one million, in addition to its eight mega-cities, according to a report by Colliers India.
The report, titled “Equitable Growth and Emerging Real Estate Hotspots,” highlights the growth potential of these cities across various sectors.
Emerging Cities Drive Economic Growth
The report identified 30 high-potential cities poised for significant development. Of these, 17 cities are experiencing growth across multiple asset classes, fueled by infrastructure development, digitization, and a surge in spiritual tourism.
“Smaller towns are emerging as dynamic contributors to India’s economy, driven by improved infrastructure, affordable real estate, skilled talent, and government initiatives,” said Badal Yagnik, CEO of Colliers India.
Hybrid Work and E-Commerce Boost Smaller Towns
The rise of hybrid work models is prompting companies to establish satellite offices in smaller towns. This trend, along with rapid digitization, is enhancing the prospects for warehousing and data centers. The proliferation of e-commerce is driving the need for fulfillment centers and distribution hubs, supported by smart infrastructure developments.
As India progresses towards becoming the world’s third-largest economy, these emerging cities are expected to play a pivotal role in its growth trajectory.
Colliers’ comprehensive analysis assessed the real estate attractiveness and growth potential of over 100 cities based on various social, economic, financial, and real estate-specific parameters.
Infrastructure Development: A Key Catalyst
Infrastructure growth remains a crucial factor for real estate development across India. Enhanced connectivity and increased manufacturing activity, driven by flagship projects under the National Infrastructure Pipeline (NIP) and PM GatiShakti, are expanding growth centers beyond Tier I cities.
This expansion is anticipated to boost the economies of smaller towns, triggering real estate activity, particularly in warehousing and residential segments.
High-Potential Cities Across India
The 17 high-potential cities identified in the report are spread across different regions:
North: Amritsar, Ayodhya, Kanpur, Lucknow, Jaipur, Varanasi
South: Coimbatore, Kochi, Tirupati, Visakhapatnam
East: Patna, Puri
West: Dwarka, Nagpur, Surat, Shirdi
Central: Indore
Badal Yagnik noted, “This growth is set to propel the real estate sector to an estimated $1 trillion by 2030 and potentially $5 trillion, a 14-16% share in GDP by 2050. Significant momentum is expected across residential, commercial, retail, hospitality, and industrial segments.”
Digitization Spurs Real Estate Activity
Increased digitization is expected to significantly boost real estate activity in smaller towns, especially in warehousing and data centers. The expansion of e-commerce will lead to the development of fulfillment centers, warehouses, and distribution hubs in strategic locations.
The rise in data consumption will drive the development of data centers and smart infrastructure, enhancing the attractiveness of these towns for real estate investments.
Colliers’ analysis on digitization included factors like population, GDP per capita, online purchasing propensity, and digital payment adoption.
Cities such as Jaipur, Kanpur, Lucknow, Nagpur, Patna, Surat, and Visakhapatnam are expected to witness heightened real estate activity driven by digitization.
Spiritual Tourism: A Growth Driver
Bolstered by government policy support and infrastructure developments, spiritual tourism is poised to be a critical growth driver for several temple towns in India.
Improvements in infrastructure and connectivity through enhanced roads, flagship trains, and new airports are expected to attract organized real estate players to these spiritual destinations, particularly in the hospitality and retail segments.
Cities identified for significant growth driven by spiritual tourism include Amritsar, Ayodhya, Dwarka, Puri, Shirdi, Tirupati, and Varanasi.
With a focus on infrastructure, digitization, and spiritual tourism, Colliers India’s report underscores the vast potential for real estate development in emerging cities. As India continues to grow economically, these cities are set to become major contributors to the nation’s progress, driving significant activity across various real estate segments.
