Railway Corridors and Metro Expansions to Boost Real Estate in Emerging Cities

July 29, 2024: Finance Minister Nirmala Sitharaman, in the Interim Budget 2024, announced the establishment of three major corridors: the port connectivity corridor, the energy, mineral, and cement corridor, and the high traffic density corridor. Additionally, 40,000 normal rail bogies will be converted to Vande Bharat trains to enhance passenger safety, convenience, and comfort. Key rail infrastructure projects, including Metro Rail and Namo Bharat, will also be expanded to more cities. These initiatives, part of the PM GatiShakti scheme and the National Logistics Policy, with a massive budget allocation of Rs 100 lakh crore, aim to decongest railway infrastructure by 51% by 2024-25.

These infrastructural developments are expected to provide a substantial boost to the real estate sector, particularly in Tier 2 and Tier 3 cities. By reducing travel times and enhancing connectivity, these projects are making these regions more viable for real estate development and investment.

Enhanced Connectivity Driving Migration and Development

Mohit Goel, MD, Omaxe, notes, “The recent infrastructural developments are set to accelerate the transformation of Tier 2 and 3 cities. As migration from Tier 1 cities intensifies, the real estate sector is poised for substantial growth. We are already witnessing increased demand, and with ongoing construction and timely project completions, these cities are on track to become major real estate hubs. The future looks exceptionally promising as we align our strategies to meet the evolving demands in these burgeoning markets.”

Apart from generating new job avenues, the demand for housing and commercial spaces has risen significantly due to these developments. Developers have shifted their focus to Tier 2 and 3 cities like Lucknow, Chandigarh, Ayodhya, Moradabad, Panipat, Bareilly, Indore, and Udaipur, among others.

Deepak Kapoor, Director, Gulshan Group, highlights, “The substantial growth in infrastructure has allured MNCs and new startups to set up in these cities. This has attracted individuals to shift from Tier 1 cities to Tier 2 and Tier 3 cities, where they are finding the same comfort and quality of life but at a lower cost, thus pushing prime real estate developers to invest in these cities.”

Major Infrastructure Projects as Catalysts

Significant infrastructure projects in these cities are further driving this growth. The Lucknow-Kanpur Expressway, spanning over 62 kilometers with six lanes, will reduce travel time from two hours to just 50 minutes. The Lucknow Metro Rail Project will cater to more than 200,000 people per day, easing commutes to previously hard-to-reach sections. Similarly, Jaipur Metro Phase II will connect various residential and industrial areas, providing seamless connectivity to Jaipur Airport.

Uddhav Poddar, MD, Bhumika Group states, “With such enhancements in infrastructure and the boom in employment generation in Tier 2 and Tier 3 cities, it will open up opportunities for developers to develop world class projects in these cities, and such developments will further enhance the quality of living and overall growth of these cities.”

Economic Benefits and Future Prospects

These major developmental projects are creating an ecosystem for businesses and retail outlets that will flourish over time. Several multinational companies are setting up operations in these corridors to benefit from lower operational costs compared to Tier 1 cities. Improved employment opportunities and infrastructure growth are fueling demand for office spaces, warehouses, and retail locations. Developers are already investing in prime locations to meet the growing demand for both housing and commercial segments.

Ishan Agarwal, Co-Founder & COO, Aurika Homes, comments, “With such high-end infrastructural projects being undertaken by the government, focussing on physical and digital connectivity, to enhance the living experience in Tier 2 and Tier 3 cities, we are assured that there is a bright future lying ahead for the Real Estate sector in these cities.”

According to experts, property prices in these cities are expected to appreciate as connectivity and economic activities increase. Tier 2 and Tier 3 cities will prove to be good investment destinations for developers and end-users, contributing to the overall economic development of these regions.