Certified Financial Planner, Lt. Col. Rochak Bakshi (Retd.), Founder and CEO of True North Financial Services, said that real estate investment has historically not been very lucrative in tier 2 cities and despite the growth in connectivity and infrastructure, these cities have failed to generate the kind of return that would attract investors.
“The cost of managing a property combined with poor rental yields, not-so-great appreciation in capital value and highly illiquid nature make investment in these cities highly risky. Unless required for end-use, investors must opt out of tier 2 cities and instead invest in more liquid and return-generating instruments like mutual funds, PMS etc,” added Bakshi.
The West Zone comprising Ahmedabad, Vadodara, Gandhinagar, Surat, Goa, Nashik and Nagpur contributed 72% to the total sales, as per the report.
The top three cities that witnessed the maximum drop in launches were Sonepat, Panipat and Agra. Only eight cities saw growth in new launches with the top three being Bhopal (268%), Dehradun (100%) and Coimbatore (77%). West Zone contributed 71% to the total launches.
Among state capitals, Bhopal witnessed the maximum rise in new launches at 268% while Trivandrum saw a maximum decline in new launches at 87%. Similarly, Dehradun saw a maximum rise in sales at 47% while Bhubaneshwar and Chandigarh saw a maximum decline in sales at 18% each.