The Indian Real Estate sector is undergoing a significant shift, driven by the evolving demands of Generation Z (Gen Z). This tech-savvy, entrepreneurial, and environmentally conscious generation is transforming commercial real estate, particularly in tier II and tier III cities. As Gen Z continues to assert its influence on the market, real estate developers are adapting their strategies to meet the expectations of this dynamic group. From luxury cafes and fine dining to modern workspaces and gaming centres, the demand for new-age amenities is on the rise in these emerging hubs. Real estate players are keenly observing this trend and expanding their projects to cater to Gen Z’s aspirations.
In this article, we will explore how the demand for commercial and residential properties in tier II and III cities is growing, the role of Gen Z in this transformation, and what real estate developers are doing to capitalize on this shift.
The Gen Z Influence on Real Estate Development
The Rise of Non-Metro Cities
The emergence of Gen Z’s influence in smaller cities like Amritsar, Karnal, and Meerut is reshaping India’s commercial real estate landscape. As Santosh Agarwal, Executive Director and CFO at Alpha Corp, points out, these cities are benefiting from enhanced infrastructure, better connectivity, and a growing appetite for modern, tech-enabled workspaces. This shift is being supported by a decentralised work model, which has allowed businesses to look beyond traditional metropolitan hubs for office space.
“Gen Z is reshaping the commercial real estate landscape, particularly in Tier 2 and 3 cities like Amritsar, Karnal, and Meerut,” said Agarwal. “These emerging hubs are benefitting from better infrastructure and a growing demand for tech-enabled workspaces.”
Tech-Savvy, Environmentally Conscious, and Entrepreneurial
Gen Z is not just influencing what is being built, but how it is being built. Developers are now creating commercial assets that cater to the generation’s preference for eco-friendly, tech-integrated spaces. These spaces often incorporate elements like energy-efficient systems, flexible workspaces, and recreational amenities, such as gaming centres, fine dining, and more. Gen Z’s entrepreneurial spirit is also driving the demand for co-working spaces and flexible office layouts that foster creativity and innovation.
“Gen Z culture is far more mature today… They are coming back [from studying abroad] with huge aspirations, and their lives are really world-class,” said Adish Oswal, CMD of Oswal Group. His firm’s Vardhman Amrante group is investing Rs 1,350 crores into real estate projects in Punjab, focusing on Ludhiana and other cities. This investment will cover various real estate segments, including commercial, residential, and hospitality.
Investment and Infrastructure Developments
According to Shrinivas Rao, CEO of Vestian, regional developers have ramped up activity in emerging locations like Ludhiana, Meerut, and Karnal. “Regional developers are delivering customized commercial assets that meet the evolving needs of the new workforce,” Rao said. Along with these regional players, Tier-1 developers are expanding their reach into non-metro cities to tap into growing demand and strengthen their presence.
The India Brand Equity Foundation (IBEF) projects the real estate sector to grow at a compound annual growth rate (CAGR) of 9.2% from 2023 to 2028, a positive indicator of the sector’s growth potential in these new hubs.
Emerging Trends in Tier II and III Cities
The Role of Startups and Skilled Workforce
The growth of startups in Tier II cities is also contributing to the surge in demand for office spaces. Approximately 15% of India’s tech talent currently resides in smaller cities, making them increasingly important in the country’s tech landscape. The availability of a skilled workforce, coupled with affordable real estate, is making these cities attractive to both developers and businesses.
Vimal Nadar, National Director & Head of Research at Colliers India, believes that the demand for commercial real estate in these smaller cities will continue to rise. “These smaller cities are likely to become the next growth engines for India’s office market, supplementing the established Tier 1 markets,” Nadar said.
Retail and Recreational Developments
Luxury cafes, gaming centres, fine dining restaurants, and malls are also becoming integral parts of the evolving real estate ecosystem in Tier II and III cities. Developers are capitalizing on this demand by incorporating retail and recreational spaces into their projects. With an increase in disposable income and changing lifestyles, these cities are quickly becoming hubs for modern amenities.
Summary Table: Key Trends in Tier II and III City Real Estate
| Key Trend | Impact on Real Estate |
|---|---|
| Demand for Modern Workspaces | Rise in demand for tech-enabled, flexible office spaces |
| Infrastructure Growth | Enhanced connectivity and better infrastructure support |
| Rise of Startups | Increased demand for office spaces and co-working spaces |
| Retail and Recreational Spaces | Surge in demand for luxury cafes, malls, and gaming centres |
| Gen Z’s Entrepreneurial Spirit | Increased focus on eco-friendly, tech-integrated spaces |
Expert Quotes:
- Santosh Agarwal, Executive Director, Alpha Corp: “Gen Z is reshaping the commercial real estate landscape, particularly in Tier 2 and 3 cities like Amritsar, Karnal, and Meerut. These cities are benefiting from better infrastructure and a growing demand for tech-enabled workspaces.”
- Adish Oswal, CMD, Oswal Group: “Gen Z culture is far more mature today. The youth, especially in Punjab, are returning from their studies across India and the world, with huge aspirations and a desire for world-class living.”
- Shrinivas Rao, CEO, Vestian: “Regional developers are delivering customized commercial assets that meet the evolving needs of the new workforce, and Tier-1 developers are expanding into these emerging cities.”
Frequently Asked Questions (FAQ)
Q1: How is Gen Z influencing real estate in Tier II and III cities?
Gen Z’s preferences for tech-enabled, eco-friendly spaces are reshaping commercial real estate in smaller cities. Developers are focusing on creating flexible, modern workspaces, along with recreational amenities like gaming centres and fine dining.
Q2: Why are developers focusing on Tier II and III cities?
Developers are focusing on these cities due to improved infrastructure, better connectivity, and a growing demand for modern workspaces and recreational facilities, particularly driven by the aspirations of Gen Z and the rise of startups.
Q3: What are some of the emerging hubs in India’s real estate sector?
Cities like Amritsar, Karnal, Meerut, and Ludhiana are emerging as key hubs for real estate growth, with investments being made in commercial, residential, hospitality, and industrial sectors.
Q4: How are startups contributing to the real estate boom in smaller cities?
Startups are driving demand for office space and co-working facilities in Tier II and III cities. The availability of a skilled workforce and affordable real estate is attracting startups to these locations.
Q5: What is the projected growth for India’s real estate sector?
According to the India Brand Equity Foundation (IBEF), the real estate sector in India is projected to grow at a CAGR of 9.2% from 2023 to 2028, indicating significant opportunities in both metro and non-metro cities.