Soon, Surat, Jaipur To Be India's New Metro Cities
With increased urbanisation and space crunch that the big metro cities are facing, businesses and marketers are eyeing Tier 1 and Tier II cities of India. This opens opportunities for other cities to come up. Jaipur and Surat are expected to come up as new metros. The two cities will cross over a household income of more than Rs 80,000 crore (Rs 800 billion) by 2018 as per an Ernst & Young (EY) report titled 'India's growth paradigm: How markets beyond metros have transformed'.
Good economic growth will boost demand for housing in the two cities
The cities are projected to record real GDP growth of 8.7 per cent and 10.3 per cent respectively from the period ranging from 2015-20. As an outcome of this, the total consumption level will reach 75-80 per cent of metros like Pune and Ahmedabad. Good economic growth in the cities will naturally leave people with high level of disposable income. This means they have more income to save and spend after taxes leaving a positive impact on the housing sector.
The report also highlights 42 new wave cities. These cities are expected to grow at 8.9 percent in comparison to the traditional eight metros which are expected to witness growth at 8.3 per cent CAGR in the 2015-20 period.
The 42 new wave cities are categorised into a set of two fresh metros, 10 next scale of high-potential cities and 30 additional emerging markets. The 10 cities with high potential include Bhopal, Chandigarh, Indore, Jabalpur, Kanpur, Lucknow, Nagpur, Patna, Vadodara and Vizag.
Why Surat and Jaipur?
The favourable demographics of Jaipur and Surat turns out to be one of the prime factors that attract marketers. The marketers have a large consumer base because of migrant inflows and high birth rates. The population in the city saw an increase of around 1.7 million and that too within the period ranging from 2010-15. One of the strongest point of these two cities is that 22 per cent of their population varies within the range of 15 to 24 years, compared to other metros where it is 20 per cent. This is great as marketers have young and educated workers to target.
Rising investment activity
In EY's 2015 Attractiveness Survey, global investors have ranked Jaipur and Surat as the first and fifth most coveted investment hubs after the metros. Various infrastructural projects coming in these two cities are the reasons that attract investors. Under the smart cities mission, development projects of around Rs 2,500 crore (Rs 25 billion) are planned for both the cities. Work is going on Surat's airport extension which will be completed in 2017. In 2015, Jaipur came up with country's sixth-metro rail system. Along with this, the Delhi-Mumbai Industrial Corridor will further benefit the real estate of the two cities.
In 2015, Jaipur's per capita income of Rs 2 lakh (Rs 0.20 million) was the highest in India. Whereas Surat's per capita income was Rs 1.3 lakh (Rs 0.13 million). Although it was lower but still comparable to Ahmedabad. Along with this, the increased level of consumption has further created more opportunities for the marketers.