With price corrections and softening of interest rates setting in, real-estate developers are keen on investing in Tier I cities, or metros such as Delhi, Mumbai and Bangalore. “Almost all realty developers are focusing back on Tier I cities as they believe that as of now, expanding to medium and small cities is on shaky ground. Some investors, on the other hand, are wary about working in Tier II and Tier III markets in the short term. They believe fundamentals in these markets with regards to economic activity and consumer base will take some time to mature,” a Ficci-Ernst & Young report said.

According to the report, Delhi continues to be the preferred choice of developers and investors in the real-estate sector, with Mumbai a close second. Some key factors that have helped Delhi retain the number one rank are the fast-paced improvements in physical infrastructure such as the functional metro railway, modernisation of the international airport, road widening projects and dedicated efforts to make the ring roads signal free. Other factors are the emerging flyovers, underpasses, pedestrian walkways, high capacity buses, hotels and townships being developed on account of the forthcoming Commonwealth Games.

“Mumbai has come to second position due to a slow pace of infrastructure development, pushing the city down by a notch,” said the E&Y report.

Hit by recession last year in October, the realty sector seems to be back on the path of recovery. “After a rough phase that lasted for over a year, the real estate industry is on the path of recovery. Especially, the residential real estate segment has witnessed a revival in demand, primarily due to improved affordability,” the report said.

... contd.