Home prices in small towns may spike on infrastructure focus: Report

New Delhi: Home prices in small cities and towns are likely to see a gradual rise on increased infrastructure activities and real estate developers focusing on affordable housing, says a report.

Price growth will be higher and faster in cities coming under the smart cities programme, according to a report by Anarock Property Consultant.

"After a protracted period where interest for real estate investment was concentrated primarily in the metros, we are now seeing a resurgence in smaller cities," said Anuj Puri, chairman, Anarock Property Consultant in a report.

Home prices in smaller towns and cities start from a lower base, owing to cheaper land prices and builders being more aligned towards affordability.

According to the report, many of these cities are seeing increasing economic activity and infrastructure growth, to some extent reducing the outward migration to the metros.

"With increasing demand, one can expect prices in these cities and towns to assume a gradual upward trajectory. Price growth will be higher and faster in cities coming under the smart cities programme," said Puri.

The report says movement from larger metros to smaller cities is a welcome dynamic which will eventually result in a more uniform spread of real estate demand across the country, and reduce the pressure on the larger cities.

From the investment perspective, the report said, "investors with better capitalisation may wish to focus on the larger cities, depending on their risk appetite, while others would be more interested in reviving small towns."

It further noted that not all small towns are performing uniformly well, though it is true that supply will generally follow demand.

"In other words, cities which are performing well economically will attract more migrant population which will need rental housing," the report concluded.