All in all, the residential market of Kolkata in 2025 is being characterized by a strong shift towards mid-premium housing. Both developers and buyers are putting money on this segment, and affordable homes comes as a consistent, but less prominent player in the real estate growth narrative of the city.
The new urban centers facilitate commercial real estate to expand with cost-saving and talent-retention.
This is a significant change in the commercial real estate market in India as the rising cities have become focal point of demand, investments as well as expansion of office space. Tier-2 and tier-3 cities are no longer the underperforming shadow of bigger cities in the country, such as Bengaluru, Mumbai and Delhi-NCR, as they are now the drivers of growth due to cost advantage, better infrastructure and retention of talents.
The interest of companies in cities like Indore, Coimbatore, Kochi, Bhubaneswar, Jaipur, Surat and Lucknow has swelled over the past year, when it came to expansion of offices. These places provide vast cost reduction as opposed to the conventional metro stations. Reduced rentals, cheap land supply and decreasing operation costs are allowing companies to maximise the spending and design modern workplaces of superior flexibility. To most organisations, setting up Satellite offices or reduction scale campuses in these emerging markets has turned out to be a strategic solution to diversify and circumvent reliance on metros that are too expensive.
Talent retention has also been one of the most powerful forces of this change. As people reverse migrated during the pandemic and hybrid forms of work became popular, it is skills professionals who tend to choose to live in their home cities or more affordable smaller cities, rather than move to the metros. The firms venturing into these destinations are experiencing improved employee satisfaction, reduced employee turnover as well as improved workforce stability in the long term. This employee-company fit is increasing the attractiveness of the tier-2 and tier-3 cities as business destinations.
This growth story is further being enhanced by infrastructure development. Most of the emerging cities are undergoing the rapid upgrades of roads, metro access, airports, and digital infrastructure. State governments are also facilitating the development of IT parks, industrial zones, and special economic zones and such areas are now favorable to corporate investments. With the increasing connectivity, businesses are able to arrange regional offices to their metro headquarters without having to strain to make the integration smooth.
The emergence of co-working and managed offices is also having a significant role to play. Flexible workspace providers have moved out of major cities aggressively to capture emerging demand in smaller cities by startup, freelancers, and remote-first firms. These move-in ready offices enable firms to conduct without great start-up costs, and thus expand more swiftly and economically. Due to this, there is a gradual increase in commercial absorption in the emerging cities.
A much balanced business ecosystem is also working to the advantage of companies. Less competition on prime office space, less congested and enhanced work-life balance is drawing industries that used to only depend on the metro cities. Global companies are also considering the idea of multi-city distribution, establishing themselves in smaller while well-equipped cities to create resilience and guarantee the continuity of the businesses.
The transition is not without problems as the momentum is strong. The slowness in the speed of regulatory procedures, scarcity of Grade A office supply in some localities and necessity of additional enhancement of the infrastructure remain.
Together with the affordability, a stable workforce, and an expanding infrastructure, these cities are likely to become strong commercial centers in the next few years, creating new growth potential and transforming the commercial landscape of the country.
