Real estate investment has historically not been very lucrative in tier 2 cities. Despite the growth in connectivity and infrastructure, these cities have failed to generate the kind of return that will attract investors.
The cost of managing a property combined with poor rental yields, not-so-great appreciation in capital value and highly illiquid nature make investment in these cities highly risky. Unless required for end-use, investors must opt out of tier 2 cities and instead invest in more liquid and return-generating instruments like mutual funds, PMS etc.
These investments would not only give higher returns, but also peace of mind as it doesn’t have to be handled, unlike property where active management is needed.
