Living abroad for years, Anil’s longing for a home in India intensified. With dropping home loan rates, the prospect of owning a property became enticing. Yet, the conundrum of Tier 1 versus Tier 2 city investment loomed large.
Understanding Tier 1 and Tier 2 Cities
The distinction is clear: 8 major cities including Ahmedabad, Bengaluru, Chennai, Delhi, Hyderabad, Kolkata, Mumbai, and Pune belong to Tier 1, while a whopping 97 cities fall under Tier 2 classification. The criteria? Population benchmarks set by the Sixth Central Pay Finance. Cities with over 1 lakh residents are Tier 1, while those with 50,000 to 99,999 inhabitants fall into Tier 2.
Deciphering the Best Investment
Affordability: Tier 2 cities shine in affordability. Anil noticed the stark contrast between spacious, budget-friendly houses in Tier 2 and the financial hurdles of Tier 1 cities like Mumbai or Delhi. Opting for a Tier 2 property seems prudent, especially for those on a tight budget. With competitive home loan rates prevailing, even Tier 1 cities become feasible.
Public Services: There’s a misconception that Tier 1 cities reign supreme in public services. However, Tier 2 cities boast commendable infrastructure including shopping complexes, entertainment hubs, and healthcare and education facilities. Yet, the dearth of job prospects remains a prevalent issue in Tier 2.
Return on Investment: High real estate prices in metros translate to lucrative rental incomes. However, the elevated cost of living in these cities often counterbalances these gains.
Making the Choice
The decision boils down to diverse factors. Tier 2 cities allure with their low property costs, affordable living, growth potential, and government focus on development. Conversely, Tier 1 cities beckon with their abundance of job opportunities and superior lifestyle offerings. The key lies in scrutinizing property locations and their inherent qualities.
Final Thoughts
Be it a Tier 1 or Tier 2 city, the dream home is within reach. Consider the location and intrinsic characteristics of properties. With various options available, applying for a home loan paves the way to turning your dream into a reality.
