Housing Prices in Tier-2 Cities Surge 63% in 5 Years

NEW DELHI — An unprecedented change is taking place in India’s real estate sector. Non-metropolitan centers are witnessing fast-appreciating property values, based on a research report dubbed 'India's Next Real Estate Markets', released jointly by CII and real estate consulting firm Knight Frank India. In a revelation made through the report, Housing Prices in Tier-2 cities have seen an amazing 63% increase within the last five years compared to their metropolitan counterparts in India.

During the period 2021-2026, property prices in the 11 important Tier-2 cities witnessed a 63% rise in comparison to just a 42% growth witnessed in the eight most important metropolitan cities, including Delhi-NCR, Mumbai, Bengaluru, and Hyderabad. On average, the capital value of these rising markets stands between ₹4,500 and ₹13,500 per sq ft.

The study evaluated 11 high-potential markets, namely Lucknow, Goa, Bhopal, Coimbatore, Bhubaneswar, Chandigarh Tricity, Indore, Jaipur, Kochi, Nagpur, and Visakhapatnam. In the last decade, the price of residential properties in these non-metros has witnessed a CAGR of 8%, twice as high as that of the eight best metros, which stands at 4%.

According to industry experts, there are three major reasons for the same:

• Infrastructure Acceleration: Mass expansion of expressways, modern airport terminals, and regional metro connectivity has seamlessly linked secondary markets to central financial centers.

• Evolution in Buyer Preferences: Post-pandemic workplace flexibility and hybrid models have altered housing demands. Buyers in emerging cities are increasingly leaving standalone housing to invest in integrated, amenity-rich gated communities.

• Commercial and Industrial Expansion: Non-metro regions are evolving into independent economic engines. Increased IT activity, manufacturing hubs, and warehousing networks continue to generate sustained local employment.

High Demand in Key Markets: Focus on Lucknow and Goa

The trend is clearly evident in the various regional property destinations found in the northern and Western parts of India.

In the state of Uttar Pradesh, the search volumes for the most recent property in Lucknow have risen substantially. With many of the public infrastructure projects being carried out, such as extending the metro network and outer ring roads, there has been an upsurge in demand for residential townships along the new economic corridors.

On the other hand, the real estate sector in Goa has moved far beyond the construction of temporary property for holidays only. Goa has become the best choice of destination for luxury house buyers, remote workers, and vacation rental investors. The high demand for luxury second homes and villa gates continues to drive up property prices.

Long-Term Economic Impact

Though existing metropolises will keep dominating the trading volume, the Tier 2 cities will solidify their role as important drivers for future real estate development.

Total real estate output in India is estimated to hit the mark of $5.8 trillion by 2047. The smaller but emerging urban areas will account for 25%-30%, which means $1.4 trillion to $1.7 trillion out of that amount due to growth in residential, commercial, logistics, and retail sectors.

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