Tier-2 and Tier-3 cities in India represent a dynamic segment of the nation’s urban landscape. These cities, characterized by their moderate population density and emerging economies, are now at the forefront of India’s growth story. Further, urban development initiatives have played a pivotal role in this transformation. Investments in infrastructure, such as improved connectivity through highways, airports, and metro networks, are unlocking the potential of these cities.
Recent projections for real estate in emerging markets are highly encouraging. According to ANAROCK’s Consumer Sentiment Survey, 26% of property investors are now prioritizing Tier-2 and Tier-3 cities, signaling a notable shift in investment trends. Economic factors such as government funding for infrastructure projects and lower land prices compared to metros are driving the demand for luxury real estate in these regions.
Besides, government initiatives like the Smart City Mission, PMAY, and AMRUT are making substantial contributions through investments in roads, highways, public transport, and regional airports. These improvements enhance connectivity, linking smaller cities to major urban centers, and making them more accessible and attractive to potential residents. As a result, the demand for luxury residential properties in these evolving urban areas continues to rise.
Piyush Kansal, Executive Director, Royale Estate Group said, “Tier-2 and Tier-3 cities are witnessing a remarkable shift in luxury real estate demand. Rising disposable incomes and changing lifestyle preferences, coupled with enhanced connectivity through airports, highways, and metro extensions, are making these cities highly attractive for homebuyers. Additionally, HNIs and NRIs are increasingly investing in their hometowns, seeking luxury and second homes with world-class amenities. This transformation is redefining the real estate landscape, as smaller cities now offer premium living options that rival those in metros.”
On the other hand, a report from PropEquity supports buyers’ growing appeal towards luxury homes. The report states that housing sales in the top 30 tier 2 cities have risen 11% to nearly 2.08 lakh units in the financial year 2023-24. This economic uplift enables individuals to invest in luxury properties, leading to a burgeoning demand for premium housing. In addition, sustainability has become a central theme in the real estate sector, particularly in Tier-2 and Tier-3 cities, where eco-friendly projects and green building practices are gaining significant traction. Developers are increasingly adopting sustainable solutions like solar energy systems, rainwater harvesting, and smart waste management to create environmentally responsible communities.
Manit Sethi, Director, Excentia Infra said, “Urban development is integrating sustainability through various innovations. Growing awareness about environmental impact and the cost benefits of sustainable living have further driven this shift in preferences. Hence, this paves the way for developers to responsibly shape the future of real estate, ensuring that development meets both environmental and lifestyle aspirations. Thus, we look forward to remaining committed to sustainability, redefining real estate with responsibility and vision.”
As property demand rises, Tier-2 and Tier-3 cities are experiencing steady value appreciation, positioning them as appealing options for both investors and homebuyers. Their comparatively lower property prices, coupled with rapid infrastructure development, present significant opportunities for long-term capital growth.
Yash Miglani, Managing Director, Migsun Group said, “The future of real estate in tier 2 and 3 cities lies in creating integrated ecosystems that combine residential, commercial, and recreational spaces. Urban development projects are driving this transformation, enabling these cities to become self-sufficient hubs that cater to diverse lifestyles and business needs. This approach not only enhances convenience but also attracts buyers and investors looking for comprehensive living solutions. As infrastructure improves and demand grows, we envision unlocking their true potential through our projects and establishing them as sustainable, thriving urban centres.”
Ravindra Gandhi, Founder and Managing Director of Tirasya Estates said, “Tier 2 and 3 cities offer an untapped market with rising demand for modern and luxurious residential spaces. The growing desire for premium homes allows developers to craft quality and diversity of housing options, catering to a wider range of buyer preferences and budgets. Moreover, cities like Goa offer a distinctive blend of modern amenities and traditional charm, appealing to a global audience. This unique combination not only attracts investors seeking high-value opportunities but also homebuyers desiring a lifestyle that merges contemporary living with heritage. Hence, this transformation reflects the broader potential of these cities to thrive while maintaining their cultural identity. We look forward to maintaining this allure by uniting development with the essence of the city, ensuring that our projects not only elevate the real estate landscape but also contribute to the cities’ sustainable growth and long-term prosperity.”
Thus, urban development has been a key catalyst in transforming Tier-2 and Tier-3 cities into thriving real estate hubs. Infrastructure improvements, such as better connectivity, modern amenities, and government-backed initiatives, have sparked significant growth in these regions. As buyer preferences shift towards sustainable and holistic living, these cities are increasingly aligning with global trends, offering a unique blend of modernity and tradition.