India’s real estate market is witnessing an exciting transformation, with emerging cities driving its growth. These cities offer an ideal blend of affordability, luxury, and promising returns, making them highly attractive to both homebuyers and investors.

As per reports, residential property launch prices in Tier II cities like Goa, Chandigarh, Mohali, Lucknow, and Jaipur have surged by up to 94% over the past five fiscal years, ending 2023-24. This growth is fueled by increasing consumer confidence, a thriving job market, and rapid infrastructure expansion, positioning these cities as the new hotbeds of real estate activity.

Why Tier 2 Cities Are Dominating Real Estate

In the past couple of years, Tier 2 cities in India have become the new protagonists of real estate. Chiefly, affordability is now driving this trend. With sky-high property prices in Tier 1 cities, buyers and developers alike are looking for cheaper alternatives, and Tier 2 cities are now satisfying that demand.

In the last fiscal year, these cities saw an 11% increase in housing sales, with over 2.08 lakh units sold across 30 smaller towns. The surge in demand is primarily due to the twin forces of low property prices and an increasing level of economic activity revamping the market and making these cities more and more attractive.

How Government Support and Infrastructure Are Accelerating Growth

The Tier 2 cities in India are expanding due to a strong government push and organised infrastructure programs like the Smart Cities Mission and AMRUT (Atal Mission for Rejuvenation and Urban Transformation). These augment core infrastructure-basic roads, connectivity, and general livability-giving rise to a suitable housing and office development ecosystem.

Increased connectivity and lower land rates have heightened the interest of developers, middle-class buyers, and investors in places like Panchkula, Panipat, Ludhiana, and Mohali.

In addition, the Tricity belt, which includes Chandigarh, Mohali, and Panchkula, has emerged as a property hotbed, driven by the migration towards remote and hybrid work patterns. The need for bigger homes and an improved standard of life is drawing professionals and NRIs to the belt.

This shift has resulted in price hikes of up to 65% in new projects, with luxury properties like a floor unit in DLF The Valley Gardens, Panchkula, recently sold for over Rs 4 crore, highlighting the increasing demand for premium real estate.

Commercial and Economic Growth Shifting to Tier 2 Cities

The commercial real estate landscape is evolving, with Tier 2 cities emerging as key players. Flexible workspaces, IT companies, and e-commerce giants are setting up operations, transforming these cities into innovation hubs. The growing demand for office space is making them prime targets for commercial development.

Economic growth in these cities is accelerating, driven by the rise of small and medium enterprises (SMEs) and government initiatives supporting industrial development. Improved connectivity, infrastructure, and government backing are further fueling this momentum.

Sustainability is a central focus as India aims for a $10 trillion economy by 2030. Urbanisation in Tier 2 cities is projected to reach 50% by 2050, positioning them as key contributors to sustainable and inclusive growth.

Untapped Potential for Investors and Developers

For investors, Tier 2 cities present a wealth of opportunities. These cities offer a strong edge with lower land prices, untapped potential, and healthy rental yields. The growing middle class and rising demand for both residential and commercial space continue to attract builders. Additionally, the government’s focus on upgrading infrastructure and improving connectivity further enhances the investment potential in these cities.

Whether you are a developer or a homeowner, now is the perfect time to look into opportunities in these up-and-coming markets, as they hold long-term growth and profitability potential.

Bottom Line

Cities like Goa, Chandigarh, Mohali, and many others are rapidly emerging as key players in India’s real estate sector. With rising demand, affordability, and substantial infrastructure development, these Tier 2 cities offer promising investment opportunities with high returns and vast economic potential. The landscape is shifting, and it’s clear that emerging cities are shaping the future of India’s real estate boom.

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