- Growing real estate influence of Tier-2 cities
In India, Tier-2 and Tier-3 cities are rapidly gaining momentum, significantly impacting the real estate sector. With increasing urban populations and rising land prices in these areas, many are now focusing their attention on Tier-2 cities. Additionally, the relatively lower land prices and improved infrastructure in these cities are attracting developers as well. Many IT employees, benefiting from hybrid work models, are showing interest in purchasing property in Tier-2 cities, closer to their hometowns.
As a result, residential real estate activities in these cities have picked up significantly. Government initiatives such as the Smart Cities Mission, PMAY, and Atal Mission for Rejuvenation and Urban Transformation (AMRUT) are playing a crucial role in developing the infrastructure of Tier-2 cities. Significant investments are also being made in roads, highways, public transport, and regional airports, which are improving connectivity and making it easier to connect with nearby major cities.
This increase in demand for Tier-2 cities is evident, with 26% of property investors expressing interest in Tier-2 and Tier-3 cities, according to the Anarock Consumer Sentiment Survey. As the lifestyle of buyers changes, more people are moving towards Tier-2 cities, where luxury amenities are still available but in less crowded environments compared to metro cities. These cities have become an excellent choice for affluent buyers seeking a quality life away from the hustle and bustle of metropolitan areas.
According to a PropEquity report, home sales in the top 30 Tier-2 cities saw an 11% increase in the 2023-24 financial year, reaching nearly 2.08 lakh units.
