Real Estate Boom In Tier II Cities? Reality Check

The housing prices in Tier 2 cities are up  by 65 per cent as per a PropEquity report. 25 out of the top 30 Tier II cities witnessed a rise in prices while five saw a decline. As Tier I cities face soaring property prices and saturation, Tier II cities are emerging as the next frontier for both residential and commercial real estate investments. These cities offer a compelling mix of affordability, infrastructure upgrades, and improving quality of life, making them ideal for homebuyers and businesses alike.

The Peculiar Case of Goa

As per the PropEquity report, Goa is the only city among 30 tier II cities that has seen a weighted average launch price cross the Rs 10,000 per square feet threshold. Despite media reports on lower footfall in Goa and the deteriorating tourism market, Goa’s real estate market is witnessing unprecedented growth, driven by a unique combination of factors. The state’s infrastructure development, such as the expansion of the NH-66, the Zuari Bridge, and the imminent completion of the Mopa Airport link road, has significantly enhanced its appeal for homebuyers and investors alike. Additionally, the region's natural charm, vibrant tourism, and the growing demand for luxury and second homes are driving housing prices upward. Talking about the real estate price in Goa, Vansh Kataria, Co-founder of Tirasya Estates said, " Crossing the Rs 10,000 per sq. ft. mark reflects not just the premium value of Goa’s real estate but also the increasing preference for quality lifestyle and investment opportunities." 

What About Other Tier II Cities

The demand for premium residential spaces is complemented by the rise of commercial hubs, driven by expanding economic activities and urbanization. “Tier II cities are not just growth alternatives but are becoming independent engines of economic and lifestyle transformation, paving the way for balanced and sustainable development across India." Siddharth Katyal, CEO, of Bhumika Group said.

These cities are not only redefining the luxury real estate market but are also positioned to play a pivotal role in shaping India's next phase of economic growth and urban development. "Dehradun, with a 14 percent price surge, is a key example of this shift, where urbanization meets natural beauty. As these cities continue to evolve, they offer an attractive alternative to overcrowded metropolitan areas, providing a high quality of life at competitive prices," said Manit Sethi, Director, of Excentia Infra

Which Cities See A Rise In Real Estate

Not all Tier II cities see an even influx of home buyers or real estate investors. "Homebuyers looking for cost advantages without sacrificing lifestyle are increasingly gravitating towards tier 2 cities like Faridabad, Lucknow, Vrindavan, Chandigarh, Ludhiana, and Bhopal," said Mohit Goel, Managing Director, Omaxe Group. Seeing this demand, developers are also coming up with high-end projects to satisfy this growing need."Lucknow, in particular, showcases exceptional growth fueled by improved connectivity, robust infrastructure development, and government-led initiatives." said Neeraj Sharma, MD, Escon Infra Realtors, showcasing the cause of Lucknow as a viable investment location.

"Besides, tier 2 real estate is also high on investors' radars as it promises high return on investment," Goel added, further pushing the cost of real estate in Tier II cities.

It seems like investors and potential homebuyers now have a wider array of properties to pick from.