The growth in the Indian real estate sector today involves transcending the traditional dominance of major urban centres. Tier 2 cities are now emerging as significant players in driving overall development in the industry. They are rising as key catalysts of growth, propelled by a combination of factors including policy advancements, improved connectivity, and the establishment of both domestic and international corporations.
The recent performance of Tier 2 cities on Housing.com’s IRIS index further underscores their rising prominence in the real estate landscape. Surprisingly, these cities have exhibited performance on par with, if not surpassing, that of top-tier metros.
With an impressive 53-point lead over the top eight metros, Tier 2 cities are proving to be new economic nodes, drawing a steady influx of interest from both rural areas and smaller urban centres within their spheres of influence.
Cities such as Lucknow, Jaipur, Kochi, Surat, and Mohali are leading the charge, witnessing a notable surge in high-intent property search volumes for buying property in 2023.
This surge not only reflects growing consumer confidence but also underscores the increasing attractiveness of Tier 2 cities as investment hotspots. Let’s delve into some of the key characteristics of these five Tier 2 cities.
Lucknow
The residential real estate market in Lucknow has experienced remarkable growth in recent years, attributed to increasing job opportunities, the establishment of IT parks and educational institutions, all of which have attracted a significant influx of people into the city, thus driving the demand for housing. Online search trends for homebuyers in Lucknow highlight concentrated queries in areas like Gomti Nagar, Indira Nagar, and Vrindavan Yojna, known for their strategic locations and well-planned infrastructure, indicating a preference for convenience and urban lifestyle among buyers. Interestingly, majority of the searches are concentrated around 3 BHK homes, seeking apartments priced between INR 50 lakh to INR 1 crore.
Jaipur
Jaipur’s positioning within the influence zone of the Delhi-Mumbai Industrial Corridor has enhanced its business environment greatly, the influx of employment opportunities fuelling demand for residential properties. Localities such as Mansarovar and Vaishali Nagar are associated with high-end property values, whereas emerging areas like Jagatpura near the airport, and extensions of Mansarovar and Vaishali Nagar near NH 48, provide connectivity at relatively affordable rates. The increasing interest from homebuyers has propelled property prices by up to 15 percent in these areas. Of late, neighbourhoods such as Pratap Nagar and those along Ajmer Road are also gaining attention due to their connectivity to commercial zones and infrastructure development.
Kochi
Kochi's real estate market transformation can be traced back to strong infrastructural developments, including the Kochi Metro, and a burgeoning IT sector. The online search trends for homebuyers in Kochi depict that a major share of the search queries were concentrated in locations such as Kakkanad, Edappally, and Thrippunithura. Other locations such as Vyttila and Kaloor also received substantial number of queries. The dominant trend in online property searches reveals a strong inclination toward 3BHK homes among potential homebuyers with majority of them seeking apartments priced between INR 50 lakh to INR 1 crore.
Surat
Surat's robust economic landscape has been a driving force behind the growth of its residential market. The city's thriving diamond and textile industries, coupled with its manufacturing and trading sectors, have attracted a steady incursion of job seekers and entrepreneurs, resulting in a surge for housing demand. The online search trends for homebuyers in Surat showed that majority of the search queries were concentrated in locations such as Vesu, Dindoli, and Mota Varachha. As per data, a large share of the prospective home buyers in Surat seek apartments priced between INR 50 lakh to INR 1 crore with an increasing preference for 2BHK residences.
Mohali
Mohali's residential sector has flourished due to robust infrastructure development, connectivity enhancements, and proactive urban planning, while its strategic proximity to Chandigarh and major highways renders it an appealing choice for both businesses and residents. The online search trends for homebuyers show that most search queries were focussed on locations such as Kharar, Sector 115 and Shivalik City. Other locations such as Sector 123 and Sector 70 also received a substantial number of queries. Significantly, majority of the searches are concentrated around 3 BHK homes, with budget preferences in the INR 50 lakh and below category.
In conclusion, while mature cities will continue to retain their significant share in the market, Tier 2 cities stand out as beacons of opportunity, offering a promising alternative for those seeking to ride the wave of India's burgeoning real estate sector. As investors, developers, and homebuyers increasingly turn their gaze towards these burgeoning hubs, Tier 2 cities are set to chart a course towards unprecedented growth and prosperity in the years to come.
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