Several tier-2 cities in India are emerging as the new urban centres for economic growth and development owing to rapid urbanisation, attracting businesses, investors and tourists. While metropolitan cities in India, such as Delhi, Mumbai, Chennai and Kolkata, have established themselves as commercial and industrial hubs, the tier-2 cities are witnessing rapid growth and development and ensuring a better quality of life for people.
See also:Â Tier-3 cities in India
What are tier-2 cities in India?
Cities in India are classified into tiers based on several factors, including population density, infrastructural development, economic activities and income levels. While tier-1 cities are the most urbanised and developed with the highest per capita income, tier-2 cities are smaller and comparatively less urbanised. However, these cities are witnessing rapid economic growth and urban development.
Top 5 tier-2 cities in India
Tier-2 cities #1 Chandigarh
The union territory of Chandigarh, the shared capital of Punjab and Haryana, is known for its well-planned infrastructure and quality of life. It is one of the first planned cities in India. The city is clean and has well-developed social infrastructure, which includes educational institutions and healthcare facilities. The IT Park in Chandigarh houses major national and multinational corporations and contributes to the growth of the IT sector.
Cost of Living in Chandigarh: The city offers a high standard of living. Expenses, such as house rent, transportation, food and household utilities, are relatively higher than in other tier-2 cities. The average expenses can range from Rs 20,000 to Rs. 30,000 per month for individuals, depending on their lifestyle. The costs can be higher in upscale localities.
Real Estate in Chandigarh: Chandigarh provides ample options for residential and commercial investments. Homebuyers could find properties ranging from affordable apartments to luxury villas. Owing to its strategic location and infrastructure, the city has attracted several investors looking to expand their business.
Tier-2 cities #2 Jaipur
Jaipur, the capital of Rajasthan, is among the top tier-2 cities in India. It is a tourist destination and a major hub for industries and the IT sector, attracting several investors. The city has several renowned universities and colleges, which attract students from across the country. Besides a robust industrial sector and a special economic zone (SEZ), the city has seen growth in the IT and BPO sectors with several IT parks and companies.
Cost of Living in Jaipur: Jaipur provides a low cost of living compared to tier-1 cities in India. It attracts retirees looking for quality life and modern amenities at an affordable price. The monthly expenses are around Rs 30,000 for a person.
Real Estate in Jaipur: The real estate market in Jaipur has witnessed rapid development. The demand for residential and commercial properties in Jaipur is rising due to improved infrastructure, connectivity and affordability. Homebuyers would find apartments and independent houses, among other options.
Tier-2 cities #3: Coimbatore
Coimbatore, the second-largest city in Tamil Nadu, is known for its strong industrial base, including textile mills and engineering firms. The city offers ample job opportunities. It has several educational institutions and a well-developed infrastructure with excellent roadways and railways and a domestic airport.
Cost of Living in Coimbatore: Compared to other large cities in India, Coimbatore is an affordable city. However, one’s lifestyle choices may affect the overall cost.
Real Estate in Coimbatore: Owing to its industrial significance and good connectivity, including the upcoming metro project, Coimbatore is attracting homebuyers and investors. Moreover, it is a preferred destination for those looking for retirement homes. One can find several housing options both affordable and luxurious.
Tier-2 cities #4 Lucknow
The capital of Uttar Pradesh, Lucknow is emerging as an economic centre and witnessing major infrastructure and urban housing developments. The developing IT city project and investments in business and retail make Lucknow one of the top tier-2 cities in India. The city has several educational institutions, a modern metro network, an international airport and an excellent network of roadways.
Cost of Living in Lucknow: Despite the rapid development and modernisation, the cost of living in Lucknow is considerably lower than the bustling metro cities of India. Middle-class families and expatriates looking for quality living could find affordable food, transportation, healthcare and schooling.
Real Estate in Lucknow: The real estate market in Lucknow is flourishing due to several factors, including enhanced infrastructure and connectivity. Moreover, the presence of several multinational companies, IT parks and businesses has led to growing demand for residential properties.
Tier-2 cities #5 Indore
Indore is known as the commercial capital of Madhya Pradesh, which has seen significant growth in infrastructure and investment opportunities. Indore is popular for its cleanliness, quality educational institutions, excellent infrastructure and IT growth, which makes it one of the top tier-2 cities in India.
Cost of Living in Indore: The cost of living in Indore is reasonable compared to metro cities. Owing to its affordability of healthcare, groceries and transportation, the city attracts families seeking a decent lifestyle within a budget.
Real Estate in Indore: The real estate sector in Indore has seen significant growth in recent years. The affordable property prices and quality infrastructure attracts residential and commercial investments. The city offers homebuyers a range of property options, from luxury apartments to affordable homes, catering to different income groups.
Key aspects of tier-2 cities in India
Cost of living: Compared to the metros, the cost of living in tier-2 cities is relatively low. These cities provide affordable housing and lower transportation costs. Hence, they have become a favourable destination for individuals and families seeking a quality standard of living at a lower cost.
Less traffic and pollution:
Unlike the congested tier-1 cities, tier-2 cities have less traffic congestion and significantly less air pollution. Therefore, tier-2 cities are fast becoming a preferred destination for homebuyers seeking a healthier and stress-free lifestyle.
Infrastructure:
Many tier-2 cities, including Lucknow, Jaipur and Coimbatore, are seeing significant improvements in roadways and transport facilities. Upcoming metro projects, flyovers and improved bus services have ensured smooth connectivity for the residents.
Quality education:
Several reputable educational institutions have established their campuses in some of the top tier-2 cities in India. These cities attract students from different parts of the country.
Employment opportunities
The IT boom has made an impact on tier-2 cities, such as Pune, Kochi and Chandigarh. These cities are becoming prominent IT hubs, offering ample employment opportunities. The migration of skilled professionals to these cities and an enhanced infrastructure have boosted their economy. The investments have led to an improved standard of living.
Investment avenues
Some of the tier-2 cities in India are emerging as the preferred real estate investment destination. Infrastructure growth and lower property prices have attracted investors. The cost of establishing and operating businesses in tier-2 cities is considerably lower than in tier-1 cities. Hence, they have become an attractive proposition for startups and SMEs.
The increase in disposable income and purchasing power has opened up new markets for various sectors like retail, FMCG and e-commerce.
Other factors contributing to the growth and development of tier-2 cities include government initiatives, such as the Smart Cities Mission to improve the infrastructure and attract investment.
Real estate in tier-2 cities
The increasing demand for housing along with the relatively lower property prices have been the driving factors for the growth of real estate in tier-2 cities in India. This has brought new opportunities for developers and buyers. Government schemes, such as the Pradhan Mantri Awas Yojana (PMAY), aimed to boost the housing sector, have further fuelled the growth potential of these cities.
Policies, such as AMRUT (Atal Mission for Rejuvenation and Urban Transformation), focus on providing basic civic amenities and making these tier-2 cities sustainable and efficient.
FAQs
What are tier-2 cities in India?
Tier-2 cities are cities that are smaller than tier-1 cities but have witnessed significant economic growth. Examples include Chandigarh, Jaipur, Kochi and Indore.
What is the significance of tier-2 cities in India?
Tier-2 cities contribute significantly to the country’s GDP. They are emerging as the preferred investment destination while reducing population pressure on the metro cities.
What is the cost of living in tier-2 cities in India?
The cost of living in tier-2 cities is relatively lower than in tier-1 cities. These cities provide urban convenience with a less crowded environment, improved infrastructure and affordable housing options.
Do tier-2 cities offer business and investment opportunities?
Owing to the growth of real estate, retail and IT sectors in tier-2 cities, they offer several business and investment opportunities.
How is the real estate market in tier-2 cities in India?
The real estate market in tier-2 cities in India, including the residential and commercial segment, is witnessing steady growth due to new infrastructure developments, affordable prices and increasing demand.
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