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Real estate in Tier 2 cities is increasingly outperforming Tier 1 counterparts in capital appreciation, according to the latest analysis by Magicbricks, a real estate platform in India. Fueled by infrastructure expansion, increasing affordability, and rising demand, Tier 2 cities are rapidly becoming the new growth hubs, delivering strong returns and capturing investor interest. The northern region is witnessing a pronounced surge in Tier 2 performance.
According to Magicbricks, the average capital appreciation across tier 2 cities stands at 17.6%, outpacing Delhi’s 15.7% by a significant margin. Kanpur takes a lead with a remarkable appreciation of 24.53% YoY followed by Lucknow at 22.61% YoY appreciation, both surpassing the national capital in terms of capital appreciation.
While the average price in Delhi is Rs 18,618 psf, Lucknow (Rs 6394 psf), Kanpur (Rs 6986 psf), Dehradun (INR 5653 psf) and Jaipur (Rs 5654 psf) emerged as relatively affordable cities with competitive infrastructure to invest in.
"Tier 2 cities in North India are no longer secondary markets—they’re becoming prime investment destinations. With expanding infrastructure, increasing supply of modern housing, and rising demand from young professionals and first-time buyers, these cities are poised to play a major role in India’s real estate growth over the next decade. Similarly, tier 2 towns in western India present a compelling investment opportunity, registering 22.3% appreciation—closing in on Mumbai’s 20.3%. Goa, in particular, emerged as a frontrunner, recording an extraordinary 66.37% YoY capital appreciation, with average price touching Rs 13290 psf as against Rs 28921 psf in Mumbai. This spike positions Goa as one of the most dynamic markets in the region, driven by demand for second homes, rental yields, and tourism-linked investments," said Prasun Kumar, Chief Marketing Officer, Magicbricks.
In Eastern India, Tier 2 cities posted an average capital appreciation of 14.63%, and Patna stood out as the region’s high-growth market, clocking a 15.12% appreciation, a signal of the city’s rising stature as an investment-worthy destination. In the South, Tier 2 cities continue to outperform. Kochi (16.55%) for example, significantly outpaced Chennai’s 11.9% increase in capital appreciation. Here are the key points:
Tier 2 cities see average capital appreciation of 17.6%, higher than Delhi’s 15.7%, per Magicbricks data.
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Kanpur leads nationally with 24.53% YoY appreciation, followed by Lucknow at 22.61%.
Goa records a massive 66.37% YoY appreciation, becoming a top-performing market in western India.
Affordability + Growth: Cities like Lucknow (₹6,394 psf), Kanpur (₹6,986 psf), and Dehradun (₹5,653 psf) offer lower entry points compared to Delhi (₹18,618 psf).
Kochi (16.55%) beats Chennai (11.9%) in capital appreciation in South India; Patna leads in the East with 15.12%.
Drivers of growth: Expanding infrastructure, increasing demand from young buyers, affordability, and rise in second-home and rental yield investments.
Tier 2 cities are emerging as prime investment destinations, not just affordable alternatives.
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