Tier 2, 3 cities account for 44% of land acquisitions, Lucknow, Jaipur lead

India's real estate sector is witnessing a major shift as developers are now turning their attention to Tier 2 and Tier 3 cities. In 2024, these emerging urban centers accounted for an a 44% of the 3,294 acres of land acquired by developers, said a research report on the real estate sector of 60 Indian cities, released by CREDAI-Liases Foras during the New India Summit 2025 in Nashik, Maharashtra.

 

The report said housing sales in 2024, reached 681,138 units across 60 cities, recording a 23% year-on-year (Y-o-Y) increase. The primary developers’ market registered a sales value of Rs 7.5 trillion, reflecting a staggering 43% YoY growth, propelled by sustained demand across segments, the report said.

 

 

Notably, the luxury and ultra-luxury segments dominated the market, contributing to 71% of total sales value. This surge in high-end property transactions highlights a shift in buyer preferences toward premium living spaces, driven by rising incomes and aspirations.

 

Properties priced between Rs 1–2 crore saw a 52% jump in sales, with 1,32,532 apartments sold in 2024 while the ultra-luxury segment ( Rs 2 crore+) witnessed a steep rise of 73%, highlighting developers’ confidence in catering to high-net-worth buyers, according to the report.

 

Increased urbanisation, coupled with government initiatives such as the Prime Minister’s Gati Shakti mission, is enhancing connectivity between satellite towns and major metropolitan centers, unlocking new opportunities for growth. Cities like Lucknow, Jaipur, and Bhubaneswar are witnessing steady price appreciation, reinforcing their market strength.

 

With affordable housing options and increasing urbanization, these cities are becoming attractive destinations for first-time buyers and investors alike.

 

The affordable housing sector remains a key driver, with the Priority Sector Lending (PSL) category—covering homes priced under Rs 30 lakh—and the Rs 30-50 lakh segment attracting both first-time homebuyers and investors. Cities such as Ahmedabad, Pune, Indore, and Coimbatore are leading the way in affordable housing development, making homeownership more accessible to a wider demographic.

 

"As developers, we’re witnessing a remarkable shift in demand—people are looking beyond metro cities for affordable yet quality living spaces. These emerging urban centers offer immense potential, driven by increasing urbanization and improved infrastructure. It’s exciting to see how these cities are reshaping the market, creating opportunities not just for buyers but for developers to innovate and grow. The charm of these cities lies in their balance between affordability and lifestyle, making them the next big thing in real estate," said Ashish Agarwal, Director, AU Real Estate.

 

"From the past few years, developers, investors, and buyers have been increasingly drawn to Tier 2 and Tier 3 cities for their better quality of life and beautiful environment. These cities are emerging as real estate hotspots, offering immense growth potential and housing options. We’ve embraced this trend by developing Trident Hills in Panchkula, a township that reflects the promise of these vibrant urban centers. The shift towards these cities is not just about investment; it’s about creating communities that blend modern living with natural charm, making them the future of India’s real estate landscape," said S.K Narvar, Group Chairman, Trident Realty.

 

“This is a function of the rising demand of Tier -2 cities by homebuyers, and reflects an evolving trend of Tier-2 cities growing in prominence in the real estate market. With hyper-congestion and dwindling quality housing supply in Tier-1 cities, the next generation of homebuyers are increasingly looking towards Tier-2 cities that align with a modern urban lifestyle. Bahadurgarh and Indore are quintessential example of improved connectivity and infrastructure development paving the way for residential property price appreciation," said Yashank Wason, Managing Director, Royal Green Realty.

 

The synergy between infrastructure growth and real estate development is redefining the country’s property market. While Delhi NCR leads with its luxury offerings, Tier 2 and Tier 3 cities are carving their niche as essential contributors to India's real estate future.  For instance, Panchkula, part of the Tricity region alongside Chandigarh and Mohali, has seen its real estate market evolve significantly, with property prices now rivaling those in the National Capital Region (NCR). DLF has reported a 26.7% price appreciation in its Panchkula project, The Valley Gardens. Launched at Rs 8,329 per sq. ft., prices have now reached Rs 10,556 per sq. ft.. The project generated revenues surpassing Rs 1,150 crore. A recent Rs 4 crore transaction for a single unit has further set a benchmark for high-value sales in the region, reflecting growing affluence among buyers in smaller cities. 

Panchkula’s proximity to Chandigarh, Shimla, and key industrial hubs enhances its appeal, but the rapid price escalation raises concerns about long-term affordability and market sustainability. While the Tricity region emerges as a key player in India’s luxury housing market, its growth trajectory will depend on balancing demand with infrastructure readiness and inclusivity.