Real estate developers target Tier-2 and Tier-3 cities for land acquisition, says research report on 60 Indian cities released by CREDAI-Liases Foras
As many as 44% of the 3,294 acres of land acquired by real estate developers in 2024 were concentrated in the emerging hubs of India’s Tier-2 and Tier-3 cities, 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 ₹7.5 trillion, reflecting a staggering 43% YoY growth, propelled by sustained demand across segments, the report said.
This data is from a report released by CREDAI titled ‘Overview of Residential Real Estate Market in 60 Major Cities of India.’
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Luxury and ultra-luxury continue to drive housing demand
According to the report, luxury and ultra-luxury housing emerged as key drivers of demand across 60 cities, contributing 71% of the total sales value, driven by larger ticket sizes and a balanced supply-demand dynamic in premium markets.
Properties priced between ₹1–2 crore saw a 52% jump in sales, with 1,32,532 apartments sold in 2024 while the ultra-luxury segment ( ₹2 crore+) witnessed a steep rise of 73%, highlighting developers’ confidence in catering to high-net-worth buyers, according to the report.
While metro cities continue to dominate luxury and premium housing sales, the rise of Tier 2 and 3 cities has introduced a more balanced market dynamic, where mid-range and affordable properties play a crucial role in driving demand, the report said.
According to the report, many tier-2 and tier-3 cities are evolving into academic, logistics, and industrial hubs, further fuelling housing requirements.
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For example, in Mumbai, House Price Index (HPI) shows recovery from decline (2019-2021) to steady growth (2022-2024), rising from -2.5% to 3.4%. This reflects renewed demand, economic stability, and strong investor confidence in the real estate market, the report said.
The HPI in Bengaluru, with steady growth, stood at 7.1% in 2024, driven by strong job creation, real estate demand, and infrastructure expansion. The HPI in 2022 for Bengaluru was 3.9%.
In Gurugram, the HPI in 2024 stood at 7.3% compared to 7.6% in 2022. Noida’s HPI in 2024 stood at 13% compared to 12.9% in 2022.
In the case of tier-2 and tier-3 cities, the HPI in Ahmedabad in 2024 stood at 6.5%, compared to 3.8% in 2022.
The HPI for Nashik stood at 2.9% in 2024 compared to 3.8% in 2022. In Nagpur, it was 3.5% in 2024 compared to 2.1% in 2022.
Jaipur’s HPI in 2024 stood at 7.2% compared to 7.7% in 2022. In the case of Lucknow, HPI in 2024 stood at 8.4% compared to 5.8% in 2022.
“Increased urbanization, 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 growth opportunities,” the report said.
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Price appreciation in tier-2 and tier-3 cities
The report said that cities like Lucknow, Jaipur, and Bhubaneswar are witnessing steady price appreciation, reinforcing their market strength.
The affordable housing segment remains a key driver, with the Priority Sector Lending (PSL) category—covering homes priced under ₹30 lakh—and the ₹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 broader demographic, the report said.
“Tier 2 and 3 cities are the cornerstone of India’s next phase of urbanization, driving inclusive growth and economic diversification. As highlighted in the report, these cities now account for nearly half of all land acquisitions by developers, signalling a seismic shift in investment patterns,” said Manoj Gaur, chairman of CREDAI.
He added, “For instance, Nashik’s transformation from a pilgrimage town to a thriving urban hub exemplifies the potential of these cities in reshaping India’s housing landscape. As connectivity improves and industries decentralize, we expect to see similar growth trajectories in cities like Indore, Coimbatore, and Bhubaneswar.”
Boman Irani, president of CREDAI, said, “India’s real estate sector is undergoing a paradigm shift, with Tier 2 and 3 cities playing a central role in urban expansion. Developers recognise this shift, leading to a surge in investments and new projects. The insights from this report will help the industry navigate the evolving market and ensure sustainable growth across regions.”
The report also highlighted a significant surge in the role of Tier 2 and 3 cities in shaping India’s real estate future.
“With the real estate sector now valued at ₹22.5 trillion and contributing 7.2% to India’s GDP, it is evident that Tier 2 and 3 cities are becoming growth engines, offering both affordability and high-value transactions that redefine India’s urban narrative,” Gaur added.
