India’s emerging Tier-2 markets have seen a significant surge in residential property prices, with a 63% increase between 2021 and 2026, surpassing the 42% growth in the country’s top eight primary real estate cities, according to a report by the Confederation of Indian Industry (CII) and Knight Frank India, titled “India’s Next Real Estate Markets”. This report highlights 11 secondary real estate hubs, including Bhopal, Bhubaneswar, Chandigarh Tricity, Goa, Indore, Jaipur, Kochi, Lucknow, Nagpur, Visakhapatnam, and Coimbatore, which have achieved an average residential price compound annual growth rate (CAGR) of 8% from 2016 to 2026, twice the 4% CAGR of the top eight metropolitan markets during the same period.
Regional Growth and Future Outlook
Although primary metropolitan centers will remain the backbone of the real estate market in terms of volume, Tier-2 and Tier-3 cities are expected to contribute 25% to 30% of India’s total real estate output by 2047, with an estimated value of Rs 116 lakh crore to Rs 141 lakh crore ($1.4 trillion to $1.7 trillion). According to Shishir Baijal, International Partner, Chairman & Managing Director, Knight Frank India, the investable opportunity across Tier-2 and Tier-3 cities, satellite markets and emerging corridors will be shaped not simply by infrastructure creation, but also by their ability to convert connectivity into sustained economic activity.
In 2025, Tier-2 cities accounted for 36 million square feet of India’s 134 million square feet of organized retail space across 365 shopping centers, with the 11 identified markets holding nearly 60% of the regional retail inventory. Additionally, key Tier-2 cities recorded 11.2 million square feet of warehousing lease transactions in 2025, with Lucknow, Jaipur, Nagpur, Indore, Coimbatore, and Bhubaneswar accounting for nearly half of these industrial volumes.
The growth in these areas is further supported by increased government infrastructure spending, which rose from 39% of capital expenditure in FY 2015 to 55% in FY 2026, alongside a three-year public-private partnership pipeline consisting of 852 projects with a combined project cost of Rs 17 lakh crore.
