India’s real estate sector has stayed firmly on an upcycle through 2025, supported by strong macro growth, resilient consumption, policy continuity, and sustained investor confidence. With momentum holding across both residential and commercial segments, the market is no longer being read only through “sales” and “launches,” but through the larger trends it is creating, how Indians want to live, how capital is moving, and which urban centers are emerging as the next anchors of demand. One of the clearest shifts inside this upcycle is the rise of Tier 2 cities as desirable, investment-grade real estate markets, drawing both end-users and investors as infrastructure upgrades, improving liveability, and expanding formal development pipelines reshape buyer expectations.

Which cities are considered Tier 2?

Tier 2 cities in India are mid-sized urban hubs that sit between the mega metros (Tier 1 like Mumbai, Delhi, Bengaluru) and smaller towns. What is the definition of these cities? It is primarily based on population size, economic activity, and infrastructure levels. It is based on classifications from the 7th Pay Commission or real estate bodies like CREDAI. A Tier 2 city is a rapidly developing, medium-sized urban center with a population typically ranging between 50,000 and 99,999 (based on RBI classification). They are hubs of growing industries and have decent connectivity and a mix of jobs in IT, manufacturing, or services, making them hot for investments without the chaos of big cities.

Think of them as the sweet spot-affordable living, rising property prices, and improving amenities like malls, airports, and metros, but still with some breathing room. Some examples include-Jaipur, Lucknow, Chandigarh, Amritsar, Faridabad, Ghaziabad, Kanpur, Varanasi, Surat (Diamond City), Nagpur, Indore, Vadodara, Nashik, Bhopal, Raipur, Kochi, Coimbatore, Visakhapatnam (Vizag), Mysuru, Mangaluru, Madurai, Vijayawada and Bhubaneswar, Jamshedpur, Patna, Guwahati. Parvinder Singh, CEO, Trident Realty shares insights on why more and more people are fining investment in tier-2 cities a lucrative prospect.

Why the Tier 2 Shift Is Really About “Stability”

This preference is being driven by one word that matters deeply to buyers: stability. The kind that makes a purchase feel predictable and low-friction, one where delivery timelines feel more reliable, daily life works better, and the medium-term growth story is easier to trust.Stability is also why the demand story is now widening beyond metros. Once buyers feel the “risk” in a market is lower on delivery, liveability, and value retention, they become more willing to look outside the legacy metro anchors. That is exactly what is playing out across Tier 2 India: premium and luxury housing interest is steadily moving into non-metro markets, supported by rising household incomes, lifestyle upgrades, and a preference for larger, better-designed homes in lower-density environments.

A Definitional Shift: What “Premium” Now Means

Importantly, this shift is not just geographic; it is definitional. As buyer sentiment matures, “premium” is increasingly being measured by privacy, wellness, and experiential living, not only by size or pin code. That naturally lifts demand for organised, lifestyle-led communities, gated formats, independent floors, and integrated residential ecosystems, which Tier 2 cities can often deliver more efficiently because they have lower congestion, more planning headroom, and better scope for low-density development.

Developer Behaviour Is Confirming the Trend

One of the strongest signals of “stability” is where developers are placing long-term bets. A CREDAI–Liases Foras report indicates Tier 2 and Tier 3 cities accounted for 44% of land acquisitions, with 3,294 acres acquired across 2024–25. The same coverage notes that the sales value of these land transactions rose materially, suggesting that capital is not only moving outward from metros but doing so with increasing conviction. This matters to buyers because sustained land acquisition is typically a forward indicator of multi-year supply pipelines, planned infrastructure alignment, and deeper market institutionalization, factors that tend to reduce execution uncertainty over time.

Infrastructure-Led Connectivity

Tier 2 markets are also benefiting from a clear policy and infrastructure tailwind: upgraded highways, better regional mobility, improved airport connectivity, and corridor-based development are shrinking the “distance penalty” that once limited buyer confidence. As connectivity improves, more households can plausibly choose Tier 2 cities for a higher quality of life without giving up access to jobs, education, and healthcare.On the business side, office tenants are moving into Tier 2 areas more and more to save money and find skilled workers. This is possible because infrastructure is getting better and cities are becoming more developed. As part of India’s overall real estate growth, CBRE has pointed out that Tier II cities like Chandigarh are becoming more appealing. This is important because employment depth is one of the strongest anchors of housing stability. When job growth and housing demand work together, markets tend to be less speculative and more driven by fundamentals.

Why Tier 2 Markets Are Less Volatile Than Metros

Metros will still be the most important places for high-value transactions, but they will also have bigger swings in micro-markets because prices can be more affected by people’s feelings, land is harder to find, and demand is often split between end-use and investment. On the other hand, many Tier 2 markets are seeing a more balanced situation. There is more land available, which makes it easier to plan formats, supply can be adjusted with more flexibility, and buyers often base their decisions on how much they will use the property, not just how much it will go up in value.This is why Tier 2 “stability” is becoming more and more understood as a mix of (1) end-user-led absorption, (2) infrastructure-backed location confidence, (3) more liveable density, and (4) a growing presence of organized developers and institutional interest.

Stability Is Now a Story About Lifestyle and Infrastructure

Tier 2 cities are offering stability which is looked upon as a positive sign. This is happening due to rising local wealth, better connectivity, the increase in organized development frameworks, and changing buyer preferences that put more emphasis on livability, space, and market predictability. In 2025, cities like Chandigarh saw steady demand for lifestyle housing and plotted developments, and they are set to grow quickly in 2026. Tier 2 cities are becoming places where buyers can make long-term decisions based on clearer fundamentals and where developers and investors are putting their money on the long term. Tier 2 cities are emerging as markets where buyers can make long-term decisions with clearer fundamentals and where developers and capital are placing longer-horizon bets. These measures signal that the Indian real estate growth will be increasingly multi-nodal.