Smaller cities in India are seeing a boom in the real estate sector. According to a recent report, property prices across 30 Tier II cities in India have seen an unprecedented price surge while some others were grappling with a surprising dip.
In Jaipur, for instance, the city known for its pink palaces and rich heritage the property prices have seen a staggering high. Between 2023 to October 2024, the city saw a 65 per cent jump in the average price of projects that were newly launched wherein the prices climbed from Rs 4,240 to Rs 6,979 per square foot.
The city is a frontrunner in the housing market among all 30 Tier II cities. However, it’s not all rosy when you take the pan-India picture. Cities like Bhopal and Mysore for instance, saw a 5 per cent and 14 per cent decline respectively.
What Is Driving These Changes?
So, why are some cities flourishing while others flounder? Says Samir Jasuja, founder and CEO of PropEquity, “Tier II cities have seen renewed interest from developers, corporates, financial institutions and investor community.”
He emphasises that the cheap availability of land in these cities followed by the massive development of connectivity infrastructure and strong demand has led to an increased supply of premium and luxury housing.
Such new projects are not only coming from incumbent developers but new entrants cashing in on the potential of these cities as well. This boost in new supply is further pushing the growth centers and employment hubs which are driving the progress of real estate in these cities.
Where The Growth Is Happening?
Northern India: Agra has witnessed a 59 per cent surge in prices now averaging Rs 11,111 per square foot, second only to Goa.
Chandigarh and Bhiwadi saw 34 per cent and 25 per cent growth in prices respectively, the new launches in these cities were very few (between 3-5 projects) during this period.
Southern India: Andhra Pradesh’s Guntur saw the average price of new launch projects rise by 51 per cent to Rs 5,169 per sq. ft. between 2023 and October 2024 followed by Mangalore (41 per cent), Visakhapatnam (29 per cent).
Despite these hikes in prices, some tier II realty markets are still affordable for seekers. Cities like Surat, Gandhinagar, and Vadodara in Gujarat are still priced below Rs 5,000 per square foot, making them attractive options for budget-conscious buyers.
Western India: Gandhi Nagar saw the weighted average price of new launch projects rise by 19 per cent to Rs 4,844 per square foot between January and October 2024, followed by Surat (14 per cent) and Nagpur (12 per cent).
Mysore and Trivandrum, however, witnessed a fall in prices at 14 per cent and 4 per cent respectively. Goa is the only city amongst 30 Tier II cities that has seen a weighted average launch price cross the Rs 10,000 per square foot threshold.
The report highlights that Tier II cities are no longer just quiet alternatives to metros, they are also emerging as dynamic markets with high growth potential. However, even the price trends show that not every city offers the same opportunity.
