Rapid price gains in emerging Tier‑2 markets
A joint study by the Confederation of Indian Industry (CII) and Knight Frank India, released on 18 September, shows that residential property in 11 Tier‑2 cities has outpaced growth in the country’s biggest metros. Prices in these markets rose 63 % from 2021 to 2026, compared with 42 % in the top eight cities.
The report lists Bhopal, Bhubaneswar, Chandigarh Tricity, Goa, Indore, Jaipur, Kochi, Lucknow, Nagpur, Visakhapatnam and Coimbatore as the fastest‑growing markets. Over the decade 2016‑2026, their compound annual growth rate (CAGR) averaged 8 %, twice the 4 % CAGR recorded across the metros.
Prices still below metro levels
Despite the faster growth, most of these markets offer a lower entry point. Average residential prices range from Rs 4,500‑6,500 per square foot in Nagpur and Visakhapatnam to Rs 11,500‑13,500 per square foot in Goa. Bhopal sits at Rs 5,000‑7,000, Indore at Rs 5,500‑7,500, and Jaipur and Kochi at Rs 7,000‑9,000.
Beyond residential – warehousing and retail
The shift is evident in other property segments. In 2025, Tier‑2 cities leased 11.2 million square feet (msf) of warehousing space, almost unchanged from 11.4 msf in 2024. Six of the 11 cities—Lucknow, Jaipur, Nagpur, Indore, Coimbatore and Bhubaneswar—accounted for 5.3 msf, nearly half of all Tier‑2 warehousing transactions.
Retail is also expanding. India’s organised shopping‑centre stock reached 134 msf in 2025 across 32 cities, with 36 msf spread over 24 Tier‑2 markets. Ten of the 11 identified cities contributed about 60 % of that Tier‑2 retail space.
What drives the momentum?
Shishir Baijal, International Partner, Chairman & Managing Director of Knight Frank India, said the next wave of growth will hinge on how well these cities convert improved connectivity into jobs, enterprise, population growth and consumption. "Cities that bring together employment, enterprise, population growth, consumption and urban capacity will be better placed to build deeper and more diversified real‑estate markets," he noted.
Implications for investors and developers
The faster price growth and lower entry points make Tier‑2 markets attractive for both homebuyers and developers. However, Baijal cautioned that success will require a sharper understanding of each city’s economic drivers and a selective approach to investment.
Where to look next
The report suggests that future growth will depend on sustained economic activity in these cities. Investors should monitor how connectivity projects translate into job creation and whether infrastructure investments continue to support residential, warehousing and retail demand.
Sources
- Confederation of Indian Industry (CII) and Knight Frank India, "CII‑Knight Frank India report on Tier‑2 real‑estate growth," 18 September (no URL provided). - Moneycontrol, article summarising the CII‑Knight Frank findings (no URL provided).