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Tier 2 and 3 cities are shaping India’s real estate future, as 44 per cent of the 3,294 acres of land acquired by developers last year were concentrated in these emerging hubs, a report showed on Friday. 

This marks a strong shift in investment focus, reflecting the potential of these cities in driving long-term sectoral growth. 

Housing sales in 2024 reached 6,81,138 units across 60 cities, recording an impressive 23 per cent year-on-year increase, according to the report by CREDAI- with real estate research firm Liases Foras.

The primary builder’s market registered a sales value of Rs 7.5 lakh crore, reflecting a staggering 43 per cent YoY growth, propelled by sustained demand across segments. 

Luxury and ultra-luxury housing emerged as key drivers, contributing 71 per cent of the total sales value, driven by larger ticket sizes and a balanced supply-demand dynamic in premium markets. 

Properties priced between Rs 1-2 crore saw a 52 per cent jump in sales, with 1,32,532 apartments sold, while the ultra-luxury segment (Rs 2 crore and above) experienced an even steeper rise of 73 per cent, highlighting developers’ confidence in catering to high-net-worth buyers. 

With the real estate sector now valued at Rs 22.5 lakh crore and contributing 7.2 per cent 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, said the report.

“These cities now account for nearly half of all land acquisitions by developers, signalling a seismic shift in investment patterns. 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,” said Manoj Gaur, Chairman, CREDAI .

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. 

Cities like Lucknow, Jaipur, and Bhubaneswar are witnessing steady price appreciation, reinforcing their market strength, said the report. 

Boman Irani, President, CREDAI, said that as these cities become economic and industrial hubs, there is an increasing demand for affordable and mid-segment housing.