Tier-2 and Tier-3 Cities Account for 44% of Land Acquisitions in 2024: CREDAI-Liases Foras Report
Real estate developers are increasingly targeting Tier-2 and Tier-3 cities for land acquisition, with 44% of the 3,294 acres acquired in 2024 concentrated in these emerging hubs. This data comes from a research report on 60 Indian cities released by CREDAI-Liases Foras during the New India Summit 2025 in Nashik, Maharashtra.
The report highlights that housing sales across 60 cities in 2024 reached 681,138 units, marking a 23% year-on-year (Y-o-Y) increase. The primary developers’ market recorded a total sales value of ₹7.5 trillion, reflecting a 43% Y-o-Y growth. The increase is attributed to sustained demand across different housing segments.
Luxury and Ultra-Luxury Housing Trends
Luxury and ultra-luxury housing have been key contributors to this growth, accounting for 71% of the total sales value. Properties priced between ₹1–2 crore saw a 52% increase in sales, with 132,532 apartments sold in 2024. The ultra-luxury segment, covering properties priced above ₹2 crore, recorded a 73% rise in sales. Developers have shown confidence in catering to high-net-worth buyers in metro and emerging urban markets.
While metropolitan cities remain dominant in the luxury and premium housing segments, Tier-2 and Tier-3 cities have seen increased demand for mid-range and affordable properties. These cities are evolving into academic, logistics, and industrial hubs, further driving the need for housing.
House Price Index (HPI) Trends in Metro and Tier-2/3 Cities
The House Price Index (HPI) across major cities shows a pattern of recovery and growth:
- Mumbai: HPI improved from -2.5% (2019-2021) to 3.4% in 2024, reflecting renewed demand and investor confidence.
- Bengaluru: HPI reached 7.1% in 2024, up from 3.9% in 2022, driven by job creation and infrastructure expansion.
- Gurugram: HPI in 2024 was 7.3%, compared to 7.6% in 2022.
- Noida: HPI stood at 13% in 2024, slightly up from 12.9% in 2022.
Tier-2 and Tier-3 cities have also witnessed price appreciation:
- Ahmedabad: HPI increased to 6.5% in 2024 from 3.8% in 2022.
- Nashik: HPI declined slightly to 2.9% in 2024 from 3.8% in 2022.
- Nagpur: HPI rose to 3.5% in 2024 from 2.1% in 2022.
- Jaipur: HPI stood at 7.2% in 2024 compared to 7.7% in 2022.
- Lucknow: HPI grew to 8.4% in 2024 from 5.8% in 2022.
The report attributes this growth to increasing urbanization and government initiatives such as the Prime Minister’s Gati Shakti mission. These initiatives are improving connectivity between satellite towns and major metropolitan centers, unlocking new development opportunities.
Price Appreciation and Affordable Housing in Emerging Cities
Cities like Lucknow, Jaipur, and Bhubaneswar are experiencing steady price appreciation, reinforcing their market potential. The affordable housing segment remains a critical driver of demand, particularly within the Priority Sector Lending (PSL) category for homes priced under ₹30 lakh. The ₹30-50 lakh segment has also attracted interest from both first-time homebuyers and investors.
Cities leading affordable housing development include Ahmedabad, Pune, Indore, and Coimbatore. These cities are making homeownership more accessible by offering a broader range of housing options.
Manoj Gaur, Chairman of CREDAI, noted that Tier-2 and Tier-3 cities are playing a crucial role in India’s next phase of urbanization. He pointed out that these cities now account for nearly half of all land acquisitions by developers, indicating a shift in investment trends. He cited Nashik’s transformation from a pilgrimage town to an urban hub as an example of the potential of these cities in reshaping India’s real estate landscape. He expects similar growth in cities like Indore, Coimbatore, and Bhubaneswar as infrastructure and connectivity improve.
Boman Irani, President of CREDAI, highlighted that the real estate sector is undergoing a shift, with increased developer interest in Tier-2 and Tier-3 cities. The surge in investments and new projects reflects changing market dynamics and growing urban expansion.
The report emphasizes that the real estate sector, now valued at ₹22.5 trillion and contributing 7.2% to India’s GDP, is seeing a growing role for Tier-2 and Tier-3 cities. These cities are providing a mix of affordability and high-value transactions, redefining urban expansion patterns. With infrastructure projects expanding and industries decentralizing, these emerging hubs are expected to drive long-term real estate growth in India.
