10 High Potential Tier 2 Cities for Residential Property Investment

Soaring economic activity, infrastructure development, and reverse migration are driving double-digit property price appreciation in emerging urban centres. Once overlooked, these urban centres -Tier 2 cities are rapidly closing the gap with their Tier-1 counterparts, emerging as the much sought-after investment destinations.

One can buy residential property in Nagpur, Nashik, Vadodara, Bhopal for INR 3000-5000 per sq ft, in Jaipur, Kochi, Lucknow for INR 4000-8000 per sq ft, in Tricity Chandigarh for INR 7000-10000 per sq ft and in Goa for INR 6000-12000 per sq ft Select micro markets of Tier 2 cities are offeering 10-15 percent YoY capital appreciation with capital values in premium locations of Goa, Kochi, Chandigarh Tricity matching Delhi-NCR and Mumbai. On the rental front, the hot Tier 2 destination of Goa is commanding a high yield of 8 percent.

The real estate narrative of India is evolving rapidly, with Tier-2 cities like Kochi, Jaipur, Goa, and Chandigarh Tricity emerging as new growth powerhouses. Housing.com’s proprietary Property Buy Index reveals  that Tier-2 cities are  surpassing the top eight metros by a staggering 88 points, underscoring their increasing prominence and service sector potential.

5 Reasons Why Tier 2 Cities Are Hot Investment Destinations

• Key micro-markets in Tier-2 cities have witnessed significant double-digit capital value appreciation of 10-15% year-on-year, narrowing the price gap with top metros.

• Capital values in premium localities of Goa, Chandigarh Tricity, and Kochi are now almost at par with key markets in Delhi-NCR and Mumbai Metropolitan Region.

• Tier-2 cities like Goa boast robust rental markets with yields as high as 8 percent, in contrast to 2-3% in major metros.

• Homebuyer preferences are shifting towards high-rise apartments and lifestyle amenities like clubhouses, open spaces, and sports facilities

• Online property searches by potential buyers in the INR 1-2 crore segment have surged 61 percent, while the above INR 2 crore bracket has seen a growth of 121 percent.

As urban centres are emerging as the new magnets  for skilled workforce and the start-up ecosystem, the evolving real estate landscape of Tier 2 cities presents immense opportunities for investors, homebuyers and developers, looking beyond the traditional real estate hotspots. Moreover, as the high property prices in Tier 1 cities  and even in suburbs of metros are bewyond the reach of large number of property buyers, they can make most of their investment by opting for Tier 2 cities which are comparatively much affordable and yet offer as attractive capital appreciation and rental yield opportunities as in Tier 1 cities.