India’s Tier Two Markets Gain Housing Momentum

India’s next property cycle is spreading beyond its established metropolitan centres, with 11 emerging cities recording substantially faster residential price growth over the past five years. A new CII–Knight Frank India assessment places Bhopal, Bhubaneswar, Chandigarh Tricity, Goa, Indore, Jaipur, Kochi, Lucknow, Nagpur, Visakhapatnam and Coimbatore among markets gaining importance as infrastructure, employment and consumption expand beyond the largest urban economies.

The numbers point to a notable shift in India’s real estate geography. Across the 11 markets, residential prices rose by an average 63% between 2021 and 2026, compared with 42% across Mumbai, Bengaluru, Delhi-NCR, Hyderabad, Chennai, Pune, Ahmedabad and Kolkata. Over the longer 2016–2026 period, the emerging markets recorded an average annual price growth of 8%, against 4% for the established eight-city group. Average residential values in these newer markets currently range from about ₹4,500 to ₹13,500 per sq ft. However, the data does not suggest that smaller cities are becoming a single, uniform property market. Their trajectories depend on different combinations of manufacturing, tourism, services, education, logistics, consumption and regional connectivity.

That distinction matters for urban planning. Rising property values can reflect stronger local economies, but they can also increase land costs and gradually push housing beyond the reach of households that originally helped drive a city’s growth. The emerging cities housing market will therefore need to expand alongside affordable homes, public transport, water systems, drainage, power networks and social infrastructure. The report also identifies growing commercial activity beyond residential construction. Tier-2 cities accounted for 11.2 million sq ft of warehousing leasing during 2025, while 24 Tier-2 cities represented 36 million sq ft of India’s 134 million sq ft organised shopping-centre stock. This suggests that logistics, retail and employment are becoming important parts of the economic base supporting property demand.

CII and Knight Frank’s findings also underline a key limitation of infrastructure-led growth. Roads, airports and other connectivity projects can reduce travel times and open access to larger markets, but sustained real estate demand ultimately requires jobs, enterprise, population growth and reliable civic services. Knight Frank India Chairman and Managing Director Shishir Baijal has highlighted this broader relationship between infrastructure and economic activity. For developers and investors, the emerging cities housing market creates a wider field beyond saturated metropolitan locations. For residents, however, stronger prices do not automatically mean better urban outcomes. The next challenge is ensuring that investment translates into productive employment, accessible housing and resilient public infrastructure.India’s expanding real estate map therefore presents a larger planning test: whether rising property demand can support compact, connected and climate-resilient cities rather than simply extending low-density urban growth into surrounding land.

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India’s Tier Two Markets Gain Housing Momentum