In India, Tier 2 cities are gaining huge popularity among the real estate investors owing to their rapid urbanization. Compared to the top Tier 1 cities including Delhi, Mumbai, Bangalore and Chennai where real estate prices have soared to astronomical levels, Tier 2 cities such as Jaipur, Vadodara, Dehradun, Ayodhya, Kochi, Visakhapatnam, and Nagpur offer relatively affordable property prices. This affordability coupled with the potential for higher returns on investment makes these cities attractive destinations for both individual and institutional investors looking to diversify their portfolios. 

Primary reasons fueling the rising demand of real estate in Tier 2 cities in India are – better standard of living,  the work-life balance and reasonable property prices. The emerging markets in these cities present investors with a chance to tap into the booming real estate markets. On that note, let’s check out top Tier 2 cities in India. 

Top Tier 2 Cities In India For Real Estate Investment

Jaipur

The capital city of Rajasthan, Jaipur houses several micro, small, and medium enterprises, and a growing number of IT hubs. The city’s real estate market offers a mix of residential, commercial, and hospitality projects, with areas like Jagatpura, Ajmer Road, and Vaishali Nagar witnessing a notable surge in investment activity. 

The Pink City is attracting several investors from all over the country by offering a unique blend of history, culture, and modern development. Here are some of the factors contributing to increasing real estate investments in Jaipur. 

• Rapidly Evolving Infrastructure: In the last few years, Jaipur has witnessed a robust infrastructural development. The city offers excellent road connectivity to Delhi NCR and other nearby states, making it easier for residents and businesses to thrive. 
• Presence of Major Industries: Jaipur is not just a tourist place; it also boasts a thriving industrial sector. The city is home to a range of industries, including textiles, gems and jewelry, handicrafts, and IT. This diverse industrial landscape provides investors with multiple avenues for real estate investment. 
• Rich Cultural Heritage: Jaipur is famous for its magnificent palaces, forts, and temples which attract a lot of tourists from all over the world every year. This rich cultural heritage adds to the city’s charms and makes it a desirable location for real estate investors. 

Vadodara

Vadodara is the third largest city in Gujarat and considered as a major industrial hub. It offers plenty of housing options, including affordable units and luxury properties to cater to the diverse budget range of homebuyers. Here are some of the factors fueling the growth of real estate investments in Vadodara. 

• Constant Growth: Vadodara is emerging as one of the most preferred locations for real estate investors and homebuyers when it comes to Tier 2 cities in India.  In addition to all the basic amenities, the city offers vibrant social ambiance and lush green societies. The city is already the hub of many large-scale industries and public sector units like ONGC and GAIL.
• Growing business opportunities: The city enjoys special recognition from both state and central government as part of the ‘Smart City Plan’. Also, its proximity to Gandhinagar, also known as GIFT city of India and Mumbai, is one of the main reasons behind the boost in real estate demands in Vadodara. 

Dehradun

Dehradun is one of the top tier 2 cities in India located in Uttarakhand. Hailed as the most liveable cities across the country, the city offers improved facilities and numerous property options for both end-users and investors. Having said that, check out some of the factors influencing the demand for properties in Dehradun. 

• Perfect Destination For a Second Home: With only 243 km (6 hours) away from Delhi, Dehradun has become one of the best locations in India for a second home. The city is considered as a perfect weekend getaway destination to unwind yourself from hectic work schedules.
• Better Standard of Living: One of the main reasons why more and more people are moving to the mountains is the poor quality lifestyles in the cities. That’s why the demand for residential properties in Dehradun has increased in the last few years. The picturesque view along with lush green surroundings and peaceful environment has attracted several millennials to invest in Dehradun.
  

Pune

Known as the “Oxford of the East,” Pune is a thriving IT and education hub with a robust manufacturing sector. The city’s strategic location, pleasant climate, and quality infrastructure make it a magnet for real estate investors. Residential and commercial properties in areas like Hinjewadi, Kharadi, and Wakad have been witnessing steady appreciation in recent years. Here are some of the best reasons why you should invest in Pune. 

• Strategic Location: Situated near Mumbai, the economic capital of India, Pune benefits from its proximity to major corporate hubs while offering a more affordable investment landscape compared to the other top cities. With a combination of favorable factors such as a strong job market, a well-established education sector, and attractive property prices, Pune presents an ideal opportunity for investors to diversify their portfolio.
• Better Returns: Investors seeking stable returns on their investment can tap into Pune’s real estate market, which showcases promising growth potential. The city’s robust infrastructure, well-planned urban development, and rapidly improving connectivity further enhance its investment appeal.

Indore

Hailed as the commercial capital of Madhya Pradesh, Indore, is emerging as a popular destination for real estate investments in India. With a thriving industrial sector and government initiatives like the Smart City Mission, the city offers multiple property options across residential, commercial, and industrial segments, particularly in areas like AB Road, Vijay Nagar, and Super Corridor. Check out some of the reasons why you should invest in Indore: 

• Cleanest City in India: Indore was awarded with the ‘Cleanest City of India’ for the 6th consecutive year in Swachh Survekshan 2022. It is also rated as the first 7-star garbage-free city in India, which speaks volumes for the high standard of cleanliness, sanitation, and hygiene awareness of the people. 
• Influx of Migrant Population: As the city is producing more job opportunities and better educational centres for the young working professionals, it is attracting several big investors and developers from all over the country. Needless to say, it would also boost the demand for residential and commercial real estate in Indore.

Lucknow

Lucknow, capital of Uttar Pradesh, is also witnessing a rapid urbanization and infrastructural development, backed by government initiatives like the Lucknow Metro and IT Parks. 

The city’s growing IT and manufacturing sectors, coupled with affordable housing, make it an attractive destination for real estate investments, particularly in areas like Gomti Nagar, Shaheed Path, and Sultanpur Road. Factors contributing to the growth of Lucknow’s real estate market are: –

• Rapid Urbanization: Lucknow is experiencing rapid urbanization, resulting in an increased demand for residential and commercial properties. This demand-supply dynamics in the real estate market presents opportunities for investors to capitalize on the market potential and achieve attractive returns on their investments. 
• Quality Living At Affordable Prices: Despite the rapid development and modernisation, the cost of living in Lucknow is considerably lower than other bustling metro cities of India. Homebuyers and expatriates looking for a quality lifestyle without spending a hefty amount of capital can find affordable food, transportation, and healthcare amenities in the city. 

Kochi

Kerala’s commercial hub, Kochi, is renowned for its cosmopolitan culture. Rated among the best tier 2 cities in India, it is emerging as a favourable investment destination by offering plenty of commercial and residential property options. Here are some of the compelling reasons why you should consider investing in Kochi. 

• Booming Real Estate Market: The real estate market in Kochi is booming, with several residential and commercial projects are developing across the city. Kochi offers a range of property options – from affordable apartments to luxury villas which makes it an attractive destination for investors looking to enhance their real estate portfolio. The growing demand for real estate in Kochi is also driven by the city’s growing economy and the increasing number of migrants moving to this place for work or maybe a better lifestyle.

• Green and Sustainable Living: The increasing awareness about green and sustainable lifestyle among modern homebuyers has fueled the demand for properties in Kochi. The city has implemented various initiatives to reduce its carbon footprint and preserve its natural resources. The city’s public transportation system, including electric buses, further contributes to reducing air pollution and promoting eco-friendly commuting options.
   

Conclusion

The real estate growth in Tier 2 cities in India presents lucrative investment opportunities for both national and international investors. These cities offer a blend of modern amenities and a lower cost of living, attracting individuals from top Indian cities and creating a demand for residential and commercial properties. 

Whether one is looking for long-term capital gains or generating rental income, these cities provide a favorable investment opportunity for every investor. As the urbanization trend continues to grow and infrastructure is further going to improve, the growth trajectory for Tier 2 cities in India’s real estate market is bound to rise even higher.