Land Prices in Tier-2, Tier-3 Cities Set to Surge 25-100% in 2-4 Years: Report

The government’s pro-development policies focused on infrastructure creation could significantly boost land prices in India’s Tier-2 and Tier-3 cities over the next few years, according to a report by Square Yards. The report, titled ‘Realty’s next growth engines: Tier-2, Tier-3 markets in focus’, estimates that land prices in these emerging cities could rise between 25% and 100% over the next two to four years.

The report said land markets typically react more sharply than stabilised housing segments, especially when supported by new employment hubs, logistics networks, and industrial corridors. The report identified cities such as Bhubaneswar, Cuttack, Erode, Puri, Varanasi, and Visakhapatnam as potential drivers of the next real estate growth cycle, creating new corridors of housing demand.

The report noted that India’s residential real estate sector is entering a structurally supported expansion phase, backed by Rs 12.2 lakh crore of planned public capital expenditure, along with employment growth and stronger financial stability. Tanuj Shori, CEO and Co-Founder of Square Yards, said that as infrastructure and industrial development spread to new regions, housing demand is likely to follow employment creation.

“This will unlock new home ownership opportunities while supporting more balanced and sustainable urban growth across emerging cities,” he said, adding that growth in commercial real estate will further strengthen this ecosystem. “Considering Tier-1 cities are now largely saturated, with limited scope for future growth, unlocking new growth territories is of utmost importance to maintain large-scale activity in the country’s second-largest employment-generating sector,” he added.

The report also highlighted that properties located within 500 metres to 1 kilometre of metro corridors usually command a price premium of 8-25%, while corridor-level appreciation could reach 15–40% after project completion. Major infrastructure projects such as airports and expressways can trigger even stronger gains, with property prices in influence zones rising 30–70% between announcement and completion.

In high-growth peripheral micro-markets, particularly in plotted developments and land parcels, multi-year appreciation could exceed 80-100% as improved connectivity unlocks new development potential. Similarly, industrial corridors and logistics hubs backed by employment centres could drive land value growth of 20-60%, the report said.

Sunita Mishra, Vice-President for Research & Insights at Square Yards, said government initiatives are likely to accelerate this trend. “Along with measures announced in the Budget 2026, planned large-scale investments, such as the recently announced Urban Challenge Fund, would unlock the industrial and commercial prospects of Tier-2 and Tier-3 cities, opening new vistas of growth in the residential segment. For buyers and investors looking for mid-to long-term value appreciation, this is the perfect opportunity,” she said.

Parvinder Singh, CEO of Trident Realty, said, “Government-led infrastructure development is rapidly altering the growth possibilities of Tier-2 and Tier-3 cities in India. With the development of new expressways, industrial corridors, and better connectivity, these markets are coming closer to major economic centers and are attracting greater attention from both developers and investors. An increase in land costs in these cities is not only a sign of speculation but also indicates the structural change in urbanisation and economic activity.”

Ashish Agarwal, director of AU Real Estate, said, “The expected rise in land prices reflects growing confidence in the future potential of Tier 2 and Tier 3 cities. India’s infrastructure drive is gradually changing the real estate landscape by creating momentum in emerging urban markets where increasing infrastructure and economic activity are creating new avenues for investments. These markets are becoming more attractive for both end-users and investors seeking long-term value as highways, logistics hubs, and urban infrastructure projects are developing. With the right approach, these rising markets hold significant potential for creating the next wave for India’s real estate growth story and developers who enter these markets early and are committed to creating quality developments are likely to benefit the most from this emerging growth cycle.”

Aman Sharma, managing director & founder, Aarize Group, said, “The anticipated rise in land values in Tier 2 and Tier 3 cities reflects the growing confidence of investors and developers in the long-term prospects of these markets. With infrastructure development gaining strong momentum across the country, these locations are attracting greater attention from the real estate sector. As connectivity improves and urban infrastructure expands, these cities are gradually emerging as important centres for real estate development. Over the coming years, Tier 2 cities are likely to play a key role in broadening India’s real estate landscape beyond the traditional metro markets.”