Rise of Tier 2 and Tier 3 Cities in India's Real Estate Market in 2025
For decades, India’s real estate investments were primarily concentrated in metropolitan hubs. These areas, characterized by rapid urbanization, global connectivity, and major employment clusters, created a high demand for property. However, rising land prices and market saturation in Tier 1 cities have led developers and investors to explore new geographies, particularly Tier 2 and Tier 3 cities.
H1 2025 marks a pivotal moment for India’s real estate landscape, with these smaller cities accounting for nearly 70% of total land transactions. According to Anarock Reports, a total of about 1942 acres worth approximately Rs. 5226 crore were transacted across 30 major deals in Tier 2 and Tier 3 cities, holding a revenue potential of Rs. 34,011 crore.
Reasons for High Land Deals in H1 2025
- More Accessible Land Costs : Compared to metro cities, Tier 2 and Tier 3 cities offer more affordable land costs and larger contiguous land parcels. - Strong Growth in Industries : These regions are experiencing robust growth in industries such as IT, manufacturing, and logistics, driving urbanization. - Developer’s Appetite for Large Parcels : Developers are increasingly interested in large acre parcels suitable for townships, mixed-use developments, and plotted housing. - Strategic Shift : There is a strategic shift from metro localities to a more diversified pan-India growth footprint.
Highest Land Deals in India 2025
1. North India
North India has emerged as a significant player in the land deal market.
- Ludhiana (Punjab) : Led the region with 3 significant deals covering 364 acres valued at Rs. 520 crore, contributing 18% of total land transacted, one of the largest land parcels recorded nationwide. - Panchkula (Haryana) : Followed with one transaction of 200 acres worth Rs. 415 crore, accounting for 10% of the land size share. - Mohali (Punjab) : Registered one deal of 13 acres but stood out with the highest transaction value of Rs. 891 crore despite contributing just 1% of land size.
2. South India
South India recorded focused but value-driven activity, led by Coimbatore (Tamil Nadu) . The city completed one land deal of 9 acres amounting to Rs. 370 crore, contributing 0.5% of the country’s total land size.
3. East India
In East India, Cuttack (Odisha) surfaced as a key transaction point, completing one deal involving 57 acres of land with a transactional value of Rs. 115 crore, accounting for 3% of the total land area recorded in 2025.
4. West India
West India demonstrated strong momentum with Surat (Gujarat) emerging as a major contributor. The city executed 2 land deals covering 307 acres, valued at Rs. 510 crore, and accounted for 16% of the total national land size, making it one of the most active markets outside the northern region.
5. Central India
Central India delivered significant traction with Nagpur (Maharashtra) recording the highest number of land transactions in the country. The city completed 4 deals totaling 325 acres, valued at Rs. 777 crore, contributing to 17% of the total land size transacted and reinforcing its position as a growing real estate hub.
Key Emerging Trends
- Tier 2 Cities Outperforming Metros : Tier 2 cities are driving major land transactions, outperforming their metro counterparts. - Dominance in Northern, Central, and West India : These regions dominate land transaction activity, with the majority share of national land transactions. - Largest Land Sizes and Values in North India : Tier 2 and 3 cities in North India have registered the largest land sizes and highest values. - Industrial Corridors and Logistics Clusters : Cities are benefiting from industrial corridors, logistics clusters, and manufacturing ecosystems. - Balanced Strategies for Optimal Returns : Some cities are contributing high value with fewer acres, while others are contributing large acres with moderate value, allowing developers to optimize returns based on location maturity, demand drivers, and resale potential.
Closing Statement
H1 2025 marks a pivotal moment for India’s real estate landscape, with Tier 2 and Tier 3 cities accounting for nearly 70% of total land transactions. Cities like Nagpur, Surat, Ludhiana, Raigad, and Vijaynagaram are emerging as new economic power centers, supported by infrastructure upgrades, industrial expansion, and rising residential demand. Based on the report, it is clear that the next decade belongs to India’s rising Tier 2 and Tier 3 cities, with 14 deals, 841 acres of land transacted at Rs. 2801 crore.
