Tier-II Cities Outpacing Metros: A New Real Estate Report Challenges Investment Norms
Discover how Tier-II cities, especially in North India, are leading the way in real estate appreciation, offering higher returns and affordable rates.
Real Estate AppreciationTierii CitiesProperty InvestmentNorth IndiaCapital AppreciationReal Estate NewsJul 11, 2025
According to a report by MagicBricks, the average capital appreciation in Tier-II cities rose by 17.6%, surpassing Delhi’s 15.7%. This trend signals a rising preference among investors and homebuyers for mid-tier cities, driven by their potential for higher returns. The report highlights that this trend is most evident in North India, with Kanpur and Lucknow leading at 24.53% and 22.61% year-on-year capital appreciation, respectively.
Other cities in the region reflecting a similar trend include Dehradun, Jaipur, and Patna. The surge in property values is driven by a combination of strong demand and relatively affordable rates. For context, the average price per square foot stands at Rs 6,394 in Lucknow, Rs 6,986 in Kanpur, Rs 5,653 in Dehradun, and Rs 5,654 in Jaipur — significantly lower than Delhi’s Rs 18,618 per sq ft, as per MagicBricks data.
The value of homes sold in India’s top 15 Tier-II cities has increased by 6% to Rs 40,443 crore in Q1 2025, as against Rs 38,102 crore in the same period last year. According to NSE-listed real estate data analytics firm PropEquity, Lucknow saw the highest growth with a 25% increase in the number of units sold in Q1 2025, reaching 1,301 units. This was followed by Coimbatore with a 21% increase, Gandhi Nagar with 18%, and Mohali with 2%. Overall, the sale fell by 8% to 43,781 units in Q1 2025 as compared to 47,378 units in the same period last year. Other 11 cities saw a decline in the number of units sold in Q1 2025, with Visakhapatnam registering the highest decline at 37%, and Ahmedabad and Goa recording the least decline at 1% each.
This shift in real estate trends highlights the growing attractiveness of Tier-II cities for both investors and homebuyers. The combination of higher capital appreciation and more affordable property rates makes these cities a compelling choice for those looking to maximize their returns on real estate investments.
Frequently Asked Questions
What are Tier-II cities?
Tier-II cities are mid-sized cities that are smaller than major metropolitan areas but still have significant economic and population growth. Examples include Lucknow, Kanpur, and Jaipur.
Why are Tier-II cities outpacing metros in real estate appreciation?
Tier-II cities are outpacing metros due to strong demand, relatively affordable property rates, and higher potential for capital appreciation.
What is the average capital appreciation in Tier-II cities compared to metros?
The average capital appreciation in Tier-II cities is 17.6%, which is higher than Delhi’s 15.7%.
Which cities in North India are leading in real estate appreciation?
Kanpur and Lucknow are leading in North India with 24.53% and 22.61% year-on-year capital appreciation, respectively.
What are the average property prices in Lucknow and Kanpur?
The average price per square foot in Lucknow is Rs 6,394 and in Kanpur is Rs 6,986, which are significantly lower than Delhi’s Rs 18,618 per sq ft.
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