Tier-II Cities Surpass Metros in Property Appreciation: A New Real Estate Trend
India's real estate sector is witnessing a significant shift as Tier-II cities outperform metros in property appreciation, driven by improved infrastructure, affordability, and rising demand.
Real EstateTierii CitiesProperty AppreciationInfrastructureAffordabilityReal EstateJul 10, 2025
Northern India stands out in this trend, with Kanpur and Lucknow leading at 24.53 per cent and 22.61 per cent year-on-year (YoY) capital appreciation, respectively. These cities, along with others like Dehradun, Jaipur, and Patna, are experiencing substantial growth, driven by a combination of affordability and strong demand. For instance, the average price per square foot in Lucknow is Rs 6,394, Kanpur Rs 6,986, Dehradun Rs 5,653, and Jaipur Rs 5,654 – significantly lower than Delhi’s Rs 18,618 per sq ft. This price gap offers an accessible entry point for both end-users and investors seeking value and upside potential, the study said.
Extensive infrastructure development, upgrades in roads, metro connectivity, airports, and industrial corridors have dramatically improved accessibility and livability, making these cities more attractive. Affordability in lower property prices compared to metros enables a wider demographic to consider homeownership, fuelling demand and capital growth. Rising demand for quality housing from young professionals, first-time buyers, and families is increasingly drawn to life and less congestion. The emergence of new industries, IT/ITeS hubs, and business parks is creating jobs and stimulating residential and commercial real estate demand.
Reverse migration and urban decentralization in the post-pandemic era have seen professionals returning to their hometowns or seeking opportunities in less crowded cities, further boosting demand. Managing Director of Royal Green Realty, Yashank Wason, highlighted that the recent Magicbricks report shows Tier-II cities demonstrating superior property price appreciation compared to metropolitan areas, with many locations achieving significant double-digit growth. This acceleration is attributable to improvements in infrastructure, increased industrial investment, and a discernible preference for an enhanced quality of life beyond densely populated metros.
The confluence of accessible price points, strong connectivity, and favourable government initiatives is rendering Tier-II cities exceptionally attractive to prospective homebuyers and investors. “Our assessment indicates the continuation of this trend, as these cities present compelling value propositions, robust investment returns, and a conducive environment for sustainable urban development,” he said. Director of Mapsko Group, Rahul Singla, noted that the recent Magicbricks report underscores a significant shift – Tier-II cities are now leading the charge in property price appreciation, even outpacing metro markets with double-digit growth in several pockets.
This surge, he said, is driven by a blend of improved infrastructure, rising employment opportunities in smaller cities, digital penetration, and post-pandemic lifestyle shifts that favour affordability and quality living. As remote work becomes more mainstream and urban congestion grows, homebuyers and investors alike are turning to Tier-II cities for better value and long-term potential. “The momentum here signals a structural shift in India’s real estate landscape,” said Singla.
These dynamics are not only attracting local buyers but also investors from Tier-I cities, who see Tier-II markets as cost-effective alternatives with high appreciation potential. The robust growth in both residential and commercial segments underscores a broader rebalancing of India’s real estate narrative, with Tier-II cities now at the forefront of expansion and opportunity.
Frequently Asked Questions
What is the average capital appreciation in Tier-II cities?
The average capital appreciation in Tier-II cities has surged to 17.6 per cent, outpacing metros like Delhi and the national capital.
Which cities in Northern India are leading in property appreciation?
Kanpur and Lucknow are leading in property appreciation with 24.53 per cent and 22.61 per cent year-on-year (YoY) growth, respectively.
What factors are driving the growth in Tier-II cities?
The growth in Tier-II cities is driven by improved infrastructure, lower property prices, rising employment opportunities, and post-pandemic lifestyle shifts.
How does the affordability in Tier-II cities compare to metros?
Tier-II cities offer significantly lower property prices compared to metros, making them more accessible for both end-users and investors.
What is the future outlook for property investment in Tier-II cities?
The future outlook for property investment in Tier-II cities is positive, with experts predicting continued growth and high appreciation potential due to favorable conditions and government initiatives.
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