From metros to mini metros: How Tier-II cities are powering India’s real estate expansion

From wellness to spirituality, Tier-II cities are redefining premium living

As India’s real estate sector enters a new phase of expansion, Tier-II cities are rapidly emerging as hotspots for luxury housing, driven by rising aspirations, infrastructure investments and a renewed focus on integrated townships.

According to a recent data from property consultant ANAROCK, land transactions in H1 2025 have already exceeded full-year 2024 volumes, underscoring developers’ strong confidence in the country’s expanding real estate horizon.

The data showed that land deals across Tier-II and III cities in H1 2025 have surpassed area-wise done in Tier-I cities. In H1 2025, land deals in Tier-II and III cities lapped up around 1,907 acres, compared to 991 acres in Tier-I cities.

Market observers said that the shift represents a decentralisation of investment away from metro-heavy markets. With Colliers India projecting that 40 percent of India’s population will reside in urban areas by 2030, developers are turning to self-sustained townships as the future of modern urban living.

Townships redefine lifestyle aspirations of Tier-II India

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Integrated townships—offering curated retail, healthcare, wellness, education, entertainment, premium residences and green zones—are becoming the preferred choice of homebuyers seeking a blend of luxury, convenience and community living.

Demand is particularly strong in cities such as Ayodhya, Lucknow, Chandigarh, Ludhiana, Indore, Rishikesh, Prayagraj, Dehradun, Amritsar, Vrindavan, Sonipat and Goa, where infrastructure upgrades, improved connectivity and tourism-led investments are reshaping real estate value.

A major trend behind this shift is the rise of eco-friendly and luxury second homes. Homebuyers seek residences that offer both serenity and investment appreciation.

Tourism fuels residential demand

Real estate experts said that the rise in tourism across leisure and religious Tier-II locations has directly boosted residential demand. For instance, Ayodhya is witnessing exponential interest as it positions itself as a leading spiritual destination and national investment magnet after major infrastructure upgrades and the opening of Ram Mandir.

Goa continues to benefit from year-round tourism and is increasingly viewed as a premium second-home and investment gateway. Similarly, Rishikesh is drawing buyers who want a lifestyle that merges wellness, nature and contemporary comforts.

Developers note that tourism-centric cities naturally support township ecosystems as they attract a mix of end-users, NRIs and investors seeking secure and high-demand locations.

Sakshee Katiyal, Chairperson, Home & Soul, which is preparing major township launches in Ayodhya, Rishikesh and Goa, said that each city reflects unique demand drivers. Ayodhya’s rapid evolution into a national spiritual and cultural hub, Goa’s sustained tourism-led economic cycle, and Rishikesh’s growing positioning as a wellness–lifestyle market are collectively reshaping demand patterns in Tier-II India.

“We are seeing a new buyer segment emerge—customers who evaluate townships not just for luxury and second-home utility, but for long-term asset appreciation, regulatory clarity, and integrated infrastructure,” she said.

Developers bet big on Tier-II markets

Prominent players have established a presence across several leading Tier-II cities, aligning projects with changing consumer preferences and long-term urban development patterns.

Gurpal Singh Chawla, Managing Director, TREVOC Group, said that Tier-II cities are witnessing an unprecedented surge in demand for planned, lifestyle-driven communities. Cities like Sonipat, Panipat, and Karnal have seen a clear shift --  buyers want larger homes, green spaces and gated communities with holistic amenities.

“Business owners, professionals, and legacy families from the capital are investing here for larger land parcels and less congestion, reflecting an appetite for locations with urban access and suburban tranquility. Hence, this is where the next decade of India’s real estate growth will unfold, positioning Tier-II cities as serious contenders in the luxury housing landscape,” he said.

Market observers said that backed by over Rs 143 lakh crore in national infrastructure investments, India’s Tier-II cities are poised to redefine urban living.

Udit Jain, Director, One Group, a Delhi NCR–based real estate developer, said that integrated townships are increasingly seen as safe and future-ready investments.

“Modern buyers are prioritising security, sustainability, and community-centric living even in Tier-II cities. These fast-developing regions offer the space and scale needed to build such environments. We are seeing strong demand from both local residents and investors from metros looking for long-term value,” he said.