Tier-II cities outpace metros in appreciation of property prices, several locations see double-digit growth

India's Tier-II cities outpace metros in property appreciation, deliver strong ROI

India’s real-estate investment landscape is undergoing a shift as Tier-II cities are outperforming Tier-I counterparts in terms of capital appreciation. According to data from Magicbricks, an online property search platform, the average capital appreciation across Tier-II cities stands at 17.6 percent, outpacing national capital’s 11.10 percent.

The data analysed 19 prominent Tier-II cities, which showcased several locations exhibiting double-digit year-on-year (YoY) growth in property values.

Data showed that, in northern India, Lucknow led with an appreciation of 23.70 percent YoY in property prices, followed by Kanpur (19.52 percent), with property values increasing to Rs 7,049 per square foot (psf). Average property prices in Lucknow stood at Rs 6,880 psf in Q2 of 2025.

Similarly, in western India, Goa recorded a 64.61 percent YoY growth in the April-June 2025 quarter, with property values reaching Rs 14,028 psf. This performance positions Goa as a prime example of the high capital appreciation potential in Tier-II markets, driven by its allure as a lifestyle destination and increasing investment in tourism infrastructure.

In southern India, Coimbatore saw a substantial 46.65 percent YoY growth, with average property values climbing to Rs 5,970 psf. Kochi witnessed 14.75 percent capital appreciation. Market observers said that Coimbatore's consistent development and establishment as an industrial and educational hub are contributing factors to this upward trajectory.

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Prinicipal Correspondent|moneycontrol

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The data showed that the capital appreciation in Tier-I markets, like Delhi, Mumbai and Chennai, stood at 11.10 percent, 25.40 percent and 14.90 percent, respectively.

Experts say that infrastructure expansion, increasing affordability, and rising demand are rapidly turning Tier-II cities the new growth hubs, delivering strong returns and capturing investor interest.

Prasun Kumar, Chief Marketing Officer, Magicbricks, said that the growing momentum in Tier-II cities is a clear reflection of evolving consumer preferences and strategic infrastructure investments.

“As affordability aligns with aspiration, these cities are offering unmatched value: delivering higher capital appreciation than many Tier-I markets. From Kanpur and Lucknow in the north to Goa and Kochi in the west and south, respectively, the demand surge is being driven by a mix of end-users and investors eyeing long-term returns and lifestyle upgrades,” Kumar told Moneycontrol.

Cities like Bhubaneswar (19.54 percent YoY), Jaipur (21.32 percent YoY), Indore (22.81 percent) and Patna (17.09 percent YoY) also demonstrated a  healthy growth, reflecting a widespread positive sentiment across many Tier-II locations.

The data showed that while the overall trend pointed to a significant growth, a few exceptions exist.

For instance, Mysore saw a slight dip of 4.69 percent YoY in terms of capital appreciation, although it registered a positive QoQ growth of 2.44 percent, indicating a potential recovery. Surat also showed more modest growth compared to others, with 0.32 percent YoY growth in property prices.

Santosh Agarwal, CFO and Executive Director of Alpha Corp Development Limited, said that tier-II cities are increasingly surpassing metros in property appreciation, driven by robust infrastructure development and changing buyer aspirations.

"Cities like Meerut has evolved into a promising real estate destination due to enhanced connectivity and urban expansion. Additionally, Karnal, in particular, is undergoing remarkable transformation with the progress of the RRTS extension, significantly improving its connectivity with Delhi and bringing broader benefits to the region," he said.