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10 High Potential Tier 2 Cities for Residential Property Investment

Torbit - June 23, 2024 - - 0 |

Soaring economic activity, infrastructure development, and reverse migration are driving double-digit property price appreciation in emerging urban centers. Once overlooked , these urban centres -Tier 2 cities are rapidly closing the gap with their Tier-1 counterparts, emerging as the much sought after investment destinations.

One can buy residential property in Nagpur, Nashik, Vadodra, Bhopal for INR 3000-5000 per sq ft, in Jaipur, Kochi, Lucknow for INR 4000-8000 per sq ft, in Tricity Chandigarh for INR 7000-10000 per sq ft and in Goa for INR 6000-12000 per sq ft Select micro markets of Tier 2 cities are offeering 10-15 percent YoY capital appreciation  with capital values in premium locations of Goa, Kochi, Chandigarh Tricity matching Delhi-NCR and Mumbai.On the rental  front, hot Tier 2 destination of Goa is commanding a high  yield of 8 percent.

The real estate narrative of India is evolving rapidly, with Tier-2 cities like Kochi, Jaipur, Goa, and Chandigarh Tricity emerging as new growth powerhouses. Housing.com’s proprietary Property Buy Index reveals  that Tier-2 cities are  surpassing the top eight metros by a staggering 88 points, underscoring their increasing prominence and service sector potential.

S.No. City Average Capital Values (INR/sq ft)
1 Bhopal 3,000-5,000
2 Chandigarh 8,000-10,000
  Mohali 7,000-9,000
  Zirakpur 7,000-9,000
3 Coimbatore 5,500-7,500
4 North Goa 10,000-12,000
  South Goa 6,000-8,000
5 Jaipur 4,000-6,000
6 Kochi 6,000-8,000
7 Lucknow 5,000-7,000
8 Nagpur 4,000-6,000
9 Nashik 3,000-5,000
10 Vadodara 3,000-5,000
  • 5 Reasons Why Tier 2 Cities Are Hot Investment Destinations
  • Key micro-markets in Tier-2 cities have witnessed significant double-digit capital value appreciation of 10-15% year-on-year, narrowing the price gap with top metros.
  • Capital values in premium localities of Goa, Chandigarh Tricity, and Kochi are now almost at par with key markets in Delhi-NCR and Mumbai Metropolitan Region.
  • Tier-2 cities like Goa boast robust rental markets with yields as high as 8 percent, in contrast to 2-3% in major metros.
  • Homebuyer preferences are shifting towards high-rise apartments and lifestyle amenities like clubhouses, open spaces, and sports facilities
  • Online property searches by potential buyers in the INR 1-2 crore segment have surged 61 percent, while the above INR 2 crore bracket has seen a growth of 121 percent.

As urban centres are emerging as the new magnets  for skilled workforce and the start-up ecosystem, the evolving real estate landscape of Tier 2 cities presents immense opportunities for investors, homebuyers and developers, looking beyond the traditional real estate hotspots. Moreover, as the high property prices in Tier 1 cities  and even in suburbs of metros are bewyond the reach of large number of property buyers, they can make most of their investment by opting for Tier 2 cities which are comparatively much affordable and yet offer as attractive capital appreciation and rental yield opportunities as in Tier 1 cities.

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