Tier-2 Cities Emerge As Key Residential Real Estate Frontier In India
New Delhi, October 23, 2026: India’s residential real estate market is undergoing a significant transformation as developers increasingly shift focus toward Tier-2 cities driven by improving infrastructure, better connectivity, and evolving buyer preferences, according to a press release.
Recent industry data highlights a sustained movement beyond traditional metropolitan areas. A 2026 report by Crisil Intelligence revealed that residential demand across 10 Tier-2 cities grew at a 14% CAGR between FY2021 and FY2026, with Lucknow, Nagpur, and Coimbatore recording growth of around 20%. Additionally, a 2026 CII-Knight Frank India report showed residential prices across 11 emerging markets rose 63% between 2021 and 2026, outpacing the 42% increase seen in the top eight metropolitan cities.
Buyers in these emerging markets are increasingly prioritizing larger homes, better amenities, and planned communities over standalone housing formats. In Dehradun, for example, 57% of housing demand on Rajpur Road was for 3-BHK homes, with the Rs 1–2 crore segment accounting for 39% of total demand.
“The opportunity in emerging markets is increasingly about creating the right residential product for a changing buyer. Homebuyers are looking for better planning, quality construction and lifestyle-led amenities even outside the traditional metros. Developers who understand these evolving expectations can build a stronger and more sustainable presence in these markets,” said Manit Sethi, Director, Excentia.
Expanding connectivity is also opening peripheral areas in cities like Muzaffarnagar and Lucknow.
“Residential growth is no longer restricted to the established core of a city. As connectivity and social infrastructure improve, buyers are becoming more open to emerging locations, provided the residential development offers the right combination of accessibility, planning and lifestyle. This is creating a larger opportunity for developers to think in terms of communities rather than standalone housing projects,” said Manoj Kumar Garg, Chairman, NorthWind Estates.
Commentators noted that local end-user aspirations are fueling demand for organized, well-designed spaces.
“Markets such as Muzaffarnagar are seeing a gradual shift in residential preferences. Buyers are increasingly looking for planned developments, better amenities and improved living environments. The opportunity lies in understanding local demand and creating homes that respond to the actual requirements and aspirations of end-users,” said Sunil Goel, Managing Director, Numax.
Highlighting corridor expansion around regional hubs, Preksha Singh, CEO, Agrasheel, stated, “Lucknow’s growth is increasingly extending into its surrounding corridors, creating a larger residential ecosystem. Better connectivity and infrastructure are helping bring emerging locations into the mainstream. For developers, the focus needs to be on long-term residential planning and creating developments that match the aspirations of buyers across the wider region.”
