India’s Tier 2 and 3 Cities Charting its own growth trajectory backed Infra Push

By: Sanjeev Arora, Director, 360 Realtors

Two decades before in the early 2000s, India’s growth was largely limited to larger metros. Delhi NCR, Mumbai metropolitan region, Pune, and the IT giants in South India chronicled India’s spurred economic expansion.

For an average educated Indian, settling in one of these cities where the second-best option. The first one was obviously a well-paying job abroad.

Nevertheless, fast forward it to 2024, and the world has changed. While Indian metros continue to grow in might and size, what is intriguing is the emergence of Tier 2 and 3 cities in India. These new urban catchments are becoming champions of regional growth and economic prosperity.

Across the length and breadth of India, cities such as Indore, Lucknow, Patna, Chandigarh, Vizag, Cochin, Guwahati, Coimbatore, etc. are now seeing unprecedented amount of growth with marked improvement in infrastructure, climb in social liveability index, and steep rise in employment market.

Infrastructure Push in India’s New Urban Corridors

Under the current government, India is putting concentrated efforts to boost the infrastructure developments in Tier 2 and 3 cities. In the extensive USD 1.4 trillion infrastructure development grid, a sizable investments are directed towards smaller cities, thereby bridging the gap between metros & non-metros.

In non-metros, aggressively investments are directed towards developing new urban corridors, suburban transit systems, highway networks, townships, affordable housing projects, airports, railway corridors, etc.

Likewise, work is going full swing on logistic hubs, multi-modal logistic centres, business parks, warehousing, IDCs, riverway network, ports, etc.

A decade ago, a metro station would have been unheard of in a Tier 2 city in India. Today however, this is not the case as most of major non-metros either have an operational suburban transit project or an under-construction metro line

In Lucknow, a 37 Km metro project is underway with the first part of the project already operational. Bihar will see its first ever metro project in Patna. The Rs 13,000 crores metro project that will stretch across 33 kms is slated to start operations from 2025.

In Indore, which is also the biggest commercial hub of the state of MP, the 124 km long metro project will commence in 2024. The overall project will be built following an investment of over Rs 15,000 crores.

Similarly, a host of other projects are taking shape in Indian non-metros. India is planning to develop 35 new Multi modal logistics hubs. Besides major metros, these projects will be situated in non-metros such as Rajkot, Surat, Indore, Bhopal, Kota, Jaipur, Jammu, Coimbatore, etc. Though many MML are still in its nascent phases, once completed this will give a major flip to the logistics and indigenous manufacturing.

Accelerated growth in the real estate market in Tier 2 cities in India

As India’s non-metros are climbing up the curve, the real estate market is also thriving in these cities. Both residential and commercial real estate has taken a shot in the arm. Average property prices have moved up in Lucknow by around 73-92% in the previous 5 years. Average property prices in Indore has risen by around 80-85% in the last 5 years.

Due to rise in living standards and improved physical & social infrastructure, many residents are now moving back to smaller cities to enjoy better quality of living. Improved liveability coupled with lower level of pollution and congestion, naturally make non-metros a great place to live and work.

Due to increased focus on warehousing and logistic, alongside affordable workforce and cheaper real estate price, business & enterprises are also shifting to non-metros. This is boosting the employment market and feeding into the renewal of housing and real estate demand.

Malls, big retail companies, e-commerce, D2C brands are also moving aggressively in the smaller cities in India to tap into evolving consumer preferences. This is not just fuelling demand for new malls, high streets, and retail but also warehousing and industrial lands