Tier-2 Cities Outpace Top Markets In Residential Price Growth; Rise 63% In Five Years: CII-Knight Frank India
Mumbai, September 19, 2026: Residential property prices in India’s emerging Tier-2 markets grew by 63% between 2021 and 2026, outpacing the 42% growth recorded across the country’s top eight primary real estate cities, according to a joint report by the Confederation of Indian Industry (CII) and Knight Frank India titled “India’s Next Real Estate Markets.”
The study identifies 11 secondary real estate hubs—Bhopal, Bhubaneswar, Chandigarh Tricity, Goa, Indore, Jaipur, Kochi, Lucknow, Nagpur, Visakhapatnam, and Coimbatore—which posted an average residential price compound annual growth rate (CAGR) of 8% between 2016 and 2026, double the 4% CAGR registered across the top eight metropolitan markets over the same period.
While primary metropolitan centers will continue to anchor the real estate market by volume, Tier-2 and Tier-3 cities are projected to account for 25% to 30% of India’s total real estate output by 2047, representing an estimated output of Rs 116 lakh crore to Rs 141 lakh crore ($1.4 trillion to $1.7 trillion
“India’s real estate growth is increasingly broadening beyond the traditional metropolitan centres. The investable opportunity across Tier-2 and Tier-3 cities, satellite markets and emerging corridors will be shaped not simply by infrastructure creation, but also by their ability to convert connectivity into sustained economic activity. Cities that bring together employment, enterprise, population growth, consumption and urban capacity will be better placed to build deeper and more diversified real estate markets,” said Shishir Baijal, International Partner, Chairman & Managing Director, Knight Frank India.
In addition to residential gains, Tier-2 cities accounted for 36 million square feet of India’s 134 million square feet of organized retail stock across 365 shopping centers in 2025, with the 11 identified markets holding nearly 60% of that regional retail inventory. Furthermore, key Tier-2 cities recorded 11.2 million square feet of warehousing lease transactions in 2025, with Lucknow, Jaipur, Nagpur, Indore, Coimbatore, and Bhubaneswar accounting for nearly half of those industrial volumes.
The expansion is further supported by government infrastructure spending, which increased from 39% of capital expenditure in FY 2015 to 55% in FY 2026, alongside a three-year public-private partnership pipeline comprising 852 projects with a combined project cost of Rs 17 lakh crore.
