Winning Bizness Desk

Mumbai.Real estate growth shifts to 11 smaller Indian cities as housing prices outpace major metros over five years

India’s real estate growth is increasingly extending beyond Delhi-NCR, Mumbai and Bengaluru, with 11 emerging Tier-2 markets recording a sharper rise in housing prices over the past five years. A recent report by the Confederation of Indian Industry (CII) and real estate consultancy Knight Frank shows that residential prices in these markets rose 63% between 2021 and 2026.

The report identifies infrastructure development, improved connectivity and rising consumption as key factors behind the expansion of these markets. The 63% increase in residential prices was significantly higher than the roughly 42% growth recorded across India’s top eight metropolitan cities during the same period.

What the report says about price growth

The report, titled India’s Next Real Estate Markets, highlights the difference in housing-price growth between emerging markets and established metros. Between 2021 and 2026, residential property prices across the 11 identified markets increased by 63%, while prices in the country’s top eight cities rose by about 42%.

The longer-term data also shows a clear difference. Between 2016 and 2026, average residential property prices in the 11 emerging markets increased by about 8% annually. This compares with annual growth of around 4% across the top eight metropolitan cities.

The 11 markets identified in the report are:

• Bhopal, Bhubaneswar, Chandigarh, Goa and Indore
• Jaipur, Kochi, Lucknow, Nagpur, Visakhapatnam and Coimbatore

Infrastructure spending is driving expansion

The report links the expansion of these markets to the increase in government infrastructure spending. Infrastructure accounted for 39% of total government expenditure in financial year 2014-15. Its share increased to 55% in 2025-26.

The government’s three-year public-private partnership (PPP) pipeline includes 852 projects with a combined value of Rs 17 lakh crore. The report says these investments are supporting the long-term development of Tier-2 and smaller cities through infrastructure creation, improved connectivity and increased economic activity.

Population growth adds to housing demand

Shishir Baijal, chairman and managing director of Knight Frank India, said India’s real estate development is moving beyond the traditional metropolitan centres. Population projections cited in the report underline the scale of this shift.

Cities outside the top eight metropolitan centres are projected to record population growth of 28.2%, compared with 8.7% for the top eight cities. The higher population growth in emerging markets is contributing to the expansion of their housing and urban infrastructure requirements.

Startup activity spreads beyond major metros

The changing economic profile of smaller cities is another factor highlighted in the report. India has more than 2 lakh registered startups, with nearly 50% operating from Tier-2 and Tier-3 cities.

The concentration of startups outside the major metros reflects the expansion of business and employment activity across smaller urban centres. This wider economic base is also supporting demand for residential and commercial property in these markets.

Key figures highlighted in the report include:

• 63% rise in residential prices across 11 emerging markets between 2021 and 2026
• About 42% growth in residential prices across the top eight metropolitan cities
• Around 8% annual residential price growth in emerging markets between 2016 and 2026
• About 4% annual growth across the top eight metropolitan markets
• Rs 17 lakh crore PPP pipeline covering 852 projects

Smaller cities gain a larger real estate role

The report’s data shows that the real estate market is no longer concentrated in India’s traditional metropolitan centres. Higher residential price growth, population expansion, infrastructure investment and increasing startup activity are strengthening the property markets of several Tier-2 and Tier-3 cities.

The 11 markets identified by Knight Frank and CII — including Bhopal, Indore, Jaipur, Lucknow, Kochi and Coimbatore — have already recorded faster residential price growth than the top eight metros over the five-year period from 2021 to 2026. The report presents these markets as an increasingly important part of India’s next phase of real estate development.