The burgeoning prominence of tier 2 and 3 cities as growth engines. signals a paradigm shift in the India's current real estate landscape. As urban dwellers increasingly prioritise spacious living and proximity to nature, realty developers are astutely recalibrating their strategies to cater to this evolving demand. The phenomenon is not merely geographical, it's a societal renaissance, with individuals seeking an enhanced quality of life beyond metropolitan confines. The strategic foray of developers into untapped markets and new pockets of growth reflects a visionary approach to meeting these shifting preferences. As the market recalibrates, there are newer destinations that are gaining prominence.
As per the recent JLL data, in the 22-month period from January 2022 -October 2023, around 3,294 acres of land were acquired by developers in the country. The data shows that 44.4% of these land deals were transacted in tier 2 and 3 cities, with a total of 1,461 acres being acquired across 17 separate land deals. The data indicates that driven by the increasing demand and buying capacity of customers, branded developers have successfully closed many land transactions in these cities.
In the north, developers are venturing into cities like Panipat, Sonipat, Kurukshetra, Panchkula, Lucknow, Jaipur, and Ludhiana, and in the west, cities like Nagpur, Khalapur, Surat and Palghar have attracted national level players.

It is pertinent to note that 91.6% of the land acquired (1,339 acres) is for proposed residential developments, with a majority being planned as plotted residential developments/units. Developers are primarily focusing on low rise and plotted developments in these cities as the locals are accustomed to living in these types of formats. In fact, around 1,015 acres have been earmarked for plotted developments and valued at over 3,163 crore. 

Samantak Das, chief economist and head of research and REIS, India, JLL says, "Strategic land acquisitions by realty developers in tier 2 and 3 cities to enter new markets and leverage the rising demand for quality projects is on the rise. The launch of new residential projects is expected to strengthen further through new land acquisitions in strategic locations and growth corridors."
According to various market sources, prominent developers like DLF, Godrej, M3M, Eldeco and Omaxe have entered or expanded in these markets with recent land acquisitions. Encouraged by the unprecedented levels of residential sales in emerging cities, developers are also acquiring land to build relevant supply pipelines for the future.

Some developers are also planning to launch holiday homes as people in metros. are looking for second homes in vacation destinations like Goa, Shimla, Rishikesh, etc.
 "Discerning buyers are drawn not only by the promise of a tranquil retreat in hotspots like Goa but also by the investment potential inherent in these vibrant markets. Simultaneously, the surge in luxury real estate in tier 2 and 3 cities underscores the sophistication of evolving consumer aspirations. These cities are no longer mere satellites; they are vibrant epicentres of prosperity and culture" opines Aditya Kushwaha, CEO & director, Axis Ecorp.

As per Dr Niranjan Hiranandani, chairman, NAREDCO, several factors could contribute to the rise of these tier cities, including demographic shifts to emerging urban hubs with better connectivity, improved civic ecosystems, and industrialisation. "They serve as important economic hubs by attracting investments, creating jobs and attracting a workforce that will have a snowball effect on the economy," asserts Dr Hiranandani. Furthermore, he adds, illustrious educational campuses and improved healthcare facilities have attracted career migrants along with institutional investment.

As per Anarock Research, Ahmedabad saw total new launches of approx. 34,600 units in first nine months of 2023 while nearly 29,910 units were sold in the same period. "What is interesting is that avg. residential prices have seen 27% jump in the city between 2019 and 2023 presently from 3,010 per sq.ft. in 2019 to nearly 3,810 per sq.ft. as of September-end 2023, states Prashant Thakur, regional director & head-research, Anarock Group.
 In these burgeoning tier 2 and 3 cities, developers are not merely building structures, they are laying the foundation for vibrant communities and economic vitality. "As they strategically allocate resources to tap into the latent potential of these markets, they are not just transacting land, they are catalysing transformations that resonate across both urban and rural landscapes," avers BK Malagi, COO, Experion Developers.
The interest in real estate sector is now not only restricted majorly to residential and commercial properties, but also to warehousing, data centres, malls, high street retail. "With e-commerce gaining momentum and with the expectation of same day delivery, the demand of warehouses have also increased in various smaller city centres," puts in Harsh Parikh, partner, Khaitan & Co.
Jatin Suratwala, MD and chairman, Suratwala Business Group too highlights that this decentralised growth pattern will contribute to a more balanced and sustainable real estate market, alleviating the pressure on overcrowded metropolitan areas.