Land prices in Tier-2 and Tier-3 cities may rise 25-100% in 2-4 years: Report
Pro-development policies targeting better infrastructure could push up land prices in India’s Tier-2 and Tier-3 cities between 25% and 100% in a period of 2-4 years, according to proptech firm Square Yards. In its report "Realty’s next growth engines: Tier-2, Tier-3 markets in focus”, Square Yards cited that land markets tend to react more sharply than stabilised housing segments particularly when supported by employment hubs, logistics networks and industrial corridors.
The report lists cities such as Bhubaneswar, Cuttack, Erode, Puri, Varanasi and Visakhapatnam to spearhead the next growth cycle, thereby enabling the rise of new housing demand corridors. It highlighted that India’s residential real estate sector is entering a structurally supported expansion phase, backed by Rs 12.2 lakh crore investment in planned public capital expenditure, employment growth and improved financial stability.
Tanuj Shori, CEO and Co-Founder, Square Yards, said that as infrastructure and industrial development expand into new regions, residential demand will increasingly follow employment creation. This will unlock new home ownership opportunities while supporting more balanced and sustainable urban growth across emerging cities, with commercial real estate growth reinforcing this broader ecosystem.
“Considering Tier-1 cities are now largely saturated, with limited scope for future growth, unlocking new growth territories is of utmost importance to maintain large-scale activity in the country’s second-largest employment-generating sector,” he added.
The report stated that properties located within a 500-m to 1-km radius of metro corridors typically command premiums of 8-25%, with corridor-level appreciation of around 15-40% after completion. Larger infrastructure such as airports and expressways could trigger stronger early-cycle gains, with prices in influence zones rising 30-70% from announcement to completion.
In high-growth peripheral micro-markets, particularly in plotted developments and land, multi-year appreciation can exceed 80-100% as connectivity unlocks new development potential. Industrial corridors and logistics hubs supported by employment anchors can drive land value growth of roughly 20-60%, according to the report.
“Along with measures announced in the Budget 2026, planned large-scale investments, such as the recently announced Urban Challenge Fund, would unlock the industrial and commercial prospects of Tier-2 and Tier-3 cities, opening new vistas of growth in the residential segment. For buyers and investors looking for mid-to long-term value appreciation, this is the perfect opportunity,” said Sunita Mishra, Vice-President, Research & Insights, Square Yards.