Indian real estate developers are now expanding into Tier 2 and 3 cities, moving beyond the metros and big cities. According to JLL, a real estate and investment management company, roughly 3,294 acres of land were acquired developers across the country between January 2022 and October 2023. Of these transactions, 44.4% occurred in Tier 2 and 3 cities, accounting for 1,461 acres spread across 17 separate deals.
The trend is particularly noticeable in northern and western India, with Panipat, Ludhiana, Nagpur, and Panchkula accounting for 75% of the total land acquired in these cities.
Real estate firms are targeting new markets in Tier 2 and 3 cities to initiate projects in response to rising customer demand and increased purchasing power. The data reflects the success of reputable developers in finalizing numerous land deals.
There is a strong demand for quality homes in these cities, with DLF’s inaugural project in Panipat selling out within an hour of its launch, and Godrej Properties selling out phase 1 of its plotted development project in Sonipat within two days of its launch. Plotted residential projects have also been introduced in cities like Ambur, Mahabalipuram, Coimbatore, Trichy, and Mysuru in southern India.
Developers are acquiring land in these cities to create future supply pipelines, with companies such as Godrej Properties, M3M, Eldeco Group, and Omaxe Group entering or expanding their presence through recent land acquisitions.
According to Samantak Das, chief economist and head of research and REIS, India, at JLL, if Tier 2 and Tier 3 cities are developed with proper infrastructure, both physical and social, people will be attracted to living in these areas.
The data shows that 91.6% of the acquired land is earmarked for prospective residential developments, with a major emphasis on plotted residential units. This trend is attributed to the local populace’s preference for these formats and the desire for independence and modern amenities.