Tier II Cities Sell 11% More Houses, Ahmedabad Leads Charge

Residential property sales in Tier II towns surged by 11% to nearly 2.08 lakh units in the last fiscal, according to a PropEquity report released on Friday.

The report highlighted a robust increase in housing sales, reaching 2,07,896 units in 2023-24 as compared to 1,86,951 units in the previous financial year.

Ahmedabad, along with other top Tier II cities such as Vadodara, Surat, Nashik, Gandhinagar, Jaipur, Nagpur, Bhubaneshwar, Visakhapatnam, and Mohali, collectively drove this growth by contributing 80% to the total sales in these 30 towns.

Specifically, these cities saw 1,68,998 residential units sold in 2023-24, marking an impressive 11% increase from 1,51,706 homes in 2022-23.

Other notable Tier II cities include Bhopal, Lucknow, Goa, Coimbatore, Raipur, Vijayawada, Indore, Kochi, Trivandrum, Mangalore, Guntur, Bhiwadi, Dehradun, Ludhiana, Chandigarh, Agra, Mysore, Sonepat, Panipat, and Amritsar.

This surge underscores the expanding demand for housing beyond major cities, with Ahmedabad emerging as a frontrunner in the market. As affordability and growth potential continue to attract buyers, Tier II cities are increasingly becoming pivotal in the real estate landscape, signaling promising prospects for future growth.

"Tier II cities performed better than Tier I cities due to lower property prices and growth potential," according to Samir Jasuja, founder and managing director of PropEquity. "Affordability is making home ownership a reality for the growing middle class in these smaller cities."

Jasuja also noted that these cities are experiencing economic growth due to the establishment of small and medium enterprises and industries, along with government infrastructure projects boosting demand.

The west zone accounted for nearly 70% of the total sales in these 30 Tier II cities, with major cities in Gujarat seeing significant demand. Housing sales in the west zone reached 1,44,269 residential units in 2023-24, up 11% from 1,29,423 homes in the previous year.

Sales in the north zone rose by 8% to 26,308 units, while the south zone witnessed an 8% increase to 21,947 units. The east and central zones experienced an 18% growth in sales, reaching 15,372 units.

Commenting on the report, Eldeco Group chief operating officer Manish Jaiswal said, "We are witnessing a significant transformation driven by enhanced infrastructure and improved connectivity." He mentioned that his company has made strategic investments in Tier II cities like Ludhiana, Rudrapur, and Sonipat due to the increased demand.

Madhusudan G, chairman and managing director of Bengaluru-based Sumadhura Group, noted that although Tier I cities experienced a temporary slump in the second quarter of 2024 due to the Lok Sabha elections, Tier II cities are outperforming due to their affordability, allowing the middle class to own homes.