Why tier 2 cities are now driving India’s land deals

This uptick in activity, both via outright acquisitions and joint development agreements, is being fuelled by two parallel trends: large developers diversifying into emerging markets, and regional players expanding operations.

Tier 2 and 3 cities such as Sanand, Indore, Ahmedabad, Amritsar, Coimbatore, and Mysuru, among others, have seen a notable rise in land deals this year.

Land deals gained momentum post-pandemic, mainly led by the residential sales boom in major cities. Over time, developers began eyeing smaller markets for plotted layouts, logistics parks, and data centres.

“Tier 2 and 3 cities that were once considered peripheral to mainstream real estate activity now represent a substantial component of the investment landscape. The market has also evolved from residential-focused acquisitions to diversified assets classes,” said Mayank Saksena, managing director and CEO- land services at property advisory Anarock Group.

Of the total 2,898 acres of land transacted between January and June this year for a value of ₹30,885 crore, over 1,907 acres were in tier 2 and 3 cities, while the remaining 991 acres were in the top seven cities, as per Anarock Research.

This is a sharp increase from 2024, when 931 acres of land changed hands in tier 2 and 3, out of 2,515 acres of total transacted land.

Real estate data analytics firm PropEquity on Tuesday said between 2022 and May 2025, seven tier 2 cities–Indore, Nagpur, Jaipur, Coimbatore, Mysuru, Raipur and Surat–witnessed a supply of 243,000 residential plots, signalling a strong trend driven by investors chasing higher returns and developers looking for quick cash flows.

Hyderabad, Bengaluru and Chennai were the three top tier I cities that saw a supply of 2.25 lakh residential plots during this period.

The spurt in land deals has happened even though residential sales in the country continue to be driven by the top-tier property markets such as Mumbai Metropolitan Region, Delhi-National Capital Region, Pune, and Bengaluru.

In 2024-25, the top cities clocked 18% year-on-year growth in residential sales, compared to 7% growth in the smaller markets, as per Liases Foras, a real estate research firm.

Realty beyond metros

Ahmedabad has seen strong developer interest. Arvind SmartSpaces Ltd, for example, acquired around 440 acres in the city for an industrial park, and another 150 acres in nearby Sanand for a plotted development.

“We see immense potential in Ahmedabad’s growth story and these strategic acquisitions underscore our commitment to shaping the city’s urban landscape by delivering good quality residential and industrial spaces,” said Kamal Singal, managing director and chief executive, Arvind SmartSpaces.

This year, Godrej Properties, India’s best-selling developer,entered Panipat in Haryana with a plotted development project.It also acquired 24 acres in Indore for around ₹200 crore for a similar project.

The company has been buying land in Tier 2 and 3 cities for residential plotted projects, while it focuses on the top property markets for group housing projects.

Last year, among the top ten developers, Godrej Properties and The House of Abhinandan Lodha were the developers with the highest value of land transactions (over ₹5000 crore) andthe highest size of land deals (392 acres), respectively, across large and small cities, per Anarock.

Bengaluru-based Sattva Group last week said it will develop a 30-acre mixed-use development project Sattva Vantage Vizag Campus in Visakhapatnam, Andhra Pradesh. With an investment of ₹1,500 crore, the project will have office space as well premium housing.

“Vizag is an upcoming property market with good infrastructure, and the government wants new developments. We have more land in the city, where we plan to do residential project going forward,” Sattva Group managing director Bijay Agarwal told Mint. Sattva also has projects in tier 2 markets such as Goa and Coimbatore.

“Now that tier 1 cities are showing some saturation, we think the smaller property markets will start demonstrating better improvement in sales as more affordable supply comes in,” said Pankaj Kapoor, managing director, Liases Foras.

As per Liases Foras, some of the best-performing smaller property markets, both in home sales and new supply, in FY25 were Nashik, Nagpur, Jaipur, Lucknow, Vadodara among others.

As land activity increases and developers double down on expansion beyond the metros, smaller markets are poised for a bigger role in India’s real estate story.