India's residential growth is spreading beyond its largest urban centres. According to the CII–Knight Frank report, 'India's Next Real Estate Markets', 11 emerging markets witnessed 63% rise in the housing prices over 42% in the top eight cities between 2021 and 2026.
The cities which were identified as emerging markets are Bhopal, Bhubaneswar, Chandigarh Tricity, Goa, Indore, Jaipur, Kochi, Lucknow, Nagpur, Visakhapatnam and Coimbatore. Together, these cities have also recorded stronger long-term price growth. Between 2016 and 2026, residential prices across the 11 markets grew at an average annual rate of 8%, against 4% for the top eight cities.
The numbers point to a change in where residential growth is taking place. The trend is also visible in land activity, with Tier-II cities accounting for a growing share of development interest. While the major metros continue to account for a larger share of the overall market, the pace of price appreciation in several emerging markets indicates that demand is expanding into cities with growing economic activity, improving connectivity and greater urban capacity.
Infrastructure investment is supporting the growth
The report links the growth of these markets to infrastructure investment, but also points to a broader chain of factors behind a city’s real estate expansion.
Government infrastructure spending increased from 39% of total government capital expenditure in FY2015 to 55% in FY2026. The report also points to a three-year public-private partnership pipeline of 852 projects with an estimated value of Rs. 17 lakh crore.
Enhanced road networks, transportation infrastructure and other improvements to the city’s infrastructure can improve accessibility to emerging centers for residents and businesses. However, the report highlights that infrastructure alone is not sufficient to create a sustainable real estate market. Connectivity needs to translate into employment, enterprise, population growth and consumption for demand to deepen.
That connection is becoming increasingly relevant as businesses and households look beyond established metros.
Commercial activity is expanding alongside housing
The residential story is also being supported by growth in other parts of the urban economy.
Key Tier-2 markets recorded 11.2 million sq ft of warehousing leasing in 2025, almost comparable to 11.4 million sq ft of the previous year. Lucknow, Jaipur, Nagpur, Indore, Coimbatore and Bhubaneswar contributed 5.3 million sq ft, or almost half of the overall volumes in key Tier-2 markets. Retail infrastructure is expanding as well. India had 134 million sq ft of organised shopping-centre stock across 32 cities in 2025, of which Tier-2 cities accounted for 36 million sq ft. Ten of the 11 emerging markets identified in the report accounted for around 60% of Tier-2 shopping-centre stock.
For the residential market, the key is the wider ecosystem. Warehousing, retailing, services and employment generate activity which can drive demand for housing rather than relying on speculative interest in property.
Jobs and population will shape the next phase
The report also points out social and economic trends that could affect the future of these markets. The cities not in the top eight metros are expected to have a 28.2% population growth, compared to 8.7% for the top eight.
Employment, MSMEs, startups and services activity will therefore remain important to whether the current momentum translates into sustained demand. For developers and investors, the question is not only where property prices have already increased, but whether cities can build the jobs, infrastructure and urban services needed to support further expansion.
The report projects that India’s real estate output could reach $5.8 trillion by 2047, with Tier-2 and Tier-3 cities expected to contribute 25–30% of that total, equivalent to around $1.4–1.7 trillion.
The CII–Knight Frank findings, however, are a record of market performance and a view of emerging potential, rather than a guarantee of future returns. The stronger price growth recorded between 2021 and 2026 shows where momentum has emerged so far; the ability of these cities to sustain it will depend on economic activity, connectivity, population growth and the capacity of their urban infrastructure.
