India's Tier II cities have demonstrated remarkable resilience in the residential real estate sector, recording a significant 4 percent increase in housing sales value during the July-September quarter of 2025, even as transaction volumes witnessed a decline. According to data from real estate analytics firm PropEquity, the total sales value reached ₹37,409 crore across 15 major Tier II cities, showcasing the underlying strength of these emerging markets.
Market Performance Analysis
The quarterly data reveals a complex picture of India's Tier II housing landscape. While the sales value showed healthy growth, the number of units sold actually declined by 4 percent year-on-year to 39,201 units. This paradox indicates that buyers are opting for higher-value properties despite overall market caution.
New housing supply experienced an even more pronounced contraction, dropping by 10 percent to 28,721 units during the same period. This reduction in new launches suggests developers are adopting a more cautious approach to inventory management.
City-Wise Performance and Regional Dominance
The analysis covered 15 key cities including Ahmedabad, Surat, Gandhi Nagar, Vadodara, Jaipur, Nashik, Nagpur, Mohali, Bhubaneshwar, Lucknow, Bhopal, Coimbatore, Goa, Trivandrum, and Kochi. Among these, Ahmedabad emerged as the largest market, though it recorded a 6 percent decline in sales to 13,021 units. Surat followed with an 8 percent drop to 4,936 units.
Lalit Parihar, Managing Director of Aaiji Group, highlighted the significant dominance of Gujarat cities in the Tier II market landscape. "The four Gujarat cities—Ahmedabad, Surat, Gandhi Nagar and Vadodara—account for over 60 percent of Tier II launches and sales," he stated. These urban centers are demonstrating strong housing demand driven by robust economic growth, rising white-collar employment opportunities, and rapid infrastructure upgrades.
Industry Perspectives and Future Outlook
Industry leaders interpret the current market dynamics as a sign of maturation rather than weakness. Samir Jasuja, Founder and CEO of PropEquity, emphasized that "Tier 2 cities remain the key engines of India's growth story." He attributed the sustained demand across residential, commercial, and retail real estate to expanding employment opportunities, improving infrastructure, and stronger connectivity.
Kirthi Chilukuri, Founder & MD of Stonecraft Group, offered an insightful perspective on the supply reduction. "The drop in new launches is more of a strategic pause than a slowdown," he explained. The 4 percent rise in sales value indicates that demand remains robust, with buyers showing willingness to pay premium prices for trusted brands and superior amenities. This trend signals a healthier, more mature market where long-term value appreciation takes precedence over short-term gains.
Other industry experts, including Yashank Wason of Royal Green Realty and Rajat Khandelwal of Tribeca Developers, corroborated these observations, affirming that Tier II cities continue to experience strong housing demand. They noted that homebuyers are increasingly showing preference for newly launched projects that offer modern amenities and better living standards.
The improved connectivity and expanding industrial hubs in these cities are creating a balanced mix of affordability, quality of life, and long-term investment potential, making them attractive destinations for both end-users and investors alike.
