India’s real estate landscape is witnessing the rise of 17 high-impact emerging hotspots, showcasing cities poised for significant growth. These cities span the nation, including Amritsar, Ayodhya, Jaipur, Kanpur, Lucknow, and Varanasi in the north; Patna and Puri in the east; Dwarka, Nagpur, Shirdi, and Surat in the west; alongside Coimbatore, Kochi, Tirupati, and Visakhapatnam in the southern region, with Indore representing central India.
As the world's third-largest economy, India’s evolving urban centers are predicted to be pivotal for the country's future economic expansion. A report by Colliers outlines that by 2050, India could boast eight megacities and nearly 100 cities with over a million inhabitants, marking the dawn of a new urban growth era spurred by factors such as infrastructure progress, tourism boosts, digitization, and transformations in office landscapes.
Key Findings
The report pinpoints the 17 high-impact cities, highlighting how residential real estate stands out as the major segment in 13 of these locations, while warehousing and retail dominate in 10 and 13 of them, respectively. Beyond these, other segments like office space, hospitality, senior living, and data centers are also emerging significant players in this burgeoning market. Interestingly, hospitality ranks as the primary segment in seven cities, while only four cite office spaces as a main focus. Additionally, both data centers and senior living emerge as impactful in seven of the cities rated.
Smaller cities are increasingly vital to India’s economy, thanks to enhanced infrastructure, affordable real estate, skilled labor, and proactive government policies. Badal Yagnik, CEO of Colliers India, emphasizes, "This growth is projected to propel the real estate sector to an estimated $1 trillion by 2030, potentially reaching a $5 trillion value, accounting for a 14-16 percent share of GDP by 2050."
The National Infrastructure Pipeline (NIP) and PM GatiShakti initiatives are expected to facilitate the diffusion and growth of development centers beyond tier-1 cities, driven by improved connectivity and heightened manufacturing activities. With the expansion of factories and MSMEs, the demand for warehouse spaces in these up-and-coming hotspots is also on the rise, particularly along infrastructure corridors.
Demand in Tier-2 Cities
The report outlines a surge in demand for real estate across all segments within tier-2 cities. As businesses increasingly adopt a hub and spoke approach—augmented by the hybrid working trend—many now establish satellite offices in less populated towns. Factors contributing to this trend include advancements in technology, a thriving startup ecosystem, an adept talent pool, ongoing infrastructure improvements, and proximity to established office markets. Notable cities like Kochi, Indore, and Coimbatore illustrate considerable potential as satellite office destinations.
Both employers and employees stand to gain from this trend, enjoying the benefits of office rental arbitrage, complemented by the comparatively lower housing costs ranging between 20% to 30% less than major urban centers. As Vimal Nadar, Senior Director and Head of Research at Colliers India notes, "This surge in demand is set to ignite a wave of interest from leading real estate developers, ushering in an influx of high-quality supply in these markets."
Additionally, digitization within the warehousing and data center sectors is spurring real estate activity in these smaller towns. The explosive growth of e-commerce is likely to drive the establishment of distribution hubs, fulfillment centers, and warehouses in strategically important areas. Cities such as Jaipur, Kanpur, Lucknow, Nagpur, Patna, Surat, and Visakhapatnam have been highlighted as those most likely to experience increased digitization-driven real estate development.
Furthermore, spiritual tourism emerges as a powerful growth catalyst for India's temple towns, attracting significant long-term investment prospects, particularly in the hospitality and retail sectors. Enhanced road networks, flagship train services, and new airport constructions are expected to further increase the attractiveness of these destinations. Cities like Amritsar, Ayodhya, Dwarka, Puri, Shirdi, Tirupati, and Varanasi are particularly marked as significant growth centers due to their spiritual tourism potential.
The identification of these high-impact locations for spiritual tourism derives from a deep analysis of various factors including governmental initiative allotments, visitor statistics at major pilgrimage sites, future real estate development plans, and trends in land price increases.