Tier-2, Tier-3 cities to drive next phase of India’s premium housing growth

NEW DELHI: India’s premium and luxury housing segment is undergoing a structural expansion, with demand steadily moving beyond traditional metropolitan markets into Tier-2 and Tier-3 cities, according to industry reports and developers.

As per Magicbricks, India the country’s luxury housing market is projected to grow at a compounded annual growth rate (CAGR) of 35 per cent, expanding from nearly $17 billion in 2024 to over $103 billion by 2030. This positions luxury housing as one of the fastest-growing segments within India’s residential real estate market.

Data from Anarock further indicates sustained momentum in premium housing demand, driven by rising household incomes, lifestyle upgrades and a growing preference for larger, better-designed homes across emerging urban centres.

While metros such as Mumbai, Delhi-NCR and Bengaluru continue to dominate high-value residential transactions, the Magicbricks report highlights a clear shift in buyer interest towards non-metro markets, including Panchkula, Mohali, Raipur, Bilaspur and select peripheral city clusters. These locations are benefiting from infrastructure upgrades, lower population density and greater land availability, enabling the development of low-density premium projects.

According to Anarock, premium and luxury homes now account for a significantly higher share of new residential launches in several Tier-2 cities, underscoring developers’ confidence in sustained end-user demand in these markets.

Industry stakeholders note that luxury housing in India is increasingly being defined by lifestyle considerations rather than size alone. Buyers are prioritising privacy, exclusivity, wellness and experiential living, leading to higher demand for gated communities, independent floors and lifestyle-led developments.

Aakash Ohri, Joint Managing Director and Chief Business Officer, DLF Homes, said, “Families seeking a more peaceful and fulfilling lifestyle are drawn to the serene embrace of places like Panchkula. Additionally, homebuyers are looking for exclusive addresses and a resort-like living experience as they value privacy, comfort, and a luxurious lifestyle with many amenities and facilities.”

He added that there has been a noticeable rise in non-resident Indian (NRI) interest in these markets. “We have also observed significant interest and investment from NRIs in the region’s real estate market. Many NRIs view current conditions as a favourable opportunity to invest… Over the past three years, there has been a surge in demand for DLF’s low-rise independent floors in Panchkula”, Ohri said.

Echoing similar trends, Prakhar Agarwal of Rama Group said, “The next phase of India’s premium housing growth is clearly moving beyond metros into Tier-2 and Tier-3 cities. In regions like Chhattisgarh, particularly Raipur and Bilaspur we are seeing growing demand for well-designed premium homes with modern amenities.”

He further noted, “Infrastructure development, rising local affluence, and increasing professional migration are accelerating this shift. At Rama Group, we are focused on creating premium residential experiences in these emerging markets”.

Rohit Kishore, CEO, Hero Realty, pointed to Mohali as a key emerging destination, stating, “Real estate in Tier-2 cities is changing rapidly, with more investors exploring options beyond major metros. Mohali stands out as an attractive choice due to urbanization, improved infrastructure, and a desire for a better quality of life”.

Both Magicbricks and ANAROCK indicate that the rise of premium housing beyond metros reflects a long-term structural shift rather than a cyclical trend. As wealth creation expands geographically and lifestyle aspirations evolve, premium housing is expected to play a defining role in India’s next phase of urban development, with the market firmly on track to cross $103 billion by 2030. (ANI)