With Budget 2026 signalling a stronger focus on Tier-2 and Tier-3 cities through a sustained infrastructure push, land prices in these markets could rise by 25% to 100% in select corridors over the next two to four years, according to a report by proptech firm Square Yards.
On February 1, Finance Minister Nirmala Sitharaman announced a major thrust on regional urban development, with the Budget proposing the creation of City Economic Regions (CERs). The plan includes an allocation of ₹5,000 crore per region over five years to implement development plans through a ‘challenge mode’, signalling a sharper policy focus on Tier-2 and Tier-3 cities.
Also Read: Budget 2026: Tier-2 infrastructure push set to support housing and logistics demand
The Square Yards report, titled ‘Realty’s next growth engines: Tier-2, Tier-3 markets in focus,’ highlights that pro-development policies targeting better infrastructure could push prices up between 25% and 100% in specific corridors in the said timeframe.
The report notes that several infrastructure drivers are expected to boost land values across emerging cities. Properties located within a 500 metre to 1 kilometre radius of metro corridors typically command a premium of 8–25%, with corridor-level appreciation of around 15–40% after completion. Larger infrastructure projects such as airports and expressways could trigger stronger early-cycle gains, with prices in their influence zones rising 30–70% from the announcement stage to completion.
In high-growth peripheral micro-markets, particularly in plotted developments and land parcels, multi-year appreciation could exceed 80–100% as improved connectivity unlocks new development potential. Additionally, industrial corridors and logistics hubs supported by employment centres are expected to drive land value growth of roughly 20–60%, it said.
According to the report, land markets tend to react more sharply than stabilised housing segments particularly when supported by employment hubs, logistics networks and industrial corridors.
Highlighting that infrastructure investments announced in Budget 2026–27 are expected to expand India’s economic footprint beyond traditional metropolitan centres, the report identifies cities such as Bhubaneswar ( ₹4,000– ₹8,000 per sq ft), Cuttack ( ₹2,000– ₹7,000 per sq ft), Erode ( ₹1,600– ₹6,000 per sq ft), Puri ( ₹5,500– ₹10,500 per sq ft), Varanasi ( ₹4,000– ₹8,000 per sq ft) and Visakhapatnam ( ₹3,000– ₹8,000 per sq ft) as key markets likely to spearhead the next growth cycle and create new housing demand corridors.
The report notes that housing demand in these markets is largely driven by salaried end-users rather than investors. Homes priced between ₹30 lakh and ₹60 lakh typically attract first-time buyers, while the ₹60 lakh to ₹1 crore segment caters to core mid-segment buyers. Properties priced between ₹1 crore and ₹1.5 crore see demand from aspirational buyers, while plotted developments are also witnessing strong traction.
According to the report, India’s residential real estate sector is entering a structurally supported expansion phase, backed by ₹12.2 lakh crore in planned public capital expenditure, employment growth and improving financial stability.
It adds that the sector is witnessing a shift from speculative, liquidity-driven cycles to an employment-backed demand environment, where homebuying activity is increasingly led by end-users rather than investors.
This trend is expected to strengthen the mid-income housing segment, particularly in the ₹50 lakh to ₹1 crore price range, as affordability improves and income stability increases. Improving macroeconomic stability and moderation in the repo rate are also enhancing mortgage affordability, making homeownership more accessible for India’s salaried class, it said.
Infrastructure push expected to drive structural shift in the real estate market
“India’s real estate market is transitioning into a structurally driven cycle anchored in infrastructure expansion, employment growth and financial stability. As infrastructure and industrial development expand into new regions, residential demand will increasingly follow employment creation. This will unlock new homeownership opportunities while supporting more balanced and sustainable urban growth across emerging cities, with commercial real estate growth reinforcing this broader ecosystem,” said Tanuj Shori, CEO and co-founder, Square Yards.
Also Read: Budget 2026: Will focus on Tier-II and III city growth clusters boost real estate opportunities?
“Considering Tier-1 cities are now largely saturated, with limited scope for future growth, unlocking new growth territories is of utmost importance to maintain large-scale activity in the country’s second-largest employment-generating sector,” he said.
Emerging cities to lead the next growth cycle
The report further notes that the revival of more than 200 legacy industrial clusters, alongside initiatives such as Semiconductor Mission 2.0 and expansion in electronics, chemical and advanced manufacturing, is expected to generate large-scale employment across multiple regions. This employment expansion is likely to drive sustained residential absorption in emerging cities while also supporting demand for commercial real estate, including office spaces, logistics hubs and warehousing, as businesses expand operations to support economic growth.
“Along with measures announced in the Budget 2026, planned large-scale investments, such as the recently announced Urban Challenge Fund, would unlock the industrial and commercial prospects of Tier-2 and Tier-3 cities, opening new vistas of growth in the residential segment. For buyers and investors looking for mid-to long-term value appreciation, this is the perfect opportunity,” said Sunita Mishra, vice-president, Research and Insights, Square Yards.
