Infrastructure Boom to Drive Sharp Rise in Land Prices in India’s Tier-2, Tier-3 Cities
Land prices in India’s Tier-2 and Tier-3 cities are expected to rise sharply over the next few years as large-scale infrastructure projects and industrial expansion boost demand in emerging urban centres, according to a report by proptech firm Square Yards. The report, “Realty’s Next Growth Engines: Tier-2, Tier-3 Markets in Focus,” estimates that land values in several cities could increase by 25% to 100% over the next two to four years. Cities such as Bhubaneswar, Cuttack, Erode, Puri, Varanasi and Visakhapatnam are projected to lead the next phase of real estate growth as government investments expand economic activity beyond major metropolitan regions.
The report notes that land markets typically react faster than stabilised housing segments when supported by infrastructure and employment hubs. Properties located within 500 metres to 1 kilometre of metro corridors often command premiums of 8% to 25%, while corridor-level appreciation can reach 15% to 40% after completion. Major infrastructure projects such as airports and expressways can push land values up by 30% to 70% between announcement and completion, while high-growth peripheral areas and plotted developments may see appreciation exceeding 80% to 100% as connectivity improves.
According to Square Yards CEO and Co-Founder Tanuj Shori, India’s real estate sector is entering a structurally driven growth cycle supported by infrastructure expansion, employment creation and financial stability. The report also highlights that rising employment opportunities, revival of over 200 industrial clusters and initiatives such as Semiconductor Mission 2.0 are likely to generate sustained housing demand in emerging cities. With improved mortgage accessibility and macroeconomic stability, the mid-income housing segment—particularly homes priced between ₹50 lakh and ₹1 crore—is expected to see strong demand in the coming years.
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