Housing sales in top 30 Tier II cities up 11% in FY24 to nearly 2.08 lakh units: PropEquity

New Delhi: Rise in housing demand is not restricted to major cities as sales of residential properties rose 11 per cent last fiscal across 30 Tier II towns to nearly 2.08 lakh units, according to PropEquity.

Real estate data analytic firm PropEquity on Friday released a report on Tier II cities' housing market.

The data showed that housing sales increased 11 per cent to 2,07,896 units in 2023-24 as against 1,86,951 units in the preceding financial year.

Top 10 Tier II cities -- Ahmedabad, Vadodara, Surat, Nashik, Gandhi Nagar, Jaipur, Nagpur, Bhubaneshwar, Visakhapatnam and Mohali-- contributed 80 per cent to the total sales in 30 small towns.

These 10 cities together clocked sales of 1,68,998 residential units in 2023-24, up 11 per cent from 1,51,706 homes in 2022-23.

The other 20 Tier II cities are Bhopal, Lucknow, Goa, Coimbatore, Raipur, Vijayawada, Indore, Kochi, Trivandrum, Mangalore, Guntur, Bhiwadi, Dehradun, Ludhiana, Chandigarh, Agra, Mysore, Sonepat, Panipat and Amritsar.

Samir Jasuja, Founder and Managing Director at PropEquity said, "Tier II cities performed better than Tier I cities due to lower property prices and growth potential." Affordability is enabling the dream of owning a home a reality for a growing middle class in these smaller cities, he added.

"These cities are also experiencing economic booms due to the setting up of small and medium enterprises (SME) businesses and industries. Government push on infrastructure creation is another major reason for rising demand in Tier II cities," Jasuja said.

PropEquity, which is listed on the stock exchanges, data showed that the West zone accounted for nearly 70 per cent of the total sales in 30 Tier II cities.

Major cities falling in the state of Gujarat saw huge demand.

Housing sales in west zone reported sales of 1,44,269 residential units in 2023-24, up 11 per cent from 1,29,423 homes in 2022-23.

Sales of residential properties in north zone rose 8 per cent to 26,308 units last fiscal from 24,273 homes in 2022-23.

South zone saw sales of 21,947 units in 2023-24, up 8 per cent from 20,244 homes in the preceding year.

Housing sales in east and central zone grew 18 per cent to 15,372 units last fiscal from 13,011 units in 2022-23.

Commenting on the report, realty firm Eldeco Group COO Manish Jaiswal said, "We are witnessing a significant transformation driven by enhanced infrastructure and improved connectivity." Seeing this upswing in demand, he said the company has made strategic investments in Tier-II cities like Ludhiana, Rudrapur and Sonipat.

Bengaluru-based Sumadhura Group CMD Madhusudan G, said, " Although the second quarter of 2024 experienced a temporary slump in Tier 1 cities due to the Lok Sabha elections, Tier II cities are outperforming Tier 1 cities primarily because of their affordability, which allows the aspirational middle class to own their dream homes in these cities." Madhusudan noted that the impressive growth fuelled by SMEs and industries signals positive prospects.

"Additionally, mega public infrastructure projects are driving up housing demand in these developing cities," he added.