Synopsis- India’s tier-2 cities are coming up as the new commercial realty hotspots, being driven by infrastructure upgrades, corporate expansion, and rising investor confidence. Several tier 2 cities are now promising higher ROI, affordable entry costs, and sustainable growth.
The Indian commercial real estate space has been experiencing a transition as investors, corporates, and entrepreneurs are now looking beyond the metros for their investments. The rise of tier-2 cities as commercial hubs has been transforming investment strategies. In the coming years, these markets are set to redefine India’s commercial real estate landscape with strong capital appreciation and potential for long-term leasing demand. This article is going to talk about the 7 best tier-2 cities in India for commercial property investments in 2025.
How have Tier-2 Cities become the New Investment Hotspots
Tier-2 cities such as Lucknow, Indore, Jaipur, Coimbatore, Nagpur, Ghaziabad, and Chandigarh are now offering high Return on Investment (ROI) potential, with better affordability and robust infrastructure upgrades, due to focused government initiatives, rapid urbanization, and expansion of IT and manufacturing sectors. These cities have delivered lower entry costs, strong demand for commercial leasing, and even reliable long-term appreciation.
Key Trends Fuelling the Commercial Property Growth
- Infrastructure Upgrades: Smart City and transport projects, like new airports, ring roads, industrial corridors, and other similar initiatives, have improved the connectivity and are making these cities business-friendly.
- Government Incentives: Support from the government in certain ways, such as Tax breaks, simplified approvals, and urban rejuvenation, has been able to promote the commercial investments.
- Workforce Migration: Skilled professionals are relocating due to the availability of better job opportunities, lower living costs, and even less traffic congestion.
- Corporate Expansion: With operational costs 30-50% lower than metros and other Grade-A office options, corporates and startups are now establishing offices and retail hubs in these emerging markets.
- Rental Yields and ROI: Commercial properties provide yields ranging 6- 9%, with select warehouse and industrial developments even reaching upto 12-16%.
7 Best Tier-2 Cities for Commercial Property Investment
1. Lucknow
The rising metro city, Lucknow, has witnessed a capital appreciation of almost 23% in 2025, which is even more than most of the tier-1 cities. Infrastructure developments like the Lucknow Metro, expressway projects, and several new IT parks are now attracting top corporates and retailers. Key commercial areas such as Gomti Nagar and Shaheed Path are in high demand for office, co-working, and retail spaces.
2. Indore
Indore has been frequently ranked as India’s cleanest city, it has risen to become a startup and logistics hub as well. Being in the industrial corridors linking Mumbai and Delhi, along with incorporating a thriving SME sector, this city can accelerate demand for commercial offices, warehouses, and IT business parks. Rental yields have always remained steady. Additionally, the city’s Super Corridor has remained as a top choice for new infrastructure developments.
3. Jaipur
With its strategic location along the Delhi-Mumbai Industrial Corridor (DMIC) and other major infrastructure projects, this city is witnessing robust demand for commercial properties. Key micro-markets like Ajmer Road and Jagatpura are seeing double-digit annual price growth, making it a favourite spot for retail and commercial-focused investors.
4. Coimbatore
Also known as the Manchester of South India, this city is home to the manufacturing sector, along with a rapidly expanding IT and education sector. The presence of flexible workspace operators and global tech companies has further fuelled the office leasing market, while the retail sector has been enjoying consistent growth. Areas near the airport and TIDEL Park have been in high demand for commercial developments and uses.
5. Ghaziabad
Taking advantage of its proximity to Delhi, Ghaziabad has been booming with its improved metro and expressway connectivity. Hybrid work models and the growing demand for organized retail have been driving the prices and yields upwards. Commercial spaces alongside the Delhi-Meerut expressway and in modern business parks have been able to attract top tenants.
6. Nagpur
As a central logistics powerhouse, Nagpur is at the intersection of major highways, with various infrastructure projects in place, such as the MIHAN project and Samruddhi Mahamarg Expressway, which is transforming it into a hub for warehousing, logistics, and IT. Commercial land near the Wardha Road and the metro corridors is delivering strong capital appreciation and creating excellent rental prospects.
7. Chandigarh
Chandigarh is known for its highly planned layout, growing startup culture, and young entrepreneurial startups. With clean and spacious roads and avenues, there has been a rising presence of co-working spaces and attractive commercial investment opportunities, especially at entry prices that are far below those of tier-1 metros.
Why is Now the Best Time to Invest
- Unprecedented capital inflow: The first half of 2025 saw land deals worth Rs. 31,000 crores, out of which most of it happened in the tier-2 cities.
- Growing investor confidence: High Networth Individuals(HNIs), and Non Resident Indians (NRIs), and institutional buyers are all increasing their exposure in these markets.
- Sustained demand: E-commerce, IT, logistics, and manufacturing are the key drivers of space absorption, hence, a sustainable demand for space is expected.
Conclusion
In 2025, the top 7 tier-2 cities for commercial property investments include Lucknow, Indore, Jaipur, Coimbatore, Ghaziabad, Nagpur, and Chandigarh. These cities are backed by massive infrastructure projects and economic potential. In addition to that, these cities are able to offer an unmatched blend of affordability, appreciation potential, and future-readiness. Strategic investments here are not just going to be lucrative, but they are even going to shape the future of the Indian commercial real estate story.
Written by Adithya Menon
