The 2025 Investment landscape has seen a significant tilt in balance, with more astute investors looking beyond demographic-heavy saturated metro markets to the more compelling growth stories and Alpha markets of Tier 2 cities that have a better potential for returns. This strategic about-face betokens a growing recognition of India’s shifting economic geography, where long-held tenets for investment are being reordered by demography, the emergence of new infrastructure, and rapidly changing business tastes that reward nimbleness over sheer bigness.
Investor preference in Pune remains at the top as the city has transcended the tag of Mumbai’s satellite city and is now recognised as an individual, independent economic connector. The vibrancy of the city’s IT industry, top-notch academic institutions and geographical advantage, placed between Mumbai and the Deccan plateau, all add up in its favour.
Smart investors
Smart investors, especially, are targeting upcoming corridors such as Hinjewadi, Wakad and the Pune-Mumbai Expressway belt, where the residential market is giving rental yield returns in the region of 12%-15% year on year. Rental yields in the city are a healthy 3%-4%, much better than sub-2% returns in Mumbai, but with similar lifestyle features and quality of infrastructure on offer.
Ahmedabad is now the gem of Gujarat’s real estate investment crown, favoured due to the state’s business friendly policies and strong growth in its industries. The city’s skyline and infrastructure transformation post the Sabarmati Riverfront development, and an impending bullet train connection to Mumbai are drawing large private equity players to Ahmedabad. Locations like Science City, Bopal and Shela have seen tremendous demand from end users as well as investors with property appreciation of 8%-10% annually. The city’s rich history of manufacturing, its thriving services market, and its superb access make it an excellent option for those seeking good returns in the long term in a supportive environment for enterprises.
Kochi emerges as the most inviting destination for South India as it holds strategic prominence as a commercial port city and thriving IT destination. A cosmopolitan city with a thriving start-up ecosystem, and an excellent educational infrastructure, the city has attracted investors with its strong investment narrative. Smart investors are moving into pockets such as Kakkanad and Edapally or the fast-evolving suburbs on the NH-47 corridor. While the planned expansion of the Kochi Metro and the planned Kochi-Mangalore Industrial Corridor construction further also will push up boom property prices even further, investment opportunities ahead of the game are especially attractive for the smart developer or buyer.
Madhya Pradesh’s commercial capital Indore too has been emerging as a prime investment hub. The city’s position as a strategic region, with great local schools and an increasingly robust industry, has made for a consistent housing market both residential and commercial. Investors are especially optimistic about places like Vijay Nagar, Bhawar Kuan, and the under-development Smart City projects, where rise in infrastructure is leading to a significant rise in valuations. Affordable property prices in the city and the high demand for rentals from students and young professionals, make it a good place to dip your toe into the water if you are a first-time property investor.
The city has become one of Tamil Nadu’s most favoured locations for investment in both textiles and engineering industry. Its proximity to Bangalore, pleasant climate, a growing hub for companies and booming industrial sectors have resulted in high demand for corporate and quality accommodation. Areas such as Peelamedu and Saravanampatti and the IT belt near Tidel Park continue to attract investors, as prices have been on an uptick and rental yields are still a robust 4-5%.
Upgrade in lifestyle
Its unique proposition of planned urbanisation and locational advantage has made it the best performing investment destination in the region of Chandigarh, Mohali and Panchkula, which is also known as Chandigarh Tricity. The tri-city has its own advantages owing to Chandigarh, a Union Territory with good governance and world-class infrastructure (thanks to Le Corbusier’s master plan), which will continue to attract premium residents and businesses. The IT City, Mohali, is a hot pick for smart investors, as it is home to leading IT companies, making it an ideal location for commercial or residential investments. Areas such as Phase 11, Sector 88 and New Chandigarh are seeing fantastic appreciation, properties are giving 10%-12% as annual returns. The hills nearby, coupled with new sectors such as 20, 21, and the upcoming residential zones, make Panchkula a town with good potential to grow at affordable entry points.
In tricity, the location has loads of offerings which is a balanced mix of urban comforts, greens, revered educational institutions and easy accessibility from Delhi and hill stations thus rendering the tricity a most sought after choice for end-users and investors in the quest for quality life and high returns. The rental market continues to be healthy in the area thanks to a steady flow of IT professionals, government employees, and professionals associated with new business ventures in the CRC, and anticipated kudos from new infrastructure such as airport expansion and better highway connectivity will augment property capital values.
A metropolitan lifestyle
A metropolitan lifestyle is possible at relatively less cost and with economic soundness. It’s just the right mix of growth opportunity, affordability and quality of life that today’s savvy investors are looking for.
And as 2025 unfolds, the drive towards Tier-2 level investment is going to consolidate even further, with the pace of infrastructure growth continuing to accelerate, with the other untold story of the year being the push of corporate India no longer confined to metros.
The realisation that the next wave of urban expansion of the country is going to be powered by these emerging, dynamic cities that offer lifestyle impetus along with return on investment is beyond obvious.
The writer is Director, Motia Builders Group.
Published – August 15, 2025 04:57 pm IST