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Spiritual tourism is driving a surprising trend in India's real estate market, boosting Tier II and III cities as major growth centres. A new Colliers India report identifies 17 emerging cities set to benefit from this surge. While major metros like Mumbai and Delhi have traditionally powered India's economy, improved infrastructure, affordable living costs, and government initiatives are now attracting businesses and residents to smaller cities. Nearly 60% of domestic tourists visit spiritual destinations, a USD 60 billion industry expected to reach USD 130 billion by 2032. This growth, coupled with rising remote work, e-commerce, and digital infrastructure, is transforming India's real estate landscape.
Spiritual tourism is driving a surprising trend in India's real estate market - the rise of Tier II and III cities as major growth centres. A new report by Colliers India identifies 17 such emerging cities poised to benefit from this unexpected surge. Advertisement
Traditionally, India's economic engine has been powered by major metropolises like Mumbai and Delhi. However, the Colliers India report highlights a significant shift towards smaller cities. Factors like improved infrastructure, affordable living costs (compared to metros), and government initiatives are attracting businesses and residents, leading to a more "equitable growth" trend across the nation.
The report identifies a surprising driver of this growth - spiritual tourism. With nearly 60% of domestic tourists visiting spiritual destinations, this USD 60 billion industry is expected to reach a staggering USD 130 billion by 2032, reflecting a Compound Annual Growth Rate (CAGR) of 9-10%. Cities with famous temples, pilgrimage sites, and spiritual significance are experiencing a boom in tourism and related infrastructure development.
The report goes beyond tourism, highlighting other factors impacting real estate in these emerging cities. With an estimated 75 crore internet users, the rise of remote and gig work is creating a demand for second homes and co-working spaces in offbeat destinations. This trend is fueling growth in home ownership, shared offices, and time-share properties, as people seek to blend work and life seamlessly.
India's rapidly growing e-commerce market, projected to reach USD 160 billion by 2028, is also influencing real estate demand. The need for warehouses and fulfilment centres is increasing, and Tier II and III cities are strategically positioned to serve this expanding online shopping market. This boom in e-commerce is driving significant growth in the logistics and warehousing sectors.
Additionally, India's rapid digitization is leading to the development of data centres in smaller cities like Bhopal, Cuttack, and Ranchi. This trend is driven by the need for reliable infrastructure to support a growing online population of over 75 crore internet users, the second highest globally. As digital infrastructure improves, these cities are becoming hubs for data storage and processing.
Decentralised work models are also reshaping real estate dynamics. IT companies and startups are increasingly tapping into the talent pool in smaller cities, leading to a rise in demand for both commercial and residential real estate. The shift towards hybrid work models, with central offices in metros and operational hubs in smaller towns, is further supporting this trend, making smaller cities attractive for both businesses and residents.
The Colliers India report suggests that these 17 emerging cities will witness rapid real estate development in the coming years. This marks a significant shift in India's growth story, with smaller cities playing a more prominent role alongside traditional metropolises.
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