South India’s real estate market is entering a phase of broader, decentralised growth, with Tier-2 and Tier-3 cities emerging as significant contributors while Bengaluru continues to anchor institutional demand and innovation-driven development. Analysts say this evolution signals a more resilient and balanced market, with infrastructure investment and employment decentralisation reshaping residential and commercial absorption patterns across the southern region.
Emerging cities such as Coimbatore, Kochi, Thiruvananthapuram, and Visakhapatnam are increasingly functioning as growth engines, offering more affordable housing, shorter commutes, and access to new employment centres. Industry projections suggest these cities could collectively deliver around 40,000 residential units by 2030, rising to 60,000 units by 2035 a steady 10-12% growth trajectory over the decade. For homebuyers and investors, this represents an opportunity to access modern housing at competitive prices, while avoiding saturation in major metro corridors. Bengaluru, by contrast, retains its position as South India’s most resilient market. Its dense technology ecosystem, global capability centres, and expanding office demand continue to attract long-term capital. Analysts highlight that while residential growth in the metro may moderate in volume terms, the city remains pivotal for institutional investors seeking secure returns, mixed-use development potential, and infrastructure-linked residential projects. The metro’s evolving urban landscape is expected to prioritise liveability, transport integration, and sustainable urban planning, strengthening its appeal to high-income and tech-sector professionals. Infrastructure investment is widely acknowledged as the primary catalyst enabling this regional real estate rebalancing.
National highway expansions, Vande Bharat rail corridors, logistics hubs, and the rapid growth of regional airports are compressing travel times and enabling developers to explore non-metro locations previously considered peripheral. These improvements are particularly relevant for warehousing, logistics, and industrial projects, which are expected to outperform traditional office formats in Tier-2 cities. South India is projected to add 8-12 million sq ft of office space, 15-20 million sq ft of retail, 40-60 million sq ft of warehousing, and 12,000-18,000 hospitality rooms by 2030, alongside 200-300 MW of new data-centre capacity, primarily concentrated in coastal and emerging urban nodes. Consultants note that this decentralisation does not diminish the role of metros; instead, it creates a more integrated regional ecosystem. Bengaluru acts as an employment anchor, while surrounding cities absorb incremental residential and industrial demand. This pattern is expected to sustain rental yields, improve occupancy levels, and foster more inclusive urban growth as housing and commercial space expand in a measured manner.
Industry experts caution, however, that the 2026-2028 period could see intermittent volatility due to geopolitical risks, rising capital costs, and sectoral restructuring driven by AI and technology shifts. Developers who prioritise transparent governance, sustainable design, and disciplined capital allocation are likely to outperform speculative land-banking strategies, ensuring long-term resilience across South India’s evolving real estate landscape.
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