Tier-II slowdown: New housing supply dips 35% in Q4, developers shift focus to premium homes amid funding squeeze

Time of India

17-06-2025

New housing launches in India's top 15 tier-II cities declined sharply by 35% in the January–March quarter, as developers recalibrated their strategies amid rising costs and selective demand, real estate consultancy PropEquity said on Monday.
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The number of new residential units dropped to 30,155 from 45,901 a year ago, marking a significant supply contraction across key regional markets.
'The decline in supply is a result of cautious approach and shifting priorities by developers. Financially robust players are now focusing on premium housing to improve profit margins,' said Samir Jasuja, Founder and CEO of PropEquity, as quoted PTI.
Among the cities tracked, Ahmedabad saw the largest absolute volume drop — down 35% to 11,096 units from 17,108 units a year earlier.
Surat recorded a 39% fall, while Jaipur saw a 55% plunge. Bhubaneshwar and Trivandrum experienced some of the steepest declines, dropping 72% and 71% respectively.
Other cities with major cuts in supply included:
Lucknow: down 55% to 1,026 units
Mangalore: down 64% to 269 units
Bhopal: down 51% to 365 units
Kochi: down 49% to 225 units
Nagpur: down 28% to 1,036 units
Vadodara: down 23% to 2,149 units
Goa: down 24% to 444 units
Gandhinagar: down 10% to 4,356 units
Nashik: down 2% to 2,466 units
Coimbatore was the only city to buck the trend, with new supply more than doubling to 1,077 units, up from 475 last year.
Rajat Khandelwal, Group CEO of Tribeca Developers, attributed the shift to 'rising input costs, tighter funding, and selective demand in these markets,' adding that developers were becoming more deliberate about launch pipelines.
Kirthi Chilukuri, Founder and MD of Stonecraft Group, said the contraction signals a transformation phase. 'This marks a turning point that holds immense potential. We see it as an opportunity to pioneer sustainable, biophilic housing that aligns with modern living,' he said.
Vijay Harsh Jha, Founder of VS Realtors, noted a shift in demand toward higher-end properties. 'Tier-II cities are moving toward premiumisation. Homes priced at Rs 1–2 crore are in demand, while those around Rs 50 lakh are seeing slower movement — a concern given the inflow of job-seekers in these cities,' he said.
Despite the short-term contraction in supply, Jha said the broader real estate sentiment in tier-II cities remains strong. 'This is a temporary correction,' he added.