Classification Of Tier 1 Cities, Tier 2, 3 & 4 Cities In India, And Impact Of Real Estate

Throughout India's vast geography, cities are becoming more and more significant as key centers of commerce, employment, and culture. To make it easier for people to travel and assess the diverse landscapes, the Indian government has split cities into four main categories: Tier 1 cities, Tier 2 cities, Tier 3 cities, and Tier 4 cities. These cities' categories serve as the primary determinants of important factors such as infrastructure development, city population, economic growth, and quality of life.

What is India's Tier Classification of Cities?

When it comes to tier classification, there are two schools of thought. The first separates Indian cities into urban, semi-urban, and urban categories, while the second classifies them according to their population and commercial activity.

Classification as per Population into Tiers

Indian cities are divided into six separate groups or tiers by the Reserve Bank of India (RBI) based on their population. Based on the density of the city's population, these range from Tier I to Tier VI.

The Reserve Bank of India (RBI) has divided the cities into tiers as follows:

Tier 1       1,00,000 and above

Tier 2       50,000 to 99,999

Tier 3       20,2000 to 49.999

What Is the Main Purpose Of Classifying The Cities In India?

The reasons for categorizing Indian cities into different levels are as follows:

• For the Urban planning purpose: In order to prioritize resource allocation and ensure that the less developed cities in India receive enough attention, it is helpful to classify cities into different Tiers for the planning of infrastructure development and urban planning.

• Assessing the overall quality of life: This classification is used to measure a city's overall social development as well as its quality of life in order to evaluate the quality of life. It also aids in identifying areas for improvement and funding allocation for researchers and politicians.

• Economic Assessment: A city's potential and economic strength are also evaluated using the tier system, which helps investors and businesses find markets and business prospects.

• Administrative purpose: By properly allocating resources and making decisions, it also enables governmental entities to run cities in an efficient manner.

Why Tier 1 Cities In India As The Growing Urban Centers?

India's Tier 1 cities represent the pinnacle of infrastructure expansion, urban development, a wealth of chances, and upscale facilities. According to the Reserve Bank of India, Tier 1 cities are those with a population of at least 1 lakh as per the 2001 census.

These cities feature the most expensive real estate markets, first-rate infrastructure, top-notch educational institutions, and a thriving business environment for wise investment. A diverse populace is drawn to it as a result of the numerous job opportunities it provides.

Tier 1 Cities List In India

The Tier 1 cities in India are listed below, according to the classification made by the Indian government:

1.    Delhi

2.    Mumbai

3.    Bengaluru   

4.    Chennai

5.    Kolkata

6.    Hyderabad

7.    Pune

8.    Ahmedabad

What is the Real Estate impact in Tier 1 cities in India?

According to media estimates, in 2022, sales of real estate in Tier I cities in India outpaced sales in Tier II cities by a factor of 250. The sales of residential units in Tier I cities in India increased as a result of a number of reasons, including the lower repo rate in the first half of 2022 and reduced cost of credit.

Why Tier II Cities in India are The Emerging Urban Cities?

India's Tier II cities come next after Tier I cities. The real estate market in the cities in this category is expanding the fastest, and they are experiencing rapid expansion with exciting development prospects. In India, properties in Tier II cities are often less expensive than those in Tier I cities. In these cities, investments in and development of the infrastructure are rising steadily. According to RBI, Tier II cities in India are those with a population of 50,000 to 99,999.

The Tier II cities in India have a wide variety of reputable educational institutions, rapid infrastructure development, well-established healthcare facilities, and all the essential amenities to suit the demands of the country's expanding population.

Which All Cities Come Under Tier II Cities In India?

Tier 2 Cities List In India is as follow:

Tier II Cities In India

1. Amritsar

2. Bhopal

3. Bhubaneswar

4. Chandigarh

5. Faridabad

6. Ghaziabad

7. Jamshedpur

8. Jaipur

9. Kochi

10. Lucknow

11.  Kanpur

12.  Patna

13.  Raipur

14. Surat

15. Visakhapatnam

16. Agra

17.  Ajmer

18. Kanpur

19. Mysuru

20. Srinagar

What Is the Real Estate impact in Tier II cities in India?

India's Tier II cities are located following its Tier I cities. Compared to big cities, the cost of living and maintenance is lower here. The Tier II cities in India are attractive to real estate investors and buyers due to their good work-life balance, reasonably priced housing society types, and well-established infrastructure, to name a few. Not only that, but according to market research, India's Tier II cities will soon serve as a significant growth center for the country's real estate sector.

Why Tier 3 Cities In India Are Developing As Urban Cities?

India's urban cities in Tier III are those that are expanding. According to RBI's classification, Tier III cities are those with a population between 20,000 and 49,999. The manufacturing industry, the education sector, the IT services business, and other industries are key employers in Tier III cities. These cities are growing in popularity as a place to invest because of their vital contribution to the local economy.

Which Cities In India Are Tier III Cities?

Tier 3 Cities List In India is mentioned below:

1. Etawah

2. Roorkee

3. Bhatinda

4. Hajipur

5. Rajahmundry

6. Rohtak

7. Hosur

8. Gandhinagar

9. Junagadh

10. Udaipur

11. Salem

12. Jhansi

13.Madurai

14.Vijayawada

15. Meerut

16. Mathura

17. Bikaner

18. Cuttack

19. Nashik    

What Are The Real Estate Impact In Tier III Cities In India?

The Tier III cities in India are considerably behind the Tier I and Tier II cities, but they have a lot of room to grow and develop. The Tier III cities are a viable investment choice for real estate developers due to their comparably reduced land prices and affordable construction materials.

Why Are The Tier IV Cities In India Growing As Smaller Emerging Centres?

The Tier IV cities in India are made up of the expanding minor urban centers and towns, with a population ranging from 10,000 to 19,999. The amenities provided in these cities are less extensive than those in India's Tier I and Tier II cities because they are developing cities. These Indian cities are putting a lot of effort into raising the standard of living at the high-rise residential buildings for all residents of the city, developing their social infrastructure, and luring real estate investment.

The employment opportunities in the area are also greatly influenced by these cities.

What Real Estate impact in Tier IV cities in India is observed?

Small towns or villages in India are referred to as Tier IV cities and need significant funding and improvements to their social infrastructure. Typically, there isn't much business or real estate activity in these locations. There is now a need for inexpensive homes in these places because to the government's well-known "Housing For All" program. The Tier IV cities in India have seen a number of market players move to the suburbs and satellite towns to address the nation's housing needs as a result of low real estate costs. Other than that, Tier IV cities emphasize sustainability and environmental friendliness.

Which all cities are Tier IV cities in India?

Checkout all the Tier 4 Cities List In India:

·    Banswara

·    Bhadreswar

·    Chilakaluripet

·    Datia

·    Gangtok

·    Kalyani

·    Nagda

·    Kapurthala

·    Kasganj

·    Sujangarh

How Are Indian Cities Categorized?

The three main categories of Indian cities were established by the Seventh Central Pay Commission. These are the categories:

Category X: Formerly known as A-1, this category is now referred to as the Tier 1 cities.

Category Y: This grouping includes all of the Tier 2 cities. It was previously known as B-1 and B-2.

India's Tier 3 and Tier 4 cities are classified as Category Z. This group was referred to as C.

Conclusion

India's Tier III and Tier IV cities are expanding steadily, with a particular emphasis on providing cheap housing.

Real estate prices in Tier 2 cities are opening the door for new investment while the demand for real estate in Tier 1 cities is robust and property prices are at an all-time high. Real estate developers and investors can better grasp market demands and seize real estate opportunities by having a better understanding of how these cities are categorized.

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