Tier-2 Cities Lead Growth — Spotlight on Thiruvananthapuram’s Home-Sales Boom

Short version: In Q3 2025 Thiruvananthapuram (TVM) recorded a 19% year-on-year rise in home sales, the strongest performance among India’s top 15 tier-2 cities — even as overall tier-2 volumes dipped. That makes TVM one of the most interesting secondary-city plays for residential investors right now.

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1) The headline numbers — what actually happened

• PropEquity’s market snapshot (reported widely in TOI, HT and other outlets) shows 39,201 homes sold across the top 15 tier-2 cities in Q3 2025, a 4% drop in units year-on-year but a 4% rise in sales value to about ₹37,409 crore. Within that mix, Thiruvananthapuram stood out with a 19% increase in units sold — the only city among the top performers with double-digit growth.

2) Why TVM outperformed — the demand drivers

Several structural and cyclical factors combined to push TVM ahead:

• IT & knowledge-economy growth. Technopark and an expanding IT services ecosystem have steadily raised white-collar employment and housing demand near Kazhakootam/Kazhakuttam corridors.
• Infrastructure projects. Large public projects (Vizhinjam port expansion, defence-related corridors and ancillary investments) increase local economic activity and long-term land-use potential.
• NRI and Kerala diaspora interest. Non-resident Keralites continue to buy homes in the state capital for family use and as second/residential assets — supporting both demand and premium pricing.
• Shift toward premium/quality stock. Across tier-2s there’s a shift to fewer but higher-value transactions (value up despite volume down), and TVM’s mix has benefited from mid-to-premium launches.

3) How TVM compares with other tier-2s

• Many tier-2 cities saw flat or negative volumes in the quarter; some big markets in Gujarat and Odisha featured large absolute sales but did not match TVM’s growth rate. Several others recorded declines in sales or launches. That relative outperformance suggests local fundamentals — jobs, projects, buyer profile — are more critical than national sentiment alone.

4) What this means for investors — opportunities

1. Near-term capital appreciation potential. Double-digit sales growth in a quarter signals rising absorption; areas with new supply constrained by project approvals or land scarcity (near Technopark, Kazhakootam, Pettah) can see price upticks.
2. Rental demand from tech & professional workforce. If IT hiring continues, high-quality rentals (2–3BHK, serviced residences) will remain attractive to working professionals.
3. NRI-driven demand stability. NRI buyers often buy for longer-term holds or family use, which reduces volatility in certain micro-markets.
4. Selective luxury/mid-segment plays. Marketwide shift toward premium units (value rising even when volumes fall) creates openings for well-positioned projects with amenities.

5) Investment strategy: practical recommendations

• Buy location, not hype. Focus on micro-markets near employment hubs (Technopark corridor, airport/MPL road) and infrastructure nodes (access to highways, metro bus corridors).
• Prefer ready/near-ready stock if yield is a goal. New launches may promise upside, but completed/near-handover homes start producing rental income sooner.
• Target mid-to-upper mid segments for best liquidity. Affordable homes have broad demand, but in TVM current dynamics favour mid-income to premium stock.
• Check developer track record & RERA compliance. In tier-2 markets, delivery performance varies; due diligence is essential.
• Consider longer holding periods (3–7 years). Tier-2 city appreciation tends to be steadier than meteoric; plan accordingly.

6) Risks & cautionary points

• Macro/affordability headwinds. Interest-rate moves, inflation or weaker wage growth could affect first-time buyer affordability. Reuters analysis suggests overall housing-price dynamics and luxury cooling are possible trends to watch.
• Concentration risk. Overexposure to a single micro-market or developer raises project/delivery risk.
• Policy & approvals. Infrastructure projects can be delayed; expected economic benefits may take time to materialize.

7) Quick checklist for investors looking at TVM

• Verify proximity to Technopark / major employers.
• Confirm recent sales velocity for the specific project/area (brokerage reports, PropEquity/Anarock extracts).
• Check rental yields vs. other tier-2 and metro options — yields in tier-2s can be relatively attractive.
• Ask about NRI demand history for the project (if relevant).

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Bottom line

Thiruvananthapuram’s 19% Q3 growth is not just a quarterly outlier — it’s a signal that well-timed, location-sensitive investments in tier-2 capitals with clear employment and infrastructure catalysts can outperform. That said, investors should pair optimism with disciplined due diligence: check micro-market fundamentals, developer credentials, and have a multi-year horizon. For those seeking exposure to India’s next wave of urban growth, TVM deserves a close look.