The world of real estate is full of technical jargon. As a first-time investor, you will come across many unfamiliar terms, such as ‘real estate market tier’. In simple terms, real estate tiers are categories of certain cities and geographies.

Depending on the phase of their development, you can classify real estate markets into three levels:

  • Tier 1
  • Tier 2
  • Tier 3

Besides the development phase, the size, population, transaction volume, etc., of a real estate market also determines its category. That’s why knowing the tier of real estate becomes a significant point of consideration for homebuyers.

Let’s have a detailed look at the three tiers below.

Tier 1

Tier 1 cities tend to have a well-established and highly developed real estate market. These communities have an excellent infrastructure with a robust economy. So, you can expect a host of services and amenities. These include a good highway system, schools, businesses, and other civic facilities.

Consequently, the prices of homes in Tier 1 markets lie on the steeper side. For many people, availing of a home loan is the most convenient way of purchasing a home in such a location. Some Indian cities in this category are Mumbai, Delhi NCR, Chennai, Kolkata, Bengaluru, among others.

Additional Read: Top Reasons Why Tier-2 Cities Are Worth the Investment

Tier 2

The second tier of cities comprises relatively less developed real estate markets. While the markets are not well-established, Tier 2 cities have incredible growth potential. As such, property prices are comparatively lower than in the Tier 1 markets.

But given their exponential growth curves, such areas attract young professionals, real estate developers, investors, and businesses. Some of the most liveable Tier 2 Indian cities include Agra, Jaipur, Gurugram, Ludhiana, Lucknow, etc.

However, while the cost of living is on the lower side, real estate isn’t cheap in these cities by any means. So, if you’re thinking of buying a house in Tier 2 locations, consider taking a loan to reduce the financial burden and support your purchase. With so many financial institutions offering relaxed home loan eligibility criteria, securing home finance won’t be challenging. 

Tier 3

Tier 3 cities have non-existent or under-developed real estate markets. Property prices are the most inexpensive here, albeit with scarce or limited options. Out of the three tiers, these markets are also the most vulnerable to economic disruption, like a recession. However, Tier 3 markets can be quite promising depending on their locations, and you can easily find attractive home loanoptions to finance the property purchase.  

Additional Read: Why 2021 is the Best Time to Make a Real Estate Investment in Smart Cities?

Parting thoughts

Thinking of purchasing a house? Having second thoughts due to budget constraints? Turn to Tata Capital’s wide range of loan offerings and purchase your dream home in whichever city you want – Tier 1, 2 or 3! With attractive home loan interest rates starting at just 6.90%, you can avail of an amount as high as Rs. 5 crores.

In addition, you can opt for a loan repayment tenure of up to 30 years. Make sure to use our home loan EMI calculator to plan your purchase. Connect today!

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