Chandigarh Leads as India’s Most Mature Tier-2 Retail Market: Knight Frank

India’s Tier-2 cities are emerging as important consumption and retail destinations, driven by rising consumer spending, expanding retail infrastructure, and increasing participation from international brands. 

According to a recent research report by Knight Frank, a global real estate consultancy, Chandigarh has emerged as India’s most mature Tier-2 retail market, recording the highest urban Monthly Per Capita Consumption Expenditure (MPCE) in the country at Rs 13,425.

The city has a highly developed retail ecosystem, with 91% of its shopping centre stock classified as Grade A. Occupancy levels exceed 90%, while international brand penetration stands at 58 stores per million residents.

Following Chandigarh,  Karnataka’s Tier-2 cities, including Mangaluru, Mysuru, and Hubballi, have developed one of the country’s strongest retail ecosystems, recording an urban MPCE of Rs 8,169 and the highest occupied shopping centre density among Tier-2 markets at 1,521 sq ft per 1,000 residents.

Meanwhile, Tamil Nadu, led by Coimbatore state reports an urban MPCE of Rs 8,325, supported by strong purchasing power and sustained consumer demand.

Similarly, Kerala has emerged as a preferred destination for international retail brands, records an urban MPCE of Rs 7,834, while key cities such as Kochi, Kozhikode, and Thiruvananthapuram host 257 international stores. Kerala also offers more than 5.2 million sq ft of Grade-A shopping centre space.

Further, Nagpur is leading Maharashtra’s Tier-2 retail growth story with urban MPCE of Rs 7,415 and is home to 22 international brands with Shopping centre occupancy currently standing at 51%.

In Punjab, key retail centres, including Amritsar and Jalandhar, report an urban MPCE of Rs 7,383. Despite healthy consumer spending, the state continues to face elevated vacancy levels across shopping centres.

Likewise, Visakhapatnam anchors Andhra Pradesh’s retail market, which records an urban MPCE of Rs 7,341 with its strong presence of US-origin retailers, which account for 77% of all international brands operating in its Tier-2 market.

At the same time Gujarat’s Tier-2 cities, including Vadodara and Surat, report an urban MPCE of Rs 7,198. 

In the Northeast, Guwahati remains the focal point of organised retail activity. Assam records an urban MPCE of Rs 6,913.

Lastly, Rajasthan records an urban MPCE of Rs 6,640, with Jaipur serving as its primary retail market. However, shopping centre vacancy levels stand at 18%, largely due to the presence of ageing Grade-B retail assets.