By Fernando
For decades, global real estate investment was dominated by a few megacities—New York, London, Tokyo, Paris, and Shanghai. These urban giants attracted billions in capital, driven by their status as financial hubs, cultural epicenters, and magnets for international migration. But as the dust settles from the COVID-19 pandemic and new economic realities emerge, a quiet revolution is taking place. Investors are increasingly turning away from the world’s most iconic cities and looking to smaller, more agile urban centers—secondary cities—for their next big opportunity.
Is this the end of urban rule as we know it? Or simply the start of a more diversified, decentralized investment era?
The Rise of the Secondary City
Secondary cities—defined as mid-sized metropolitan areas outside of major capital hubs—have been gaining traction in recent years for a combination of economic, demographic, and technological reasons. Cities like Austin, Raleigh, Denver, Porto, Leipzig, and Brisbane are seeing a surge in real estate investment activity, thanks to their affordability, livability, and often surprisingly strong innovation sectors.
According to a recent report by CBRE, secondary cities in North America and Europe experienced a 38% increase in real estate investment volume in 2024 compared to five years earlier, even as some tier-one cities saw stagnation or slight declines. Similar trends are being observed across Asia and Latin America.
“This shift isn’t a blip—it’s a reflection of changing fundamentals,” says Carla Espinoza, a real estate economist at Global Urban Futures. “Rising costs, congestion, and regulatory challenges in major cities have made secondary markets far more attractive—especially in a hybrid or remote-first world.”
Remote Work and Lifestyle Shifts
One of the most significant catalysts for this shift has been the normalization of remote and hybrid work models. Since 2020, millions of workers—particularly in tech, design, and consulting sectors—have gained the ability to choose where they live based on quality of life, rather than proximity to corporate headquarters.
Cities with lower costs of living, shorter commute times, and access to nature have suddenly become prime destinations. This “zoom town” effect has driven population growth in secondary markets, creating demand for housing, retail, and commercial development.
“Investors follow people, and people are moving,” notes Jonathan Cheng, managing director at Horizon Capital Group. “As talent disperses, so does capital.”
This migration is also reshaping urban design. Cities like Salt Lake City and Charlotte are rethinking zoning laws, expanding transit infrastructure, and investing in green spaces to attract both residents and capital. For investors, this kind of proactive urban planning translates into long-term stability and upside potential.
Economic and Political Stability
Secondary cities also tend to offer more investor-friendly environments, with lower taxes, simpler permitting processes, and fewer bureaucratic hurdles compared to global capitals. In markets like Southeast Asia and Eastern Europe, secondary cities have become regional tech and manufacturing hubs, drawing multinational companies and foreign direct investment.
In the U.S., states like Texas, Florida, and North Carolina have leveraged business-friendly policies to pull both companies and capital away from coastal megacities. Meanwhile, European cities with robust university ecosystems and affordable real estate—like Valencia, Krakow, and Ghent—are gaining attention from international developers and REITs.
These dynamics are especially appealing in a time of geopolitical volatility. As investors seek diversification, secondary cities offer not just value, but also insulation from the shocks that increasingly define global headlines.
Challenges and Growing Pains
Despite the promise, the pivot to secondary cities is not without risk. Rapid growth can strain infrastructure, inflate housing prices, and displace long-time residents. Some cities are struggling to keep pace with demand, leading to labor shortages in construction and delays in public services.
There’s also the question of sustainability. Unlike dense megacities, many secondary markets have been historically car-dependent and poorly designed for climate resilience. Ensuring that their growth is environmentally and socially sustainable will be critical to long-term success.
“Secondary cities have an opportunity to get it right from the start,” says Melissa Jang, an urban strategist and consultant. “But if they just replicate the problems of bigger cities—sprawl, inequality, emissions—they’ll lose their appeal just as fast.”
Redefining the Real Estate Map
For real estate developers, fund managers, and institutional investors, the shift to secondary cities presents a strategic reset. Rather than simply chasing headline cities, many are now adopting regional approaches, identifying clusters of growth and innovation across different tiers of urbanization.
Proptech tools, big data analytics, and AI-driven forecasting are playing an increasingly important role in identifying emerging hotspots before they hit mainstream investor radar. In some cases, local governments are partnering with investors to co-develop neighborhoods, revitalize post-industrial areas, and even build entire mixed-use districts from the ground up.
This new approach could lead to a more balanced, inclusive, and diversified real estate landscape—one that’s less vulnerable to market shocks in any single city.
The End of Urban Rule?
Calling it the “end” of urban rule may be premature. Global cities like New York, London, and Hong Kong still hold enormous economic clout and cultural influence. But the concentration of investment in a handful of elite metros is certainly loosening.
In its place, a more nuanced map of opportunity is emerging—one where secondary cities take center stage as engines of growth, innovation, and livability. For real estate investors willing to embrace a broader vision of the urban future, the rewards could be substantial.
Conclusion
The tide is turning in global real estate. As capital flows out of overcrowded megacities and into dynamic secondary markets, the rules of the game are being rewritten. Whether this trend signals a lasting decentralization or simply a rebalancing of priorities, one thing is clear: the next great real estate frontier might not be where we expected—it could be in the city you haven’t heard of… yet.