While major metropolitan areas continue to attract significant real estate investment, second-tier cities are increasingly gaining attention for their exceptional return potential and affordability. In 2025, these lesser-known urban hubs are emerging as quiet leaders in the property market, offering lower entry prices, less competition, and strong rental yields.
This article explores the most promising second-tier cities for real estate investment in Europe and beyond, along with the key reasons behind their growing appeal.
What Are Second-Tier Cities?
Second-tier cities are urban areas that are smaller than capitals or major cities in terms of population and economic influence but still boast developed infrastructure, strong labor markets, and growing economies. Examples include Lyon (France), Porto (Portugal), Gdańsk (Poland), Manchester (UK), and Turku (Finland).
These cities offer several investment advantages:
– More affordable property prices
– Higher rental yields compared to capital cities
– Consistent demand from tenants, students, and migrants
– Growth in technology, logistics, and tourism sectors
Why Investors Are Turning to Secondary Markets
- Remote Work Normalization – The shift to hybrid and remote work has led professionals to relocate from expensive cities to more affordable urban centers.
- Infrastructure Investments – Rail and airport upgrades have improved accessibility to regional cities.
- Government Incentives – Several countries offer tax breaks and support programs for property investors outside major cities.
- Tourism Growth – Second-tier cities often offer rich culture and heritage, attracting tourists and short-term rental opportunities.
Top 6 Second-Tier Cities for Real Estate Investment in 2025
1. Gdańsk, Poland
Average price per m²: ~€2,000
Rental yield: 6–7%
Located on the Baltic Sea, Gdańsk has become a logistics and shipbuilding hub, while also attracting a young, tech-savvy population. Its historic charm and coastal setting make it a hotspot for short-term rentals, especially during summer.
2. Porto, Portugal
Average price per m²: €2,500–2,800
Rental yield: 5.5–6.5%
Porto combines cultural richness with economic opportunity. With an influx of digital nomads and foreign investors, plus a favorable tax regime and coastal location, Porto’s rental market is thriving, especially in areas near the Douro River.
3. Turku, Finland
Average price per m²: €3,000
Rental yield: 5.5%
Turku is Finland’s southwestern tech and education hub, with strong logistics due to its port. Its quality of life, eco-friendly policies, and academic institutions attract both students and remote workers.
4. Lyon, France
Average price per m²: €4,000–4,300
Rental yield: 4.5–5.5%
Lyon is France’s second-largest city and a powerhouse in medicine, education, and finance. The 7th and 8th districts offer good value and stable tenant demand from professionals and students.
5. Zaragoza, Spain
Average price per m²: €1,600–1,800
Rental yield: 6–6.8%
Situated between Madrid and Barcelona, Zaragoza is becoming a logistics and manufacturing center. It offers affordable housing and steady tenant demand, especially among young families and workers.
6. Manchester, UK
Average price per m²: €3,500–4,000
Rental yield: 6–7%
A booming tech and education city in northern England, Manchester is one of the top UK cities for buy-to-let investments. Student housing, new-build apartments, and proximity to business districts are all in demand.
Factors to Consider When Investing in Second-Tier Cities
– Infrastructure Projects: Look for areas with new transport, universities, or healthcare facilities
– Demographics: Population growth, student presence, and professional mobility are key indicators
– Tourism Potential: Helps boost short-term rental income
– Legal and Tax Environment: Favorable policies for foreign investors and rental income
– Market Saturation: Assess competition and construction pipeline in the area
2025–2026 Outlook
Analysts predict sustained interest in second-tier cities due to:
– Soaring property prices in capitals
– Increased regulation in top-tier cities
– Expansion of remote work and lifestyle migration
– Government-backed regional development incentives
REITs and institutional investors are also eyeing logistics hubs and residential assets in these emerging markets. Rental platforms are growing in regional cities, with new tech enabling better property management for long-distance investors.
Conclusion
Second-tier cities are no longer just affordable alternatives — they are becoming smart, strategic investment choices. Combining lower entry costs with high yields and demographic momentum, they offer a compelling case for 2025 property investors.
Whether you’re targeting student housing, short-term rentals, or long-term appreciation, these urban hubs can deliver strong returns without the saturation and volatility of major markets.
In today’s diversified landscape, the smartest investments may be found beyond the capitals — in the rising stars of regional real estate.
