Changing perceptions of the emerging markets are attracting an increasing number of foreign investors to second and third tier cities in emerging urban areas, as they begin to challenge their developed counterparts.

Economic growth, infrastructure development and demographic changes are affecting smaller cities across Asia, Africa, the Middle East and Latin America, enabling less developed areas to emerge as competitive players.

By investing in smaller cities, real estate developers and industry professionals benefit from: lower operating costs, greater space for construction, lower costs for resources and building materials, and less supply. Moving away from capital cities, property is significantly cheaper, as developers have access to more land for development and lower building costs.

When looking for investment opportunities in Pakistan, people mostly think of the three major cities: Lahore, Islamabad and Karachi. However, these are reaching saturation point and there are plenty of other emerging cities with real estate investment potential. These upcoming real estate investment hotspots include: Faisalabad, Gujranwala, Multan, Sialkot and Hyderabad.

According to Saad Arshed, Country Director of Pakistan’s best real estate website,  “These lesser-known cities have large, young working populations, not only contributing more to the economy through their employment, but spending more on consumer goods, and which are more enthusiastic to spend time and money on technology.

Investing in smaller cities gives investors the chance to get more for their money – land and operating costs are much lower, as there is more space for construction, lower costs for resources and building materials, and less supply. As a result, less developed areas are becoming more attractive to investors. These cities now need to invest in themselves, to develop their infrastructure, and position themselves as competitors to the bigger markets,” he said.

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While bigger economic capitals have the advantage over smaller, lesser known cities, due to greater recognition around the world, cheaper rental prices, less competition, and a higher growth potential is enabling these cities to rise to the challenge.