Varanasi, Ayodhya, other religious cities to see real estate boom

Upgrades in infrastructure and enhanced connectivity through improved roads, flagship trains and new airports have potential to attract organized real estate players to these spiritual destinations

Varanasi Ayodhya real estate boom

New Delhi: Cities of religious importance like Varanasi, Ayodhya, Puri, Dwarka, Shirdi, Tirupati and Amritsar are among 17 high-potential cities, which are set to see accelerated growth of real estate in the coming years, thanks to policy support from the government and infrastructure development shaping up there.

This was revealed in a report by real estate consultant Colliers India. The report has identified 30 potentially high growth cities among 100 cities, where real estate development is set to strengthen over the next five to six years. Out of these 30 cities, 17 high-potential cities are expected to witness accelerated real estate development across three or more asset classes, the report, titled Equitable Growth and Emerging Real Estate Hotspots, stated.

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Spiritual tourism is poised to be a critical growth driver for the development of several temple towns in India. Upgrades in infrastructure and enhanced connectivity through improved roads, flagship trains, and new airports have the potential to attract organized real estate players to these spiritual destinations in the long term, specifically across hospitality and retail segments, the report said.

“Identification of high impact locations with respect to spiritual tourism involved analysis of multiple parameters including sanctioned allocations under various government programs, annual tourist footfalls in primary pilgrimage sites, upcoming plans of real estate developers and land price appreciation,” the consultant said.

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The cities identified by the consultant in North India are Amritsar, Ayodhya, Jaipur, Kanpur, Lucknow and Varanasi; East India — Patna and Puri; West India — Dwarka, Nagpur, Shirdi and Surat; South India — Coimbatore, Kochi, Tirupati and Visakhapatnam; and Central India — Indore.

Amritsar, Ayodhya, Dwarka, Puri, Shirdi, Tirupati and Varanasi emerged as cities to watch out for in terms of growth driven by spiritual tourism, the consultant said.

India is likely to have around 100 cities with populations exceeding one million by the year 2025, in addition to its eight mega-cities. “Key factors such as infrastructure development, digitization, tourism, and changes in the office landscape will drive the next wave of urban growth across these locations,” the report noted.

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“Smaller towns are emerging as dynamic contributors to India’s economy, driven by improved infrastructure, affordable real estate, skilled talent, and government initiatives. This growth is set to propel the real estate sector to an estimated $1 trillion by 2030 and potentially $5 trillion, a 14-16% share in GDP by 2050. Significant momentum is expected across residential, commercial, retail, hospitality, and industrial segments,” said Badal Yagnik, chief executive officer, Colliers India.

Alternate asset classes such as data centers, senior living and second homes are also poised for significant activity in these emerging real estate hotspots. Thanks to increasing culture of hybrid working, companies are increasingly adopting hub and spoke model, establishing satellite offices in smaller towns.

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The real estate consultant has identified the high impact locations through a comprehensive analysis evaluating multiple parameters including current technology landscape and start-up ecosystem, availability of skilled talent, current and proposed infrastructure upgrades, and proximity to established office markets.

Coimbatore, Indore and Kochi, amongst others emerged as locations having high potential as satellite office markets. “As tech giants and innovative start-ups tap into the skilled talent pools of emerging hubs, smaller cities are on the brink of a transformative boom in both office and residential markets. Office rental arbitrage, typically 20-30% lower and relatively affordable housing market in these locales creates a win-win scenario for companies and employees alike,” said Vimal Nadar, senior director and head of research, Colliers India.

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Nadar further added that the surge in demand is set to ignite a wave of interest from leading real estate developers, ushering in an influx of high-quality supply in these markets. “The rise of flex spaces in these hubs will seamlessly bridge the demand-supply gap for premium office spaces, fostering a new era of growth and opportunity,” he said.

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