Temple boom: Mega opportunities that Ayodhya real estate is throwing up

  • Kunvarji Realty
  • 18/01/2024
  • 81 views

Temple boom: Mega opportunities that Ayodhya real estate is throwing up

Source: The Economic Times

Samujjwal Ghosh, CEO, The House of Abhinandan Lodha and Prashant Thakur, Anarock Group, in conversation with ET Now

Samujjwal Ghosh says: “The temple trust suggests that with the mandir opening, there will be almost 80,000 to 1 lakh visitors every day. The Vatican City gets about 5 million visitors every year and you are talking about almost 35 crore plus visitors every year. So those are extremely telling numbers to indicate the economic potential of the city and thereby how it will benefit even retail investors for that matter. ”

Prashant Thakur says the sentiment, the economic viability and infrastructure have led to a 10-20% fold jump in the land price over there. Close to 15 hotel permits have been given by the government, Rs 30,000 crore worth of investment has already gone in in terms of infrastructure upgrade. This temple town is not only going to be an economic centre, but also a cultural hub.”


How are we looking at the massive real estate boom in Ayodhya? Has there been a rise in demand? Has there been a rise in inquiries?

Prashant Thakur: After the SC verdict and the temple getting inaugurated, there has been a huge influx of capital interest and a lot of hospitality companies are taking position. So, just to give you kind of an idea of the influx of tourists that is going to propel the economy of Ayodhya, at any given point of time, the local population to tourist ratio is going to be 1:10. That itself speaks about the volume of economic activity that is going to happen and as a result real estate always follows a couple of basic principles.

One is, the sentiment, the one is the economic viability and the third is infrastructure. All these three factors have really been propelled. We have seen almost a 10% to 20% fold jump in the land price over there and this is majorly due to the fact that connectivity is seamless and the infrastructure taking shape. We have got close to 15 hotel permits by the government, Rs 30,000 crore worth of investment has already gone in in terms of infrastructure upgrade and this temple town is not only going to act as an economic centre, but also as a cultural hub.


If we combine the entire region, including Kashi Vishwanath Corridor, Banaras and Ayodhya, the entire belt is going to see a massive interest from developers and buyers, especially hospitality and also in the outskirts of Ayodhya we are seeing a massive interest for second homes. It has already seen a massive jump in land prices. So that is where we stand as of now.


You are the one who has actually acquired the Rs 300-crore land parcel right in Ayodhya. What are the plans? What do you plan to develop there?

Samujjwal Ghosh: So, largely, our land acquisition philosophy basically lies in identifying the infrastructure growth corridors of national importance, which are either naturally endowed or tourism hotspots. And as a part of the strategy, HoABL plans to invest about Rs 3,000 crore in Uttar Pradesh and we wanted to make Ayodhya the starting point of our journey in UP and followed by Vrindavan and Banaras.

As far as this specific development is concerned, we have pledged an investment of Rs 1,200 crore in Ayodhya and HoABL will be developing a world-class private enclave called the Saryu, which is supposed to be the pride of Ayodhya and within a vast expanse of 51 acres. This project will primarily include residential plots, villas along with high-rise luxury apartments.

In order to initiate this ambitious venture, we have forged a strategic alliance with Leela Palaces Hotels and Resorts, and together we plan to construct a luxury palace hotel at the Saryu, very close to the temple. This will be Ayodhya's first 100-key five-star hotel and will be the cornerstone of our development. We intend to invest around Rs 450 crore in the hotel's development. The development of the hotel is touted to be completed by March 2028, which will be a pretty significant milestone in our commitment towards Ayodhya's economic and cultural advancement so that is largely what the HoABL plan is to begin with at Ayodhya.


What has been the quantum jump of real estate prices in Ayodhya? In 2019, before the verdict, the prices were between Rs 400 to Rs 700 per square foot. Now, they have gone to Rs 1500 to about Rs 3000 per square foot. Similarly, outside the city, they were between Rs 1,000 and Rs 2,000 a square foot, now they have gone to Rs 4,000 to Rs 6000 a square foot. My question is, what is affordable and what is not affordable? And where do you think the prices will settle, both in the outskirts of Ayodhya and where they would? I mean what is that watermark level at which the prices will settle?

Samujjwal Ghosh: To answer that question, I guess, one needs to understand what are the hallmarks of this city and therefore, what are the characteristics of our development?

In Ayodhya, largely, as we would have read, there is absolute uncertainty of clear title land and hence, the land at Ayodhya is scarce. There is a very strong spiritual and tourism sentiment which is growing. It is the investment epicentre for the central government. And as far as the pricing is concerned, what we have largely seen is that the real estate prices have soared to almost 6x to 10x levels in Ayodhya in the last three to five years, depending on the proximity to the Ram Janmabhoomi temple.

As the temple completion nears and the consecration on the 22nd of January 2024, the land inquiries have just surpassed all expectations. From a numerical perspective, as far as our project, our development is concerned, we have received inquiries at a pricing of Rs 15,000 per square feet and upwards for the plotted land development. What has been the most encouraging part as far as our understanding of the demand is concerned is that because of the scarcity of clear title land at Ayodhya, there is a huge demand for the kind of product that we are developing.


Where do you think prices will settle? Given that our religious tourism has taken off, whether it is Ayodhya or Kashi or Mathura, should one look at investing into land parcels in and around the theme of religious tourism? Is there money to be made? Do you think a CAGR return of 15-20% for the next couple of years is expected if one is looking at buying land parcels or even buying flats in and around these religious places?

Prashant Thakur: I would not encourage retail buyers for land, but yes, I think buying an apartment or let us say some kind of property in terms of a second home, or a senior home is recommended because after a certain point of time, unless you buy land in a big parcel, it does not make sense for an individual investor.

Also, considering the religious sentiment of the city, I think, the land that you will see, first of all, would be sold at a very high price. Any further appreciation from here would not be as meaningful as the expectation might run. I want to be honest that we have seen enough run-ups. Immediately after the verdict came in 2019, we saw a price jump of 25-30%.

In the last five years, the prices have already shot up by 10-20 folds. So, one has to be really judicious in terms of the size of land parcel being bought, the location where it is being bought, and what is the purpose. If you want to buy it, hold it and just exit, I do not think it makes sense. For that, you should opt for some apartments or flats. Definitely, it is going to give a good return.


Your data is indicating that land prices have gone up by 10-20 times. Is that correct or am I missing a zero here?

Prashant Thakur: In last five years, it has shot up.

10-20 times?

Prashant Thakur: Yes. we need to understand that there is a huge shortage of land within the city limits. In anticipation of the positive verdict, the land price had already started to shoot up. And then in terms of, I have a sentiment value attached to land, for example, within city limit, whatever the price was being asked initially, is being transacted.

So, that is where the sudden spike have been seen. That is the reason I am a bit sceptical about individual investors entering. It makes good commercial sense for big hospitality companies. But whenever the sentiments are high, a person who is buying from an investment point of view, should exercise some caution. Let the euphoria settle down and then make an investment.


Samujjal, the same question to you?

Samujjwal Ghosh: The pricing dynamics in Ayodhya is extremely unique because it is an extremely supply-starved market. In fact, unencumbered land in Ayodhya, especially near the temple influence zone is absolutely rare. Therefore, my personal belief is that wherever there is a credible proposition from trusted land developers will always command a premium.

In fact, in a recent government auction, bidders agreed to pay almost Rs 1.5 lakh per square meter for raw land, which is almost a 10x jump in five years. The bidding price was at around 88,000 square meters and it was finally sold at a lakh per square meter as far as the pricing is concerned. So, yes, the point that I would like to make here is that it makes immense sense considering the fact that the mix of tourism, infrastructural development and the strong spiritual sentiment is going to auger great growth even as far as the retail investor is concerned because it is just not becoming a spiritual tourism centre but also a centre of commerce because of the hotels, residential developments, so on and so forth.

So, land will be rare, land will be scarce and whenever there is scarcity, it has got a direct impact as far as pricing is concerned. The government intends to invest almost Rs 85,000 crore over the next 10 years. All of these are the makings of how the city will evolve. The temple trust suggests that with the mandir opening, there will be almost 80,000 to 1 lakh visitors every day. The , Vatican City gets about 5 million visitors every year and you are talking about almost 35 crore plus visitors every year. So those are extremely telling numbers to indicate the economic potential of the city and thereby how it will benefit even retail investors for that matter.

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