Real estate hotspots: Ayodhya, Varanasi, Puri among spiritual destinations that will witness fast development

Varanasi, Ayodhya, Puri will witness fast real estate development due to government policy support and infrastructure growth in temple towns, says a report

Ayodhya, Varanasi, Puri, Dwarka, Shirdi, Tirupati and Amritsar are among 17 high-potential cities that will witness fast real estate growth in the coming years bolstered by government policy support and infrastructure development in spiritual towns, a report by Colliers has said.

Ayodhya is among 17 high-potential cities that will witness fast real estate development in the coming years (Gaurav Saigal/HT) (AP)

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.

Real estate consultant Colliers India has identified 30 potentially high growth cities from 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, according to the report Equitable Growth and Emerging Real Estate Hotspots.

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.

A geographical spread of these 17 high-impact emerging real estate hotspots highlights equitable growth across the Northern, Southern, Western, Eastern, and Central regions of the country. 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.

By 2050, India is expected to have nearly 100 cities with populations exceeding one million, 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.

“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.

Additionally alternate asset classes such as data centers, senior living, and second homes are also poised for significant activity in these emerging real estate hotspots, he said.

Owing to the rising prevalence of hybrid working, companies are increasingly adopting hub and spoke model, establishing satellite offices in smaller towns. Colliers 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.

This 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. Moreover, 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 added.