After the initial frenzy, Ayodhya’s real estate market has cooled and the temple town has to wait a little longer for a larger-scale surge in property values. In fact, data shows that Ayodhya’s real estate market witnessed about a 63 percent year-on-year decline in residential demand in the October-December 2024 quarter compared with the corresponding period of the previous year.
Demand and prices had gone up significantly just before the consecration ceremony of the Ram Mandir in January 2024 but it started coming off the highs after June 2024, according to data from Magicbricks.
Real estate experts say that the tapering off in demand signals a shift in investor interest, likely influenced by market saturation and a natural cooling down after a period of heightened activity.
Local brokers said that on the hospitality front too, no major project could start on ground in the year after the inauguration of the temple. Only a few budget hotels and home-stay options have come up. Land prices have also mostly remained flat a year after the consecration ceremony.
Dip in demand
According to Magicbricks data, searches for residential property in Ayodhya had risen significantly by 58.03 percent quarter-on-quarter in October-December 2023 and peaked in the January-March 2024 period, with a 186.54 percent growth sequentially.
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However, this momentum has gradually subsided, with residential property searches actually dropping 63 percent on-year in the fourth quarter of calendar 2024.
At the same time, residential supply in Ayodhya recorded a 39 percent annual growth, ensuring availability in the market even as demand levels normalise.
Experts said that after the temple inauguration, most of the supply was in the premium segment and prices shot up, making the propositions unaffordable for end users and local buyers.
Prasun Kumar, chief marketing officer, Magicbricks, said that the demand for properties in Ayodhya, which experienced a surge at the beginning of 2024, has now stabilised significantly.
“A majority of the available residential units have already been sold, and new developments are primarily targeting the premium segment, which is currently discouraging potential buyers. Additionally, the slowdown in temple construction and a reduction in flight operations have led prospective buyers to adopt a cautious, wait-and-watch approach,” Kumar told Moneycontrol.
Price normalisation
After the temple consecration ceremony last year, Ayodhya’s residential prices had experienced a significant spike in April-June 2024 quarter, rising by 29.36 percent on a quarterly basis, driven by strong investor interest and heightened competition.
Prices reached an average of Rs 8,491 per square foot (psf) during this period while property prices close to the Ram Mandir area fluctuated between Rs 10,000 and Rs 15,000 psf during the time of the inauguration of the temple.
However, in July-September 2024, prices saw a slight adjustment, falling 3 percent to Rs 8,237 psf and further declined marginally to Rs 8,212 in October - December 2024, indicating a move towards normalisation.
Slow hospitality sector growth
According to government authorities, given the importance of religious tourism, the Ayodhya region boasts of “enormous possibilities” for the hospitality sector but as per local brokers and businessmen, no major hotel project has kicked off in almost a year.
Sharad Kapoor, a businessman and a representative of the Ayodhya-Faizabad hospitality sector body, said that barring the Taj Group and Leela Group of Hotels, no other major hospitality chain had started work on the ground in Ayodhya so far in the 9-10 months since the inauguration of the Ram Mandir.
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He said that the Taj Group is constructing a hotel near the airport in Ayodhya on a 1.5-acre plot while the Leela Group is coming up with its palace hotel, The Sarayu.
“After the inauguration ceremony, only 8-10 small hotels have opened in the temple town. The real estate boom seems to have taken a pause in Ayodhya as activities concerning the real estate have ebbed,” Kapoor said.
Future outlook
Realty experts said that Ayodhya has the potential for religious or pilgrimage tourism and so the demand for mid-sized and budget hotels and home-stays is likely to grow. However, the religious tourism segment in real estate is still emerging in India, so the initial growth is likely to be slow.
Market observers said that the next two quarters are likely to remain subdued. Ayodhya should see good traction in demand and sales after the Ram Mandir project is fully completed in March 2025.
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