GIFT City Real Estate Booms Following Relaxation of Liquor Laws
Property and land prices in Gujarat's GIFT City have witnessed a substantial increase, ranging from 10% to 20%, since the state government eased its 60-year-old liquor prohibition law. The new guidelines permit alcohol consumption in licensed hotels, restaurants, and clubs offering "wine and dine services" within the fintech hub. This shift has spurred significant investments, particularly from non-resident Indians, in the area's housing developments.
Gujarat's GIFT City Liquor Policy
The Government of Gujarat announced in December 2023 that GIFT City employees and their official guests are permitted to consume alcohol in licensed establishments within the hub. The government mandates that only those holding a liquor license or a temporary permit are authorized to serve alcohol in designated areas.
About GIFT City
Strategically located between Ahmedabad and Gandhinagar on the banks of the Sabarmati River, GIFT City (Gujarat International Finance Tec-City) encompasses 880 acres, including a special economic zone (SEZ). The city is broadly divided into two sections – a non-SEZ area housing residential and commercial office spaces and the SEZ area dedicated to banks and financial institutions. Property consultants estimate that roughly 30% of GIFT City is currently developed, with another 30% earmarked for residential projects.
Real Estate Price Surge
Real estate prices in GIFT City have experienced a remarkable 74% surge over the past five years. Data from ANAROCK reveals that land prices, which stood at approximately Rs 4,300 per sq ft before the COVID-19 pandemic, have climbed to Rs 7,500 per sq ft by the end of Q1 2024. Residential rentals have also seen a significant jump, increasing by 40% during the same period, going from Rs 25,000 to Rs 35,000. Commercial office space rents have risen by 32%, and residential capital values have escalated by 74%, from Rs 4,700 per sq ft in 2019 to nearly Rs 8,200 per sq ft by the close of Q1 2024. A recent tender for a residential project in the SEZ area recorded a new high for development rights prices, with a bid reaching Rs 6,557 per sq ft for the development of 5.22 lakh sq ft on a 5,500 sq meter plot.
"There has been a slight increase in prices overall following the Gujarat government’s partial approval of alcohol consumption in the GIFT City region in December 2023. One quarter, for example, saw a 7% increase in land values from Rs 7,000 per square foot at the end of 2023 to nearly Rs 7,500 at the end of Q1 2024. According to Prashant Thakur, Head of Research and Regional Director at ANAROCK Group, comparable increases in the rental of commercial and residential office space have been 2% and 3%, respectively."
Impact of the Alcohol Policy
The government's decision to partially permit alcohol consumption in GIFT City has undeniably stimulated residential real estate sales. Developers have capitalized on the heightened demand by increasing property prices over the past six months. Abhishek Bhutani, Managing Director of Logistics and Industrials, Ahmedabad, at Cushman & Wakefield, remarked, “The include recent incentives by the government such as relaxed regulations, exemptions, and a new liquor policy.”
"GIFT City’s real estate values, both commercial and residential, are steadily increasing. Commercial office space lease rates range from Rs 60-80 per square foot in SEZ areas to Rs 50-65 per square foot in non-SEZ areas. The recent announcement regarding the partial relaxation of alcohol consumption norms is one of the triggers that has caused a spike in property rates in the residential sector. Since the new liquor policy was announced, residential prices have increased by 5-20%, and apartments on super built-up properties are now reaching Rs 10,000 per square foot,” he said.
Investor Activity
Following the government's decision, the residential real estate market in GIFT City has attracted a wave of investors. Swapnil Anil, Executive Director and Head of Advisory Services at Colliers India, noted that numerous investors acquired apartments in the area following the policy change, driving up prices. Property consultants report a 10% to 20% increase in both capital and rental values, with projects in GIFT City offering a diverse range of apartments, from 2 BHK to 5 BHK configurations. Niranjan Hiranandani, Chairman of the Hiranandani Group, attributes GIFT City's rising real estate prices to enhanced social amenities, improved civic infrastructure, and better connectivity. The hub's attractive tax benefits and fiscal incentives have lured numerous corporations, including giants like Google, IBM, JP Morgan, Morgan Stanley, and Oracle. This influx of businesses has further fueled the demand for residential properties, attracting real estate developers from Bangalore, Mumbai, and other cities.
"One of the factors that has helped the GIFT City real estate market is the wine and dine policy,” claims Swapnil Anil.