Should you buy property in a religious location? - Economic Times

Should you buy property in a religious location? - Economic Times:

When 32-year-old Anuja Wagle and her family moved into a new house in the western suburbs of Mumbai 10 years ago, they had no idea of its proximity to a famous temple. "We bought the house as the property rate was very low then and the price fit our budget. We believe that we were lucky to get a house that shares the temple's boundary wall," she says.

Residential Apartments

As the suburb developed and shops came up, the housing demand also rose, and most of this demand was centred in the vicinity of the temple. "Over the years, the popularity of the temple has also increased. This is why the property rates in this area have gone up tremendously since the past couple of years," adds Wagle.

Does this mean that one should buy a house near a place of worship as the price appreciation will be highest there? Will you earn a good rental income from such a property? This will probably be true for some areas, but not always. While religious hotspots guarantee a stream of devotees, and thus, increased income and rentals, realty experts caution property buyers of certain pitfalls of buying a property in such areas.

Appreciation is not assured

Om Ahuja, CEO, residential services, Jones Lang LaSalle India, explains that healthy appreciation of a property in a religious locality is not assured. If the vicinity does not have other economic market drivers, such as local employment generation, which leads to residential demand, the fate of such an investment hinges solely on often fickle religious sentiments.

Shirdi & Trimbakeshwar

Main attraction: Shirdi has a beautiful shrine that is built over the Samadhi of Shri Sai Baba, a religious saint while Trimbakeshwar is one of the 12 religious locations which house the famous Jyotirlingas.

Nearest city: Nashik (75 km from Shirdi and 28 km from Trimbakeshwar).

Average property price: Rs 3700-4,200 per sq ft at Shirdi and Rs 2,800- 3,000 at Trimbakeshwar.

If you are considering the property only as an investment, make sure that you purchase it after buying a house to live in. "While purchasing property in a religious place, you must also factor in the noise and crowd which can exert downward pressure on potential rental income and resale value," says Ahuja.

Also, the appreciation in such areas may not be as high as in metro cities. Investment in properties in religious localities may not yield high returns if it does not have other factors supplementing it. For instance, Madurai is a city of religious interest, but it also has one of the highest commercial real estate growth rates in Tamil Nadu. The demand for housing units is high there, but the primary driver is not the religious component, it's the fact that Madurai is seeing a lot IT/ITES activity. This leads to a high demand for housing to accommodate staff.

Ujjain

Main attraction: Mahakaleshwara is a Shiva Temple and one of the 12 Jyotirlingas in the country. A Kumbh mela is held here every 12 years.

Nearest city: Indore (56 km).

Average property price: Rs 1,700-2,000 per sq ft.

Sandeep Sadh, CEO of Mumbaipropertyexchange.com, a realty service provider portal says that while a property investment in a metro city could generate a return between 15-20% annually, the appreciation for similar-sized properties in religious localities could be less than 10% annually.

Stringent rules

Sadh explains that there are councils affiliated to such temples which formulate certain rules for the region. For instance, in Amritsar, tobacco and alcohol shops are restricted to certain regions. "In many temple towns in southern India, consumption of alcohol or non-vegetarian food is prohibited. So, if you buy property in these towns, you will have to adhere to such rules," says Sadh.

Rental income may be inconsistent

Rental incomes could often be seasonal, depending on the city. Unless the religious place draws year-round pilgrims from the middle income segment, rental income would be in line with the prevailing rates for a tier-2 or tier-3 city.

Before buying the property, you should ascertain whether there is enough tourist traffic so that renting out the house is feasible. If the traffic is seasonal, such as during the Kumbh Mela in Allahabad, will the rental income from the few days be enough to recoup your investment?

 Tirupati

Main attraction: Sri Venkateswara Temple at Tirumala.

Nearest city: Chennai (130 km).

Average property price: Rs 2,500-3,500 per sq ft. Guruvayur

Main attraction : Sree Krishna or Guruvayurappan Temple.

Nearest cities: Thrissur (29 km) and Kochi (75 km).

Average property price: Rs 3,300-4,100 per sq ft.

Selling the property may be tough

It's difficult finding a suitable buyer at the right price and the task could be tougher if the house is located near a religious institution. The biggest reason is that not everyone is comfortable listening to religious sermons or chants throughout the day, especially if the families have school-going children who can be distracted from their studies. Also, according to Vaastu as well as certain religious tenets, it is unfavourable to have a house very close or in the shadows of a religious structure.

 Haridwar & Rishikesh

Main attraction: Situated at the foothills of the Himalayas, these cities are the gateway to the chardham, the four holy Hindu pilgrimage destinations-Badrinath, Kedarnath, Gangotri and Yamunotri

Nearest cities: Dehradun (52 km) and Delhi (225 km).

Average property price: Rs 2,400-3,500 per sq ft at Haridwar and Rs 3,500 per sq ft at Rishikesh Vrindavan, Mathura

Main attraction: The town is believed to be the birth place of Lord Krishna.

Nearest cities: Mathura (15 km), Agra (58 km) and Delhi (145 km).

Average property price: Rs 2,300-2,900 per sq ft for built-up property.

Traffic is another issue which makes it difficult to sell such houses easily. Roads leading to temples or other religious places are usually choked with vehicles and pedestrians, which is why potential buyers avoid such properties.

It's also possible that the property rates in some areas could decline rather than appreciate after a few years. One example is the sharp fall in the rates in the spiritual town of Puttaparthi in Andhra Pradesh after the demise of Sathya Sai Baba, a religious figure. Flats in Puttaparthi were most sought after by foreigners and big businessmen, who preferred to stay for longer durations to meet the spiritual leader. Property prices which were around Rs 800-1,000 per sq ft for an apartment in the town, have dipped by 50% after Baba's death.

Puri

Main attraction: The Jagannath Temple and the Rath Yatra, an annual religious procession taken out from the temple. Puri is also part of Odisha Tourism's golden triangle, along with Bhubaneshwar and Konark.

Nearest city: Bhubaneshwar (60 km).

Average property price: Rs 3,165-3,500 per sq ft.