Gift City | Liquor permit does little for investments, but realty booms

The Gujarat government’s move to lift liquor prohibition at the Gujarat International Financial and Tech City – meant to attract international companies to set shop in the financial hub – has instead triggered a spike in real estate prices and sales in the area.

In December 2023, the state government of Gujarat, a dry state, relaxed its over 60-year-old liquor prohibition law to permit liquor consumption in hotels, restaurants and clubs offering ‘wine and dine services’ in Gujarat International Financial andTech (GIFT) City.

The move was aimed to attract international financial and tech companies to set up offices in the GIFT City. Despite the move, no new company has announced their offices in the fintech hub since December last year.

Prices of land, rentals go up

However, housing and land prices in the area have gone up by 10-20 per cent, with many local real estate companies and several non-resident Indians (NRIs) investing in housing projects in the fintech hub.

Per government data, the price of residential plots, which were around ₹4,300 per sq ft, shot up to ₹7,500 per sq ft by the end of the first quarter of calendar year 2024.

“Rates of residential rentals have increased by around 40 per cent since December last year. The rent of a 2BHK (flat with two bedrooms, a kitchen and a hall) in the GIFT City area used to be around ₹25,000 per month to ₹35,000 per month. But since liquor permit, owners have begun to demand anything above ₹40,000 per month for a 2BHK,” Kiran Solanki, a real estate agent with an Ahmedabad-based company that deals with rental properties in GIFT City, told The Federal.

Sudden surge

“There has been a sudden surge in buying and renting properties in GIFT City as residents of the area can now buy liquor and consume it in clubs or hotels inside the area. Earlier, people who worked in and around GIFT City used to opt for rental housing outside the fintech city in Gandhinagar or outskirts of Ahmedabad. The GIFT City area is yet to be developed with basic daily amenities like shops, medical facilities etc.,” Solanki added.

So far, only one residential project has been completed — Janaadhar Mangala. While the project was supposed to cater to lower-income groups, its developers have increased its rental rates post December 2023.

The only five-star hotel in GIFT City – The Grand Murcure – which otherwise used to lack footfall through the year, has now begun to have a few visitors post liquor permits.

Surge in land sale

Abhishek Bhootani, the managing director (logistics and industrials) at Cushman and Wakefield, a real estate consultancy firm based in Gujarat, says the lifting of liquor prohibition in GIFT City had led to a boom in residential real estate sales.

“In the last six months, developers too have increased prices following the rise in demand for properties in the area,” he told The Federal.

“There has been a sudden surge in both commercial and residential property values in GIFT City. The lease rates of commercial office space have gone from ₹50 to ₹65 per square feet to ₹60 to ₹80 per square feet. But the impact has been more on the residential sector. The recent announcement regarding partial relaxation in liquor consumption norms has resulted in an exorbitant spike in property rates of around 20 per cent in just six months. Apartments are now selling as high as ₹10,000 per square feet on super built up,” he said.

Investments still a pipe dream

GIFT City was planned in 2007 across 886 acres of land along NH8 that connects Ahmedabad with the state capital of Gandhinagar. The then Narendra Modi-led BJP government in the state developed it to attract business from financial services hubs like Singapore, Dubai and London and even Mumbai.

This was to be done by offering investors various incentives to conduct their foreign financial transactions in the much-touted fintech hub.

However, 17 years later, the fintech hub is still a work in progress and is far away from its promised target of generating five lakh jobs or attracting major international brands.

After 17 years, the only international brands that have offices in the GIFT city are Bank of America, Morgan Stanley, JP Morgan, IBM, Oracle and Google. Other companies that have invested in the hub are real estate developers like Bengaluru-based Sobha and Brigade Group. Mumbai-based Hiranandani Group has an office in the city along with several Gujarat-based firms such as Shivalik, and Nila Spaces.

International companies test waters

“The international companies that have offices in GIFT City have not yet decided to start full-scale operation from Gujarat. These are mostly shell offices with a small set up. Most of them still choose to have headquarters in either Mumbai or Delhi,” said Ramakant Jha, former Director and Group CEO of GIFT City.

“In the Vibrant Gujarat Summit in January 2024, the Gujarat government had announced that companies like Paytm and other artificial intelligence-based firms are to set up offices in GIFT City, but that is still on paper," Jha told The Federal.

"No new physical office of an international company has come to the fintech hub since the summit. However, many local companies, especially real estate firms have shown interests in properties since the partial liquor permit,” he added.