Initially, demand for second homes was driven by people who wanted to relax and rejuvenate in a holiday home and reduce the risk of being infected with the virus. Over time, however, it became a lifestyle choice for many upper-middle-class families.
The residential property market in India showed signs of a rapid recovery in 2021. Secondary market home sales and new launches showed significant growth. However, as several people became accustomed to remote working, second home sales have increased significantly. While its usefulness has merit, many have also viewed the second home as an investment opportunity.
As a concept, ‘second home’ can be traced back to the pre-British period in India. Many in the financially safe sections of the country’s population have bought additional homes. Second homes in picturesque locations have steadily increased over time. The demand for holiday homes has increased over the past two years. This is largely due to numerous restrictions imposed as a result of the COVID-19 pandemic, including travel bans and working from home. Initially, the demand was driven by people who wanted to relax and rejuvenate in a holiday home and reduce the risk of being infected with the virus. Over time, however, it became a lifestyle choice for many upper-middle-class families.
Unlike before, many reputable developers have entered this space and have therefore reduced the process of land acquisition, obtaining permissions, construction, etc. This is one of the other reasons why this growth in the second housing market is continuing. By offering homes in gated communities, homeowners benefit from the convenience of purchase and community facilities such as swimming pools, gymnasiums, jogging tracks, patios, sports arenas, and health centers. This not only lowers the purchase cost, but also reduces maintenance costs over a period of time.
Value and price in this segment is linked to infrastructural development around the location. Needless to say, access to a major city is essential, but less obvious factors such as:
24 hour uninterrupted electricity and water, a good internet connection and the availability of good medical facilities are also very important considerations.
However, every investment carries risks. The most obvious risk in buying a second home is the bad timing of the market. Over the past two years, the demand for and prices of second homes have risen. With most people returning to full-time work by 2022, schools reopening and international travel becoming easier, the possibility of a price correction should be considered. Second, the risk of more aggregators entering the market means that in terms of utility, one can use/rent someone else’s second home for a short period of time without the hassle or capital commitment of ownership.
Therefore, I believe the second home market will continue to grow, albeit at a much slower pace than the past two years have seen.
(By Farshid Cooper, MD, Spenta Corporation)
This post Demand for second homes gains momentum in India was original published at “https://www.financialexpress.com/money/demand-for-second-homes-gaining-traction-in-india/2462555/”