Bottom Line: Whether a weekend home should be luxury or affordable is an old debate. Ravi Sinha evaluates the two sides of the argument.
Weekend Home
Rakesh Gupta, a property agent operating out of Goa was surprised when Nikita Chaudhary, an NRI from Britain, told him that she is looking for a weekend home near the mountains. And her final choice would be subject to the price point as she is looking for an affordable option.
The broker who deals with high-end luxury properties of Goa & Mmbai-Pune region was asked to scout for property in places like Shimla, Manali, Kullu and Haridwar. He was nevertheles not sure what this NRI lady meant by affordable. He rather wondered about the seriousness of the deal.
“Isn’t a second home meant to be luxury property? Why would one go for an affordable option as a weekend home? Can an affordable budget buyer spend for a holiday home.” These were some of the questions that came to the thought of this property agent.
Gupta is not alone to have this dilemma when it comes to look for a second home with affordable options. As a matter of fact, the debate of whether a holiday home is necessarily a luxury property or affordable homes can also make their way to this elite league is quite old.
The proponents of weekend home as affordable peoperty believe it is the location that is a demand driver of holiday home and not the price point. This school of thought believes that a second home can also be bought with future appreciation in mind. Many of such weekend homes become the first home destination within a few years when the infrastructure is upgraded.
Others believe it is the buyers’ profile that idetermines whether a second home would be affordable property or the luxury property. Of course, the rich and affluent buyers go for a weekend home for sheer luxury & pleasure of holidaying. The demand in this segment of buyers is more about the luxury amenities than pricing.
The mid segment of buyers, on the other hand, have budget in mind but are not ecessarily looking for low-cost houses. They want to enjoy the house as a weekend home and also look for the appreciation potential in future. So, it is investment as well as luxury with their given budget and tourist locations serves the dual purpose.
There is also a third set of buyers who buy properties in the second home locations as their first home. They are the buyers who look for locations that would be first home location in the next few years. Of course, the budget constraints force them to look for low-cost housing. Analysts believe this third set of buyers can not be classified as the second home buyers.
Luxury or affordable dilemma?
Equally lucrative market for high end and mid segment buyers
Amenities & luxury more important for high end buyers
Affordability a key concern for mid segment buyers
Location equally critical for all second home buyers
Over and above these three set of buyers, the developers believe it is the location that also determines what are the aspirations vis-à-vis the holiday homes. Nikhil Hawelia, Managing Director of Hawelia Group says it is all about the geographical presence of the buyers. For example, a location where one can buy his first home as a decent property within a budget of Rs. 1 crore will never go for a second home above Rs. 50 lakhs. But in places where a decent first home attracts a price of Rs. 3 crore the buyer will look for a second home around one to two crore rupees.
“This probably is the reason why there is so much of debate over the luxury and affordable options in the weekend homes. Of course, one living in Mumbai and going for a second home in Goa has a different outlook of property and pricing. Such buyer can not be compared with those who are living in Noida and going for a weekend home in Manali where the price point at both these locations are on the lower side,” says Hawelia.
Santosh Naik, CEO & Managing Director of Disha Direct maintains that the options are individual-specific but every Indian now desires second home close to nature, from hills to the coast to get a refreshing break from the hectic lifestyle and spend quality time with their family. Being a real estate asset, second home is becoming a good investment option for savvy buyers.
“Looking at this opportunity many developers are coming up with new projects at various destinations. It is not surprising that second home sector is emerging as one of the fastest growing sector, growing at 70 per cent year on year for last few years,” says Naik.
In a nutshell, the second home is at a nascent stage in the Indian property market. It is hence debatable as to who are the major demand drivers – whether luxury buyers or the cost conscious & aspirational upward middle class. But what can be vouchsafed is the fact that the second home has demand drivers across the financial standings and one size fits all answer is not there for the developers also. They need to evaluate the location and the buyer profile to offer the right kind of second homes in the given market.
