There has never been a real decline in the popularity of second homes in India. It certainly is a full-fledged real estate market segment in its own right. However, just as on the first home market, the demand for second homes is driven by the general economic climate. When the economy declines, all real estate segments decline with it. By the same coin, the demand for second homes always rises when people’s spending power increases.
Speaking of the current scenario, it is a good time to buy a second home – not solely because of timing, but because there is a very healthy supply of second home projects that have come up over the last two years. There is therefore a wide choice. However, the market for second homes is slightly inflated at the present time, so circumspection and a deep understanding of one’s actual requirements is necessary to strike a good deal.
WHO’S BUYING SECOND HOMES?
The traditional second home clientele in India has been the HNI class. However, with a very distinct improvement in the economic scenario and therefore on the overall job situation, the upper middle class has also become an active second home buyer segment. Their motivations are usually equally balanced between aspiration and investment objectives.
The second home destinations in greatest demand are within 4-7 hours of drivable distance from larger cities. There is demand for second homes in naturally ambient locations as well as in self-sufficient projects that offer entertainment and ease of living.
In terms of projects close to Mumbai, Lavasa and Amby Valley come readily to mind. Locations such as Lonavala, Khandala and Karjat continue to be in great demand. The popularity of a second home destination is often driven by how close it is to large cities. Religious places such as Hrishikesh, Tirupati, Nasik and Pota are also in demand for obvious reasons
WHAT TO WATCH OUT FOR
In most areas, the second home market begins with land that has been categorized as agricultural and then converted for non-agricultural use. The projects are often structured as farm houses, which do not have a lot of permissible built-up area. In other cases, the projects are a pure real estate play, which means that developers can construct as much as they want. When this happens, the ambience and quiet that the second home buyer aspired for naturally goes for a six.
It is necessary to do a deep-drive into the location, the applicable permissions and future developments, etc. Also, the infrastructure development in remote locations – which is where second home projects often come up – can be a tricky point. Unless the second home has the benefits of all facilities such as water, electricity, sewage and road accessibility, it will not serve much purpose. It is best to buy a second home from a reputed developer who is known for high quality projects.
The author, Ramesh Nair is the Managing Director, West India – Jones Lang LaSalle India
