HS Pathak, 64, who has lived in Mumbai for the past decade, decided to buy a second home two years ago. He bought a two-bedroom flat in Navi Mumbai, a satellite town of Mumbai that has a lot of greenery and a relatively sparse population.
Now retired from the Indian navy, he says the apartment will serve as a perfect home for him to move to in his golden years.
“You do not find such green and well-designed residential complexes in Mumbai, and the flats are very spacious too,” says Mr Pathak.
Like Mr Pathak, an increasing number of Indians are buying second homes in India amid growing wealth in the country, and as they look for places to escape India’s chaotic and overcrowded major cities.
“There has been an increasing demand for second homes in India, making it a fully fledged market segment for many developers,” says Biswaroop Padhi, the co-founder and principal partner of Square Yards, an Indian real estate advisory firm.
The second homes market in India is growing by an estimated 10 to 12 per cent a year, he says. This is being driven by the country’s growing middle class with more disposable income. It is also helped by a rise in the number of households in India in which both partners earn a salary – and the increasing population of high net worth individuals in the country.
Such properties are generally located in hill stations and beach destinations, which are attractive places for holidays with family and friends, and for Indians to spend their retirement, Mr Padhi says.
Goa, Shimla and Kerala are among the most sought-after second home destinations in India.
“Goa draws its strength from being an international tourist destination with exotic beaches,” says Mr Padhi. “Shimla offers round the season opportunities to relax and enjoy. During summer and the warmer months there are ample trekking and other adventure sport options, whereas when the mercury level goes down, the hill station has many ice-skating spots. Having a second home in Kerala offers ample opportunities to visit the nearby forests, coffee gardens and other natural beauties such as backwaters.”
There are a number of destinations within a reasonable driving distance of Mumbai that have become hot spots for Indians based in the city to buy holiday homes. These include the coastal town of Alibag and Lonavala, a lush green hill station about 100 kilometres from Mumbai.
Lodha Group, which is based in Mumbai and is India’s largest housing developer by sales, is specifically targeting the growing pool of second home buyers in India with its Lodha Belmondo project. This is a 100-acre luxury resort-style project, with a Greg Norman-designed golf course, located about two hours’ drive from Mumbai and half an hour from Pune. The prices of residences at Belmondo start from about 5 million rupees (Dh289,101).
“Typically, an Indian second homebuyer will look for a balance of both a hassle-free luxury lifestyle for his or her own use, as well as a safe investment opportunity … and will be concerned about connectivity from major cities and airports,” says Abhishek Lodha, the managing director of Lodha Group.
The holiday home “concept has always been popular with the elite”, but there is also growing demand among the middle class as “greater distribution of wealth has had a rapid trickle down of the idea of owning a second home”, he says.
“These days, we are seeing an increasing response from a large set of our NRI [non-resident Indian] customers for second homes as well.”
Building luxury holiday home projects comes with challenges for developers, however.
“Completing the project with world-class amenities and alliances in a second-home location is challenging in terms of the construction supply chain and the varied skill of people required to operate and maintain the project,” says Mr Lodha.
Buyers tend to be particularly demanding when it comes to purchasing a property for holiday purposes.
“In terms of kind of homes, second homes comes in a wide range of segments ranging from small apartments to large villas and farmhouses,” says Mr Padhi. “However, the common denominator involves higher design and quality standards.”
India’s property market has suffered slowing demand in recent years because of high interest rates and a softening of economic growth. But the holiday home sector in India has remained somewhat immune, according to analysts
“It should be noted that second-home purchase in India – as well as other parts of the world – are subject to different demand dynamics and are not subject to prevailing economic fundamentals that govern the property market in general,” Mr Padhi says. “The demand for such homes is driven by the availability of surplus income among the high net worth individuals and hence are generally recession- proof.”
Kalpataru, an Indian developer based in Mumbai, is also looking to appeal to second-home buyers. It recently launched a contemporary villa project called Amoda Reserve spread over 60 acres of greenery in Lonavala with this market in mind.
The developer says that there is demand for holiday homes in nature because of “rising stress and work pressures among those residing in the metros”.
A spokesman for Kalpataru says: “Home buyers today are much more evolved and are demanding better lifestyles and amenities like exclusive clubs, lounges, spa, high-tech gyms, swimming pool, landscaped gardens and best-in-class sports facilities. There has been a distinct trend in which second homebuyers are increasingly exploring for options related to enhancing one’s health and well-being within the precinct of their property.”
Buying a second home in India has largely been a lifestyle choice, but many are starting to realise the investment potential as well, the developer says.
“The segment largely consists of buyers who either invest in second homes for post-retirement purposes or those who wish to earn a rental income,” according to Kalpataru. “However, in recent times, second-home buyers are young individuals in their 30s and 40s.”
It is typically targeting high net worth individuals, corporate executives, business owners and entrepreneurs looking to buy holiday homes for sales of its Lonavala project.
Mehul Thakur, the director of Viva Homes, a real estate developer based in Mumbai, says that as well as the trend of Indians opting to buy second homes away from major cities, they are also looking to invest in second properties in cheaper suburban areas.
“Properties located within 25 to 30 minutes [of major cities] are typically with the intention to look for good returns. And properties located within a driving distance of beyond 1.5 to 2 hours are typically seen as holiday destinations or for retirement,” he says.
There is a lot of demand from NRIs, particularly from Dubai and the United States, Mr Thakur says.
“Rising property prices in India and the prospects of earning better returns on investment is making it attractive for NRIs to invest in a second home in India,” says Shailesh Puranik, the managing director of Puranik Builders, a developer in the state of Maharashtra.
business@thenational.ae
Follow The National’s Business section on Twitter
The post For India property investors, there is no place like a second home appeared first on UAE Business Directory - TotalUAE.com.