NEW ERA OF SECOND HOMES

Covid 19 pandemic has resulted in emergence of new trend in Indian luxury homes segment.

Despite the nation-wide lockdown caused by the Covid - 19 pandemic, the real estate market has made a strong comeback after a brief dip in 2020. The move by the RBI to cut home loan rates to as low as 6-7% in some banks are great motivators for buying a second home. Moreover, the work from home culture has made it necessary for homes to have a dedicated “working space” for an average of two professionals. This has led to an increase in demand for bigger and more spacious houses. With the internet penetration rate estimated to reach above 55 per cent by the end of 2025, home buyers are, now more than ever, confident to purchase properties in more remote locations. The industry professionals themselves are optimistic about a turnaround which they are confident will be pushed by emerging tech changes to the sector. 

SECOND HOME AS AN OPTION

People have been working from homes for 18 months now, and with schools remaining closed and children learning from home, families are seriously considering buying a larger, second home away from cities. Unlike first time investors, people who have the option of going for a second home as an investment have had a lot of time in the pandemic to think and invest. Buying a second home is not an alien concept in India, but families are now showing greater interest in choosing a location that is away from their city of work, smaller towns, and bigger homes. Bigger homes in smaller towns would essentially mean they would be able to take a solid family break from their routine chores every single weekend. This is a trend that has been accepted by both leaders and analysts in the industry.

SERENE & STRESS-FREE PLACES TO WORK

Apart from the work from home scenario, other factors that motivate families to go for a second home include a solid asset that guarantees fantastic return on investment. Further, it gives them an option to work away from stress inducing metros and a chance to be closer with their families.  For less than the price of a second property near their homes, investors can get to buy a truly spacious villa as their second home. For instance, for the price of a 3 BHK apartment in a metro like Chennai, an individual home that comes along with lush green open space or a village can be purchased in hill stations like Kodaikanal or Ooty. “The pandemic has also resulted in a sharp dip in prices in the sector. Rates of interest on home loans are lower than ever before. Even if families decide to return to their city of work, rental income from their second home will be a bonus,” says an industry expert. Moreover, in new and emerging hotspots like Bhopal or Mysuru, the governments' reduction of stamp duty registration rates has given a shot in the arm.

WORK, LEARN, PLAY

Experts also offer interesting insights into the trend. They say that for their second homes, families prefer locations that are popular vacation destinations.

“Vacation homes” as a concept was not entirely unheard of in the past - when people would buy a property in a hill station, a beach property, or a remote getaway to visit and unwind after long spells of work. Individuals, working couples or upper middle class families who love to travel are booking “vacation homes” in popular weekend getaways like Alibaug or Karjat near Mumbai, Goa and similar towns in Kerala, Tamil Nadu or Himachal Pradesh. For people who loved to travel often, but were unable to due to the travel restrictions, an investment on a second home - a vacation home is a wonderful choice.

WELL CONNECTED

“Internet penetration has increased in leaps and bounds especially in the past 5 years and so has mobile phone usage. Connectivity is no longer an issue. People have no qualms to work away from their first homes as long as their routine is not interrupted,” points out an analyst. Adding to that the increased interest among investors for buying a vacation home is a clear pointer to the fact that there is a revival in the realty sector. Not just in popular tourist destinations, but the realty sector has seen encouraging activity in non-metro cities and towns. According to a leading builder, the demand for second homes comes primarily from High Networth Individuals in New Delhi-NCR, Bengaluru and Mumbai among other metros.

Unlike in metros, tier II and tier III towns might not have counselling and legal help readily available. This makes it all the more important for buyers to be cautious before settling on a purchase. It is imperative that the property can be accessed with ease, has a steady internet bandwidth and ideally no power outages. For these reasons, using a credible online platform for real estate purchasing, matters.

As it is now difficult to make property visits, investors need to look for agents and agencies that are technologically progressive and provide services like a virtual tour of their proposed property.

A second home is indeed proving to be a smart investment for those interested in reaping the benefits of the current real estate market, as it also serves as a getaway from our daily routine of working or studying.

Shashank Vashistha

Executive Director, eXp Realty, India

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