The current market size is USD 1.394 billion and is expected to reach USD 4.021 billion by 2026.
At the beginning of the previous decade, the concept of such a house began to gain popularity in the country. Goa has become a natural choice, accounting for around a quarter of the market. Goa offers sun, sand and immense scenic beauty, thus attracting a large number of buyers.
The coastal state has many townhouses, gated communities, and villa options. Alongside Indian buyers, NRIs have also bet big on Goa.
“The pandemic has further given a huge boost to the second home market in India. While the growth of many traditional asset classes such as apartment buildings, office buildings and retail units has taken a hit, the demand for second homes has increased significantly,” said Ankit Kansal, Founder and CEO of 360 Realtors.
In Maharashtra, Lonavala has become the preferred destination for shoppers from Mumbai and Pune. In Mumbai, other important places such as Alibaug, Karjat, etc. have also evolved as holiday destinations. To the south, Ooty, characterized by its British-style bungalows and villas, has become a favorite spot.
Abundant greenery, tea and coffee gardens, a plethora of entertainment and entertainment options, as well as smooth connectivity with South Indian cities such as Bangalore, Chennai and Mysore make Ooty and neighboring regions a privileged place to opt for a second home. In the north, hill stations such as Shimla, Solan, Dehradun and Mussoorie are major attractions.
“Faced with the threat caused by the virus, many buyers have started looking for vacation homes to escape the congested, paced and hectic city life. A growing push on the work-from-home culture or rather the Work lifestyle from Anywhere further propelled the upward trend,” Kansal said.
According to research by 360 Realtors, between 2019 and 2021, the retirement and second home market grew by around 89%, defying a general slowdown in the real estate sector.
As demand for second homes skyrockets, average prices have also risen sharply. According to the research, Alibaug had the highest appreciation of 10.5% over the past 2 years. In Shimla, property prices increased by 6.45%. In Panaji, the average property price appreciation was more than 2%.
Meanwhile, amid growing demand, the RSH segment in India also offers a valuable rental income opportunity. A large number of corporate professionals, digital entrepreneurs, creative freelancers, professional consultants, technicians and coders now prefer to work in quiet, serene and scenic locations rather than the typical 9- 5.
These buyers are opting to rent homes for long stays. Many tourists now prefer these homestays over traditional hotels and resorts. In Himachal Pradesh, owning a property in Shimla or Kasauli can yield an annual return of around 2.75-3%. In Maharashtra, Lonavala can provide an attractive annual rental yield of up to 6%. Second homes in Goa can also offer rental yields in the range of 4-4.5%.
The retirement and second home segment in India will continue to grow, supported by a rise in telecommuting culture, a growing tendency to avoid busy city life and the viability of second homes as a work option. careful investment. As the fear of possible waves in the future persists, many buyers will also opt to purchase a second home to mitigate future risks.
Apart from regular locations in Goa, Himachal Pradesh, Uttrakhand, Nilgiris, etc., many city suburbs will also appear as viable RSH destinations. Besides townhouses, villas and compound residences; the concept of farm life is also gaining ground. Within 1-2 hours from major Indian metros, the concept of farmhouse style compound living is becoming popular. Such a life gives people a better opportunity to bond with nature.
“Farmhouses were also popular in India and thought to be an extension of the Bungalow culture of the cities. However, in earlier times, it was only for the super-rich. Today, there are many options in the range of INR 1-3 Crores,” Ankit Kansal said.
The market is currently unorganized and dominated by local developers. However, trends are changing and big developers such as Tata Housing, Kalpataru, Provident, Axon, Lodha, ATS etc. are now entering the space, lured by the attractive return potential.
The segment is also attracting the attention of institutional investors, which is a positive sign. In addition to the new projects, the many farmlands and resort properties will be rebranded as second homes to meet growing demand.