In the past owning a farmhouse or a swanky cottage somewhere in the mountains or near the seashore meant shelling out Rs 15-20 crore. However, the market is now transforming with big players entering the space, lured by the steep rise in demand in recent years. New communities of farmhouses, gated villas, cottages, etc are emerging, bringing increased democratization of the space, says Ankit Kansal, Founder & MD, Axon Developers.
In an exclusive interview with Sanjeev Sinha, Mr Kansal talks about the retirement and second homes market, and why the RSH category is amongst the fastest-growing segments in the real estate sector in India. Excerpts:
What are the current growth statistics and market size of retirement or second homes? What is their future growth potential?
The size of the retirement and second home (RSH) villa market was roughly USD 1.394 billion in 2021. It is currently growing at a CAGR of 23.63% and is set to reach a market size of over USD 4 billion by 2026. If we consider other complementary categories such as farmhouses, homestays, and cottages, the overall size is much larger. The RSH category is amongst the fastest-growing segments in Indian real estate, as increasingly Indian households are now shunning congested city lives periodically and spending some time amidst peaceful idyllic environs and scenic natural beauties. It helps them recharge their mind and body and feel rejuvenated. Meanwhile, amid growing remote working, hybrid work models, and workcations, long leases & rentals are also trending, which is further fueling the rental market in the RSH segment. Many people now prefer homestays rather than conventional hotels.
Also Read: Should you rent or buy a house when home loan rates are rising?
Which are the favorite and most apt second home or retirement home destinations, and why?
Throughout the length and breadth of India, numerous RSH destinations are emerging. In the Himalayas, close to the snow-capped mountains hills and exotic old Cedar Forest reserves, popular tourist destinations such as Shimla, Dehradun, and Mussoorie are garnering a lot of interest from second home buyers. In the Himalayan ranges, there is also a newfound interest in the Chamba and Tehri regions, located in the midst of green mountains and flowering meadows.
In the east and west coasts of India, coastal towns such as Goa, Vizag, Pondicherry, etc. are getting a lot of interest from buyers to build villas, bungalows, and low-rise apartments. Near Goa, there is also a growing spotlight on the scenic district of Sindhudurg after the opening of the MOPA airport. The popular hilly regions of Lonavla, Lavasa, and Mahabaleshwar perched on the beautiful Sahyadri ranges are seeing renewed interest from buyers and investors of Pune and Maharashtra.
Are retirement homes only limited to the wealthy and ultra-rich indulgences? Are the price rates moving toward the upper end?
In the past owning a farmhouse or a swanky cottage somewhere in the mountains or near the seashore meant shelling out Rs 15-20 crore. However, the market is now transforming with big players entering the space, lured by the steep rise in demand in recent years. New communities of farmhouses, gated villas, cottages, etc are emerging, bringing increased democratization of the space. Today there are options available in the sweet spot of Rs 1.5-2.5 crore, vitalizing the overall market. This is also one of the reasons a large number of corporates, entrepreneurs, salaried professionals, techies, doctors, lawyers, media professionals, and many more are mulling owning second-home property in India these days. The market is now seeing options in plotted developments, starting from 0.25 acres and above, without making a deep dent in the pocket.
What is the future of the real estate sector in view of the consistent repo rate hikes?
The repo rate hikes are inevitable looking at the dampening of global liquidity and recent growth in inflationary pressure in the country. However, the real estate market will continue to recover fast on the back of a strong macroeconomic outlook, expansion in the job market, and a bounce back in housing demand. Homebuyers in India by and large now realize how important it is to buy a home at the right time. Moreover, property prices are spiraling, which makes it the right decision to own a home now rather than unnecessarily waiting for long.
Will affordable housing regain its charm after a considerable rise in the PMAY Budget allocation?
Despite India being one of the most promising emerging markets in the globe, the fact can’t be denied that housing gaps are increasing day-to-day. Every year millions of migrants are moving to Indian metros and Tier 1 cities but not everyone can afford a good place to live. In the future, 15-20% of the demand will emanate from the affordable/ budget/ low-middle income segment (Rs 30 lakh and below). It is essential for governing agencies, urban bodies, and developers to work closely to provide solutions to the growing urban housing bottleneck.
In this regard, it is a prudent step by the government to allocate a larger budget for PMAY as it reinforces the government’s commitment to link urban growth, housing for all, and economic prosperity. Meanwhile, the government and urban bodies should also work towards vitalizing the affordable rental market and fund new technological innovation in the space, as they can be the crucial lever to enable the segment to thrive fast.
How do you think digital infrastructure will impact the real estate sector in the coming times?
Growth in digital infrastructure will pave the way for increased use of smarter technologies, the Internet of things (IoT), and 5G-enabled services in our modern homes. It will help in implementing better remote access to homes, top-tier securities, and digitally monitoring power & water consumption. Technology can be the backbone to take experiential living to new heights. Powerful technological infrastructure can also give a boost to the metaverse in the future. However, personally, I feel believing too much in the metaverse boom at the moment is too futuristic. The Indian market is yet not mature for the metaverse boom.