The luxury second home market is witnessing robust growth, driven by evolving preferences and an increasing appetite for spaces that harmoniously blend luxury, practicality, and nature. Multiple factors seem to have influenced this phenomenon, especially the rise in disposable incomes as well as a shift in priorities brought about by the pandemic. Also, as hybrid-work culture becomes the norm, there’s a burgeoning demand for expansive homes designed to seamlessly combine beautiful residences with functional spaces.
In addition to the above factors, connectivity has significantly improved across many cities, wider penetration of the internet coupled with infrastructure like airports and highways, have made part-time living in serene, non-urban areas a highly appealing and pragmatic choice. Recognising the amplified rental yields and capital appreciation in these locales, it’s clear to many that such investments are not just personally enriching but financially astute as well. This segment’s potential is immense, and its trajectory points towards sustained growth and dominance in the foreseeable future.
Such properties not only appreciate in value, diversifying one’s investment portfolio beyond traditional avenues like stocks and bonds, but they also promise consistent appreciation and potential profit upon resale. Typically, buyers witness two main types of returns: yield-driven return on investment (ROI) and capital appreciation. Gross yields typically fall in the 7-10% range, with net yields at 3-5% depending on the specific micro location. The extent of capital appreciation largely hinges on the duration one retains the property, with potential growth ranging from 30%-300%. For instance, homes that once traded at INR 5-6 crore three years ago are now fetching prices around INR 10-11 crore in the secondary market in specific locations. Furthermore, the value of the underlying land has skyrocketed across the country, seeing an increase of 30-200% in just the past two years. Notably, the capital appreciation is even more pronounced for larger estates, with properties previously sold at INR 15-20 crore two years ago now trading in the secondary market at a staggering INR 35-40 crore.
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Beyond these tangible financial gains, luxury homes offer a tranquil retreat amidst nature, promoting well-being and stress relief. They serve as epicenters for family bonding, fostering deeper relationships and cherished memories. The blend of upscale amenities and comfort elevates everyday living, making these properties more than just homes—they’re portals to a more fulfilling life.
For affluent and discerning individuals seeking luxurious second homes, the allure of beachside and hillside retreats is undeniable. For instance, Goa, with its intoxicating blend of sea breeze, lush greenery, and sun-soaked beaches, emerges as a prime attraction. Notably, areas like Siolim, Moira, and Aldona in Goa exude an eco-conscious charm, setting the perfect backdrop for luxury villas. However, Goa isn’t the only coastal paradise drawing attention; Alibaug is another destination that offers a picturesque sanctuary with its vibrant beachfront vistas. Indeed, Goa maintains its position as the premier investment destination for those targeting non-urban properties. But as infrastructure and connectivity advance nationwide, other locales such as Alibaug and Kasauli are rapidly gaining traction. Today’s discerning buyers prioritise locations that harmoniously blend natural beauty with modern amenities, emphasizing clean air, expansive open spaces, impeccable connectivity, and robust infrastructure.
(By Dhimaan Shah, Co-Founder & COO, Isprava)
Disclaimer: This is the author’s personal opinion. Readers are advised to consult their financial planner before making any investment.