Second home market is set to see traction in near term: Survey

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Savills

The second home market in the country is poised to witness high traction in the near term. Almost 70% of respondents want to invest in a second home priced at INR 2 crore or less, according to a survey carried out by Savills India, a global property consultancy firm amongst prospective homebuyers.

The survey reveals that 57- 70% of the respondents want to buy a second home within 2 years. This short-term commitment of less than 2 years is evident not only in the domestic market, but also in the preferred offshore destinations. When compared maximum preference of investments is within India in a horizon of less than 6 months.

Almost 80% of potential second homebuyers intend to hold the properties for more than 5 years. As the ticket size of the property increases, so does the intended investment period reflecting an intent to attain capital appreciation and rental return before eventual exit from the cherished property.

Savills India’s research analysed responses on critical parameters that buyers consider while purchasing a second home and these include – owning a second home at a holiday destination, spacious and larger floor space, health and wellness factor, connectivity from home city, internet infrastructure and an eventual return on investment.

The survey further highlights that almost 60% of the respondents would like to invest in a second home within the security of a gated community that offers a sense of security and allows home owners to enjoy facilities such as swimming pool, gymnasium, health centre and sporting amenities, without having to worry about the maintenance of such provisions on a regular basis.

“The Second Homes market appears to be on a gradual upswing. Unlike earlier, when capital appreciation and rental incomes were the governing criteria, an additional dimension of a safe home away from pandemic hotspots appears to have become a key consideration. Rental yields in popular second home destinations are reported to be witnessing an increasing trend. Additionally, technology too has played a vital role in strengthening the investor confidence.” said Ms Shveta Jain, MD, Residential Services Savills India

The survey further highlights that respondents were willing to invest in second homes across the length and breadth of the country and the top 10 destinations emerging from the survey collectively have a share of 87% within the domestic locations.

Location preferences

       Goa: The state leads the domestic demand for second homes with one-fifth of respondents interested in buying a second home here. Almost 70% of demand is within the INR 2 cr price range. Rental yields have been in the range of 4-7% and are on an upward trend. There has been more than 20% appreciation in land rates as compared to the 2019 pre pandemic era.

       Maharashtra: 29% of the survey respondents would like to invest in the popular second home destinations of the state. Across locations in Maharashtra, 65% of the demand is within INR 2 cr. Net yields of Maharashtra properties have been in the range of 4-6%.

       Uttarakhand: The stated leads the domestic demand for second homes in the northern part of the country. Only 3% of respondents want to purchase plots in Uttarakhand reflective of the stringent local ownership laws. Net yields of Uttarakhand properties have been in the range of 3-6%.

       Himachal Pradesh: The state has witnessed limited demand for second homes priced at more than INR 5 cr (Only 3% respondents are in search of such properties). Low preference for plots in the hill state (less than 5%). Net yields of Himachal Pradesh properties have been in the range of 3-6%.

       Tamil Nadu: Leads domestic demand for second homes in the southern part of the country. In Chennai East Coast Road noteworthy (13%) demand comes from penthouses compared to other locations where penthouses account only 3-7% of the overall demand share. Rental yields have been in the range of 3-4%.  The state has seen around 15-20% appreciation in property prices as compared to the 2019 pre pandemic era.