The second home market in the country is poised to witness high traction in the near term as nearly 70% respondents are looking to invest in a second home priced at Rs 2 crore or less, showed a Savills India survey of prospective home buyers.
The survey of total 325 respondents from a mix of high networth individuals (HNIs), non-resident Indians (NRIs), reveals that 57- 70% of them want to buy a second home within two 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 home buyers intend to hold the properties for more than five 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.
It 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 homeowners 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 Shveta Jain, MD, Residential Services Savills India.
The survey added 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.
Goa leads the domestic demand for second homes with one-fifth of respondents interested in buying a second home there. Almost 70% of demand is within the Rs 2 crore price range. Rental yields in this property market 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.
Around 29% of the survey respondents have shown interest in investing in the popular second home destinations of Maharashtra. Across locations in the state, 65% of the demand is within Rs 2 crore. Net yields of Maharashtra properties have been in the range of 4-6%.
In northern India, Uttarakhand leads the domestic demand for second homes. 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 has witnessed limited demand for second homes priced at more than Rs 5 crore and has shown low preference for plots in the hill state. 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.