April 16, 2018

Second homes have got an impetus in the recent past, due to reformatory changes in the realty sector, thereby making them a lucrative bet for buyers.

Until a few years ago, buying a second or holiday home was a fad among people with disposable income. Thus, developers saw this as an opportunity to construct houses in far-off places and earn more profit. However, a lot of these projects failed to deliver on their promises. Delays in obtaining requisite permissions, poor accessibility/infrastructure, a lack of basic amenities and facilities and sub-standard quality of construction were some of the issues that plagued most of these projects. This left second home-buyers feeling cheated and their woes were compounded because resale on these properties became increasingly difficult. But this was the scenario back then. At present, the situation is different. It is a good and safe decision if you plan to invest in second homes today.

Right time to invest:

The introduction of path breaking reforms and measures such as demonetisation, RERA, implementation of GST, etc has improved the functioning of the realty industry. In the years to come, we believe there will be more institutional participation in real estate.

As per recent data, the holiday homes segment is growing at a healthy rate of 10-12 percent p.a. There is a good demand in locations within two-four hours' driving distance from major cities or towns. Some of the more prominent smaller towns where we have seen a marked increase in development of second homes are Dehradun and Shimla in the north, Ooty and Coorg in the south and Lonavala and Karjat in the west.

Key benefits:

It has been observed that vacationers prefer holiday homes over hotels — cost, convenience and privacy being the major reasons. Developers too, are catching on this trend to attract more buyers. They offer to manage individual units in their projects and also lease them out in a professional manner. Thus, investors end up receiving healthy returns between eight and 10 percent p.a.

Quality homes and well planned projects are available at reasonable prices. And with RERA, buyers have access to all the key information about projects, legislative protection and delivery date. Most importantly, investment in second homes also results in fair returns, which is actually sustainable, as it is on the back of an actual demand.

Things to consider:

Buyers need to keep a few important things in mind before investing in second homes:

* Ensure that the project has all the necessary approvals and sanctions, particularly that it is registered under rera;
* Check the past track-record of the developer, particularly if it is an under-construction project. Ascertain whether the developer has delivered as per timelines and promised amenities in past projects;
* Visit the site and gain better understanding about the potential of the project location — places of interest in the vicinity, current and future planned infrastructural developments, connectivity options, availability of power, water and other basic amenities.

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