Due to increasing urbanization our lifestyle is becoming more and more chaotic with overcrowded streets, never-ending traffic jams and loud honking horns and music that make people loo for peace and solitude. Not only the super-rich class but those with moderate means also look to buy a second home away from the city. Places like Shimla, Lonavla, Goa, Munnar, Mussoorie, Kasauli Nainital etc. are rising as weekend home hotspots that offers a wide range of leisure properties. Apart from being a perfect weekend getaways, these homes also prove to be the best investment ventures.
What are Weekend Homes?
A weekend home is also known as a second home or a vacation home. It is a leisure property that one purchases after his basic need of shelter is fulfilled. It is a home that people uses as a relaxation place or weekend getaway destination and it can also serve as a joyful retreat in your post-retirement years. Such homes are usually situated in greener and more embracing environments like the foothills of Himalayas, shrines or religious destinations and beach side localities. People love to invest in locations that are at a short distance from their primary residence, may be 3-5 hours by bus, train or car. Better connectivity, developed infrastructure, ample of greenery, cool, calm and undisturbed surroundings are the features that people look in for their weekend homes.
Latest Trends in Weekend Home Market
Over the last few years, the trends of buying ‘weekend home’ in real estate market have shown drastic changes. It used to be a popular investment choice among High Net-worth Individuals (HNIs) and now has started catching up with the middle-class buyers. Seeing a passive demand, the developers have also redesigned their property platter to meet the needs of mid-segment buyers. These properties are comparatively more affordable than the ultra-luxury category and also these homes come with modern features like private swimming pool, golf course, personal dining area, themed gardens and ultra-lavish club house.
The best part of investing in weekend homes is that these demand for these properties remain protected with any fluctuation of an unstable market condition. Even the recent market inflation did not affect these luxury homes, though the moderately priced properties were badly hit.
It is interesting to know that about 50 percent of the weekend home buyers are among the salaried individuals. On an average, the second home market is growing at a rate of 10-12% annually. Due to strong and vigorous market the availability of home loan have become quite easy and with rising income standards, people are likely to buy the first home in their mid or late 20s, and start their 30s with huge investment ventures like a second home. However, if we take a look back 20 years ago, the scenario was not the same as buying a home entailed risking one’s retirement savings.
Right time to invest in Weekend Homes
Post demonetization our government has launched several schemes for the real estate sector. Banks/ NBFC’s have considerably reduced their interest rates on home loan, however, making it the perfect time to invest in residential properties. Nevertheless, real estate sector still remains one of the best investment options that result in significant capital appreciation as well as rental yields.
Among lots and lots of benefits there are few points that are needed to be considered before buying a second home
- It is always advisable to buy a second home only after the previous home loan dues are over and the primary home of the buyer is debt-free. Handling two home loan EMIs at once is definitely not a cakewalk.
- One has to consider the operational cost of the weekend home in advance. Whether it is out on rent or not, it will incur some maintenance cost. If a caretaker is hired for the house, his/her salary will also be added to the monthly expenses.
- If the buyer thinks that the mortgage EMIs can easily be made up with the rent proceeds, you need to rethink and consult a mortgage broker. Received rentals of these houses range from 2 to 7 percent of the property value which is definitely not enough to pay off the debts.
- In case the property is purchased solely for generating rental revenue, location is the foremost factor. Most of the hill stations and beach locations have seasonal visitors. After the season is over rental earning will come to a pause. So the localities have to be chosen wisely that can yield a regular rent throughout the year. One can opt for the places that hold seminars and conferences, corporate events or spiritual workshops. Such homes generate good capital appreciation as well as regular rental demand.
The Future of Weekend Homes
Though it is a popular trend in European countries, in India the concept is still in its initial stage. Since luxurious lifestyle is the main attraction and indicator of wealth in the country, weekend homes have a bright future in India too. The market will surely grow and attract more investors in the coming decade. As a buyer, it is advised to examine the financial capabilities and then move ahead with such investments.