Realty Player explains why demand is increasing for second homes on the market

People have embraced the idea of purchasing extra houses that go beyond their main dwellings and conventional sources of income across many historical periods and key historical events. These second houses, as they are sometimes referred to, represent a wide range of possibilities and meanings for their owners. The idea of having a second residence dates back to pre-British India and has remained a common habit among those who are financially comfortable, whether for personal use or as an investment.

Nowadays, with the accelerated urbanization and growing income levels, many people now have a real desire to possess a second house. The anticipated urban population of 600 million people in India alone by 2031 suggests a sizeable market opportunity as urban regions grow (McKinsey Global Institute). Additionally, as urbanization grows, disposable incomes rise, enabling people to seek better lifestyles. Thus, the demand for a second house has evolved into a success indicator and status symbol.

With an increase of over 70% on Airbnb compared to last year and an astounding 110% gain compared to pre-Covid levels, the market for second homes in India has seen an incredible uptick.The founder and CEO of ALYF, Saurabh Vohara, discusses a number of potential causes for the striking rise in demand for second residences, including:

Commercial Accessibility and Capital Appreciation: Fractional ownership of second houses has grown to be a popular option for many people wishing to purchase a second property, with prices as low as Rs 10 lakhs. This is due to the fact that fractional ownership of vacation homes is more readily available, practical, and enticing to a wider range of people, which supports its development and ensures its presence in the real estate market going forward. Additionally, the possibility of capital gain in vacation house locations like Goa, Lonavala, and Alibaug has drawn purchasers since these markets are expanding in popularity and are not yet saturated like the urban areas.

Awareness Due to International Travel: People’s enjoyment of living in vacation houses abroad has contributed to an increased awareness of second homes. This, along with India’s booming tourist sector, has increased demand for second houses in well-liked holiday spots. The attraction of second residences as a holiday or retirement alternative has greatly expanded, with domestic tourist visits reaching 2.08 billion in 2019 and a continuous annual growth rate of 13.8% between 2011 and 2019.

Demand for Retirement Vacation houses: Retirees and others looking for a tranquil retreat are also interested in second houses. These houses provide a relaxing and pleasant living choice that is completely in line with the rising trend for peaceful getaways. The rising demand for second houses among individuals looking for a carefree and fulfilled lifestyle reveals a desire for more than just financial success.

Investment Potential and Rental Income: Second homes have long been a popular option because of its investment potential and potential for rental income. Approximately 75% of Indians still choose real estate as an investment, judging it to be the finest asset class for long-term investments. Second houses are more appealing as an investment option due to the possibility of rental income and capital growth.

Hybrid Work Pattern: The desire for second houses has also been greatly fueled by the COVID-19 epidemic. Interest in purchasing second homes in serene and less populated places has increased as a result of the adoption of remote work and work-from-home cultures. This enables people to work remotely while also living more comfortably outside of crowded cities.

Increasing Non-Resident Indian (NRI) Investments: NRI investments have helped to fuel the rise in second home demand. Due to better rental income relative to residential investments in bigger cities, NRIs have actively participated in the Indian real estate market. The Indian real estate market saw almost $13.1 billion in investments from NRIs in 2020 alone, which helped to increase demand for second houses.

A variety of variables indicating a change in attitudes and goals are fueling the demand for second residences in India. The desire to buy a second home in a tranquil area has emerged as a common incentive for many, however investment possibilities and rental income still rank highly.

People have learned the value of having a calm getaway and adopting a more simple way of life, dispelling the idea that the epidemic will severely affect the real estate sector. The yearning for a better quality of life is reflected in the ambition of having a second house, which has evolved beyond simple financial rewards.

The need for second homes will increase as urbanization, changing lifestyles, and the work-from-home trend continue to impact the real estate market.