The number of people eyeing real estate as an investment avenue is growing steadily. Further, with the rise of disposable income and the growing desire to lead a comfortable lifestyle, many investors are looking to buy second homes. Whether for retirement or to earn passive income through rentals, the second-home property market in India is witnessing tremendous growth. A key trend to note is the emergence of picturesque locations, such as hill stations and temple towns, which attract many tourists, creating excellent opportunities for short-term rentals. Further, the growth of a remote working culture in India has enabled home seekers to invest in places where their aspirations meet their basic lifestyle needs. In this guide, we explore some top locations that are ideal for investing in a second home.
#1. Hill stations
Hill stations are fast reshaping the second-home property market in India. The trend started growing after the COVID-19 pandemic and the emergence of the remote working culture. Over the recent years, holiday homes, also called vacation homes, have gained popularity from an investment point of view. Earlier, properties in such locations were considered more of a luxury retreat and preferred only by the high-end buyer segment.
Hill stations are known for their scenic beauty, greenery and pleasant climate. Renters prefer a property in a hill station owing to factors such as affordable rent and being away from city life. Buying a second home near a hill station offers rental income opportunities owing to high seasonal demand.
Some of the ideal locations for second home investments in India include Nainital, Rishikesh, Dehradun, Panchkula, Kasauli and Shimla in the north. In South India, Ooty, Kodaikanal, Coorg, Munnar, and Wayanad are emerging as popular destinations for second-home investments.
#2. Coastal and beach destinations
Like hill stations, coastal and beach destinations are equally popular among second-home buyers. Many people invest in homes near a beach or a coastal area primarily because of lifestyle benefits. The picturesque location, fresh air and calm setting enable them to lead a dream lifestyle. Some buyers opt for such locations with the intention of leading a healthier lifestyle by staying close to nature. Beach destinations such as Goa have also become a sought-after retirement destination.
Goa and Kerala are the top coastal locations for second-home investment in India. Others include Alibaug in Maharashtra, coastal localities in Mumbai such as Worli Sea Face and Versova, and some coastal towns in Gujarat.
Short-term vacation rentals, particularly those situated near tourist hotspots, appeal to second-home investors due to their high rental yields. Bungalows, villas and cottages are sought-after properties in these locations. There is a high demand for such properties, making them profitable for buyers. Further, the development of infrastructure offers scope for property price appreciation.
#3. Pilgrim destinations
Pilgrim destinations attract lakhs of visitors every year. Fuelled by religious tourism, some temple towns and pilgrimage hubs have emerged as favourable locations for second-home investments in recent years. Interestingly, the younger generation forms a significant portion of the buyers owing to their growing interest in religion and spirituality. Besides, there are frequent travellers and remote working professionals who prefer such destinations. Pilgrim locations offer a variety of leisure options, including yoga retreats and wellness activities. The demand for rented accommodation, including apartments and homestays, remains high throughout the year, peaking during certain months, particularly around festivals.
Some of the top pilgrimage destinations in India include Varanasi, Ayodhya, Rishikesh, Haridwar, Tirupati and Shirdi. Purchasing a residential property provides opportunities for tourism-driven rental income generation and can be beneficial for investors. Moreover, affordability is an important factor that makes property investment a smart choice.
#4. Emerging IT hubs
The IT boom in India has led to the emergence of several property destinations, especially in tier 2 cities and the outskirts of top cities such as Bangalore, Hyderabad and Pune. The demand for housing close to the emerging IT hubs has significantly increased in recent years. The buyers who prefer to invest in properties near IT hubs are mainly working professionals who prefer to reside close to their offices and property investors seeking rental income opportunities.
Moreover, second homes are seen as a strategic investment move, as buyers can look forward to earning a steady rental income and long-term appreciation. Further, the IT parks and offices are mostly located on the city outskirts. For example, Hinjewadi, Baner and Kharadi in Pune and Gachibowli, HITEC City and Kondapur are top IT localities.
The prices of properties in these locations are much affordable compared to those in city centres. Additionally, many tier 2 cities such as Jaipur, Coimbatore, Chandigarh and Kochi are popular IT hubs and are witnessing a steady demand for properties.
#5. Educational hubs
Educational hubs are another preferred location category for property investors. Locations with the presence of top colleges and coaching centres attract a significant student population, generating a significant rental demand. Thus, investing in a second home in another city close to an educational hub can offer excellent returns. Properties within a radius of two kilometre from a major university see around 5% higher occupancy compared to other areas.
Property owners can greatly benefit by renting out property close to an educational institute by earning a high rental income, having a lower risk of vacancy and long-term appreciation of prices. Localities such as Viman Nagar in Pune, North Campus in Delhi and Gachibowli in Hyderabad are some examples of property destinations near educational institutions. Regarding the type of properties in these areas, fully furnished apartments are quite popular among students, who prefer to rent with co-tenants.
Housing News Viewpoint
Before investing in a second home in India, it is crucial to understand the benefits of choosing the right location. If you are interested in earning good rental income, then areas close to IT hubs, pilgrimage locations, tourist hotspots, etc., are ideal options. However, if you are exploring second homes for retirement purposes, then it is crucial to factor in your lifestyle needs along with your investment goals. Buyers need to ensure there is a well-developed infrastructure with access to essential facilities, connectivity and future development potential.
FAQs
Is it better to buy a second home in a metro city or a tier 2 city for rental income?
Buying a second home is more affordable in a Tier 2 city than in a metro city. At the same time, the opportunities to earn rental income are also higher, especially if the property is close to IT hubs or tourist destinations.
What is the ideal location for a second home investment in India?
Some popular locations to buy a second home in India include hill stations, areas near IT hubs, educational institutions, and tourist hubs.
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