Weekend homes: Does luxury rule the roost or affordability?

When Nikita Chaudhary, a non-resident Indian (NRI), was looking for a weekend home in places like Shimla, Manali, Kullu and Haridwar, she had one important criteria – that the property should be an affordable house. This left her agent Rakesh Gupta, who dealt with high-end properties in Goa and the Mumbai-Pune region, rather confused. “Isn’t a second home meant to be a luxury property? Why would one opt for an affordable option, as a weekend home? Can an affordable budget buyer spend for a holiday home?” he wondered.

This raises the question of whether a holiday home should necessarily be a luxury property, or if affordable homes can also comprise this segment. Those who believe that a weekend home can be an affordable property, maintain that it is the location that is a demand driver of the holiday home and not its price point. They point out that a second home, can also be bought with future appreciation in mind and such locations may become a first home destination within a few years, when the infrastructure is upgraded.

The rich and affluent buyers, on the other hand, buy weekend homes for sheer luxury and for holidaying. The demand in this segment of buyers, is more about the luxury amenities than pricing. The mid-segment of buyers, have budget in mind but are not necessarily looking for low-cost houses. They want to enjoy the house, as a weekend home and also look for its appreciation potential.

 

Second home to first home

There is another set of buyers, who buy properties in the second home locations, with the expectation that it will become a first home location in the next few years. Budget constraints force these buyers to look for low-cost housing. Analysts believe that this segment of buyers, cannot be classified as second home buyers.

See also: Aspirational middle-class drives up demand for second homes

Developers add that the location also determines home buyers’ aspirations, vis-à-vis holiday homes. Nikhil Hawelia, managing director of the Hawelia Group, says that a location where one can buy a decent first home within a budget of Rs one crore, will not have second homes above Rs 50 lakhs. However, in places where a decent first home attracts a price of Rs three crores, the buyers will look for second homes prices around Rs one to two crores.

“Of course, a person living in Mumbai and looking for a second home in Goa, has a certain outlook on property and pricing. Such a buyer cannot be compared with someone living in Noida and looking for a weekend home in Manali, where the prices in both these locations are on the lower side,” Hawelia elaborates.

 

Underlying similarities in demand

Santosh Naik, CEO and managing director of Disha Direct, maintains that while the preferences of individuals may vary, home seekers desire properties that are close to nature, close to the hills or the coast, to get a refreshing break from their hectic lifestyle and spend quality time with their family. “Consequently, many developers are coming up with new projects at various destinations.

“Not surprisingly, second homes are emerging as one of the fastest growing segments, growing at 70% year-on-year, over the past few years,” says Naik.

As the second home segment is in a nascent stage in the Indian property market, the major demand drivers for this segment remains debatable – whether it is the luxury buyers or the cost conscious and upwardly-mobile middle class. Nevertheless, the fact remains that the demand for second homes exists, across budgets. Hence, developers need to evaluate the location and the buyers’ profile, to offer the right kind of second homes in a given market.

 

Key considerations, in second home markets

• Equally lucrative market for high-end and mid-segment buyers.
• Amenities and luxury are more important for high-end buyers.
• Affordability is a key concern for the mid-segment buyers.
• Location is equally critical for all second home buyers.

(The writer is CEO, Track2Realty)