Buying a second home? Keep in mind climate and connectivity

Select a popular location for capital appreciation, keeping in mind climate and connectivity

With the real estate market in India in upcycle, one segment that is witnessing rapid growth is second (including retirement) homes. A recent report by 360 Realtors says this segment is likely to grow at a compound annual growth rate of 23.6 per cent over the next five years.  

Goa, Alibaug, Lonavala, Coonoor, Ooty, Kasauli, and Shimla have emerged as the second home hotspots within the country.

Several factors are driving this demand.

With many companies willing to offer at least some of their employees the option to work from home permanently, many people are investing in a second home in places that offer a salubrious climate.

Some are investing for quick appreciation. 

Says Dhimaan Shah, co-founder, Isprava, which offers fully furnished second homes priced between Rs 5.5 crore and Rs 30 crore: “If you buy with the right brand and invest in the right project, you could get very good appreciation within a short period.”

According to him, Goa currently offers the best investment return on second homes.

Some are buying a second home so they can rent them out for long stays.

Says Shah: “While in top-tier metros like Mumbai, the rental yield is barely around 1 per cent, in a place like Goa, you could get 6 per cent or more with the right property.”

Choosing the right home

Besides climate, choose a place with easy connectivity to your metro, so you can return quickly in case a need arises.  

Stick to a branded developer — one who has a track record of delivering quality projects on time.

Decide whether you wish to buy the property for self-use, to rent out, or for investment.

Says Gunjan Goel, director, Goel Ganga Developments: “To earn a high return on investment, go for a popular location. On the other hand, if you are buying for self-use, focus on whether it offers the amenities and infrastructure that suit your lifestyle.”

Buying within a gated community is prudent.

Says Shveta Jain, managing director, residential services, Savills India: “Look for an independent home or villa within a gated development. Such developments offer greater security and you can enjoy facilities such as swimming pools, gyms, health centres, and state-of-the-art sporting amenities even during a holiday, without having to worry about their maintenance.”

Ensure the area does not suffer from water scarcity.

“Especially in case you are buying a standalone home, make sure there is assured water supply all year round. Water scarcity can be an issue, especially in some hilly locations.”

Go for a Real Estate Regulatory Authority-registered project, so that you have the option to complain in case there are structural defects within the building, or other such issues with the developer.  

Look for clear land title

Land title can pose an issue, more so in non-urban locations. Especially if you are buying from a smaller developer, engage a lawyer to conduct a detailed title check.

Make sure the seller provides you with documents such as title deed, sale deed, registration papers, pledged property, and encumbrance certificate. Make sure no utility bills, maintenance charges, and property taxes are due.

Some additional due diligence may be required when investing in certain states.

To invest in Shimla, for instance, a non-domiciled buyer needs permission under Section 118 of the Himachal Pradesh Tenancy and Land Reforms Act, 1972. But non-domiciled purchasers can buy a plot of land or apartment from a licensed builder who has taken approval under Section 118.   

Since property laws vary across states, it is advisable to engage a local property agent who can help you navigate through the legal maze.

Factor in maintenance cost

If you are buying an upscale villa, be prepared to spend a hefty amount on maintenance.

Says Shah: “It could range between Rs 50,000 and Rs 1 lakh per month. This will include the cost you pay to your cleaning and kitchen staff, security, and for pool cleaning, landscaping, and gardening, etc.”