Home, second home

Second homes are excellent investment opportunities. Most investors think about a second home when there’s a combination of soft interest rates and prices, and disposable incomes at hand.

“It is as good as a speculative investment and in some cases, it is just an investment. Leisure comes with out-of-town homes. In my view, real estate purchases must always satisfy the investment criteria before it becomes viable, which is the most important criteria,” says Koshy Varghese, Managing Director, Value Designbuild Private Limited. “Typically, I would say the objective of a majority of second home buying is investment. There are cases where people who bought a flat early with lower investment, go in for a better flat in a better locality after the increase of their income and position, with higher investment to suit their lifestyle. With the introduction of reverse mortgage concept, this is an ideal option for people to secure their retirement,” says Goutam Chakraborty, Regional Director - Office Leasing & Sales, Colliers International.
Parameters for purchasing a second home would be, cost, future development potential, the possibility of earning rentals and distance from the central business district among others.

Options abroad
Another thing to note is that second homes are always not necessarily bought within the country. Options abroad are a popular choice with the affluent. Take the case of Kenwood Place set in private, gated landscaped grounds of more than two acres with its own gate to the Heath - an oasis of calm. The three sets of apartments, 21 in total, have been designed by award-winning Hamiltons Architects - sleek, sculpted villas in warm natural Northumberland stone.

Trevor Abrahmsohn, Founder and Managing Director, Glentree International explains, “Kenwood Place is located between the two areas of Highgate and Hampstead, both areas highly desirable for residents and popular with affluent Indian families. Not only is Kenwood Place ideally located, close to the city centre and with good access to London’s international airports, but also represents great value for money per square foot, compared to property prices in central London locations, such as Knightsbridge and Mayfair.

“North London is home to some of the most desirable properties within the capital and has shown resilience during the economic downturn, with the market showing continually positive signs. The development offers luxury in a secure and discreet environment where privacy is respected, 24-hour security is on offer with a gated entrance and apartment windows come with electronically controlled external shutters, perfect for those using it as a second home.”

Adds T Chitty Babu, Chairman and CEO, Akshaya  Pvt Ltd., “real estate as an asset class has been offering good returns and investors are looking at properties in upcoming locations across the country. For example, OMR in Chennai and Devanahalli area in Bangalore are good choices for a second home investment option. Also the shift from joint to nuclear families and the trend of youth to look for jobs in other cities has necessitated several parents to invest in a second home for their children.”

The deciding factor
Says Sushil Mohta, Managing Director, Merlin Group, “when it comes to second homes, criteria like greenery, open space, pollution free environment, facilities like clubs etc. are considered more important. For example, Merlin Greens has been developed on the concept of country homes, which people often have as second homes. Our team of architects and engineers are helping one design and build a dream home, be it a Swiss chalet, colonial bungalow or a garden home. Along with Greens, we offer another unique concept of Ibiza, The Club. Built in true Spanish style, Ibiza the club spreads over more than 10 acres.”

Before buying a second home, a vital aspect that needs to be considered is how it can be funded.

The first home is normally more of a need-based decision. Associated to this are conditions like location, size and layout, which are linked to what the family needs.
Typically for the first home, proximity to work place/schools and hospitals play a major role in decision-making. The second home decision will not be firm on many of these criteria.

Says Babu, “criteria for a second home might slightly differ especially when one is looking at investing for appreciation of the value of the home. “Here the investors look at growth corridors and a horizon of two-five years for the appreciation.”

Second home- for whom?
Businessmen and senior working professionals are more likely to opt for second homes as this profile has a larger disposable income for investment. Hence the client profile for a second home tends to be in a somewhat more niche segment. “We have different segments here as well. You have upper class investors, who will go in for villas and farm houses as their second homes. You have another segment with incomes in the Rs 10-20 lakh, who will think about a second home,” says Chakraborty. Manoj Goyal, General Manager, Strategic Planning, Raheja Developers Limited adds, “the client profile includes non-resident Indians (NRIs) and mid-aged groups who have bought their first home already and are in a position to make further investment and pay the EMIs.” 
With the current soft prices and favourable interest rates, the markets for second homes are looking up in India.

“It is just a matter of time. We have seen a rush in 06-07 during the boom time. It should come back again. Government incentives and cheaper home loan can make it come faster,” says Chakraborty.

Because of the capital appreciation in urban areas, real estate investment has become the favourite investment with high returns in a short period of time.
“Another reason for the rising demand is that an increasing number of people are joining the ranks of the middle classes.
The sector, thus, is witnessing massive demand and investments. Investments are not restricted to Indians only. 

A large number of NRIs are also investing heavily in second homes.
Looking ahead, the market for second homes looks promising and we are anticipating that the market would improve further owing to the sophistication of buyers as well as the keenness of developers to meet the growing demand,” says Mohta.
With increase in purchasing power and a rise in the earning population, second homes have surely never had it so good and in all probability, this is a good time to make that investment.

So if you have the capability to service a new home – go for it!