Author:
Santosh Naik
Managing Director - Disha Direct
Some things are
too good to be true, they say. I am told that you can either be married or be
happy! Likewise you can either have a second home or an investment! The latter is as true as the former - depends
on ones point of view I guess. But I say, if possible, why not? Why is it too much to ask for to have the
cake and eat it too?
As business can
be mixed with pleasure, buying a second home can make investment sense if
certain basic tenets of investing are followed and tailored to suit second
homes. The basics of investment tell us that an investment should have the
potential to grow in value. This potential emanates out of the future prospects
of the investment and its ability to change hands by attracting buyers at
future prices or future valuations. It must hold the promise of growing in
value over a period of time and be liquid enough to be able to convert to cash
when one desires to do so. To make this happen, a second home property must fit
the following criteria;
- The area where a second home is
located should show promise of development in the near future
- There should be good
development in the second home scheme itself
- The property should be very
well maintained in order for it to be able to attract attention of
prospective future buyers
- The project should have good
amenities and conveniences, which can attract the interest of the buyer
and make the investment worthwhile. Special emphasis is laid on
recreational amenities, health related amenities and lifestyle.
- An attraction like a popular
restaurant, spa, picnic spot, resort etc being part of the project is an
ideal scenario. These attractions ensure foot falls in the project from
outsiders, make businesses in the project viable and ensures that a resale
market is created as there will be demand for properties for sure.
- The presence of such
attractions also ensures that the second home project is well maintained,
kept clean and attractive.
- This ensures that a resale
market is created which ensures liquidity which makes the investment very
lucrative and dynamic in ones portfolio.
Despite the
fluctuating economic conditions, the second home market continues to be
surprisingly strong. The demand for second homes is increasing at the rate of
15 to 20 % per year. Fluctuating financial markets and other factors have made
investment in real estate an extremely attractive alternative, propelling
consumers toward the possibility of a second home purchase sooner in their
lives. Earlier, weekend homes would be considered a luxury only for the
super-rich who could afford bungalows and farmhouses in quiet niches. However,
now, Weekend homes are no longer limited to the upper class; today even the
upper middle class of the society is investing in weekend homes to get away
from the stressful, bustling life of the city and spend some quality time with
their families or nurture some hobby – all of which is becoming increasingly
difficult in the fast-paced lifestyle of cities.
In addition,
second home buyers no longer want just a beautiful getaway place to retreat to
- they also want their second home to be good real estate investment. The value
addition in typical second home projects is very high, hence an investment made
in very early stages of a second home project can have a phenomenal
appreciation by the time the project comes to the end; and later on, as the
attractions start kicking in, the appreciation in investment improves manifold.
Several places like Talegaon, Neral, Karjat, Lonavla etc. whereby property
would be available for as little as Rs. 100 per sq.ft. few years back; now,
with the increase in infrastructural development and facilities like schools,
hospitals etc. have seen an increase in rates of almost 8 times till date!
Today, when a
decent flat in suburbs like Borivali cost a minimum of Rs. 75 lakhs,
home-buyers are left with little option than to scout for homes beyond that
limit. The search for a decent home with good amenities, facilities and
infrastructural developments within budget takes them to destinations like
Shahapur, Karjat, Kasara etc which conventionally were second home locales but
are now fast turning into first-home ones.
To add to it,
with many companies and organizations shifting their factories/units/offices to
offbeat areas like Thane and Vashi etc., more and more people are finding
employment and that too, close to their homes. If at all they need to travel
afar, infrastructural developments being made in the form of expressways and
flyovers as well as rail connectivity being enhanced fabulously to incorporate
far-out places like Panvel and Boisar, is making their commute far simpler;
thus also making the previously second-home destinations an ideal choice for
having a first home.
Companies like
Disha Direct believe in making second homes a lucrative investment option by:-
- Choosing destinations that hold
promise in the near future
- Projects that are very well
developed
- Products are reasonably priced
at all times to ensure that the investor benefits in the medium to long
run.
- Development of attractions like
Resort, Club & Spa are popularized, professionally run and attract a
lot of foot fall in the project
- This ensures that the project
is not dead, always alive and bustling
- Project is well maintained in
the interest of the attractions and the surplus from the attractions in
addition to the maintenance charges are well spent to further a common
goal.
Case in point
being Talegaon, here the value of land and constructed property showed a 400%
increase in merely 4 years (i.e. between 2004-2008). Disha Direct’s foresight
which promoted Talegaon as an ideal second home destination paid off for the
investors. Likewise opportunities at Kasara, Wada, Karjat and other such
destinations have returned more than 300% returns over the years.
Mr. Sameer Dange
an investor at Talegaon regrets that he should have increased his value for
investment as the phenomenal returns that he has enjoyed was unbelievable.
Likewise Mrs. Shinde an investor in Wada has seen her investment grow from
Rs.100/- per sq.ft. of land to Rs.350/- per sq.ft. over 3 years. Both these
investors have an opportunity to for resale thus giving them the chance to cash
their investments.
Even beyond the
boundaries of Maharashtra, one can easily see the handsome returns on
investment that investors in Noida and Gurgaon have earned in recent years.
What were earlier just bare tracts of farmland have grown into some of the most
valuable and prime pieces of property in the present day.
Be it in any
corner of the world, increasing urbanization and migration creates pressure on
a city’s infrastructure. When this stage reaches a saturation point, smaller
towns/sub-urban centres start springing up in and around these cities. This
exact phenomenon has led to several second home destinations fast being
converted into first home destinations. Case in point being areas like Noida
and Gurgaon around Delhi and closer home, Virar, Kasara, Panvel etc around
Mumbai.
From the
home-seeker’s point of view, those looking for 1st homes and planning to take
loans for the same, are sandwiched between high loan rates and the resultant
scaling-down of budget. For e.g., if at the loan rates prevalent 2 years back
on could get a loan of Rs. 50 lakhs, today that quantum has scaled down to Rs.
35 lakhs, thus leaving people at a paucity of money; with their problems being
further compounded with rising property rates especially in the 1st home
sphere. In this scenario, the 2nd home market becomes a prudent option which
also has great value for money vis-a-vis being an investment option. Since the
last two years, some progressive developers have identified the demand and
scope for growth in this segment and have been exploring more & more
locations for building 2nd home townships close to Mumbai/Pune.
To give an
example of 2nd home becoming 1st home, Talegaon, which a decade back was simply
a laidback hub preferred as a retirement destination, was developed by Disha
Direct to become a proper 2nd home destination. Today these second homes in
Talegaon have become very preferred 1st homes due to Talegaon’s proximity to
Pune and Hinjewadi (IT hub) as well as Chakan which has become a major
industrial and automobile hub. Palghar, Boisar, Karjat, Shahapur, Alibaug etc
are also fast developing on the similar lines. Companies like ‘Nirman Group’,
‘Havre Group’, and ‘Tata Housing’ are developing great projects in areas like
Neral, Palghar and Boisar respectively.
Yes, the
infrastructure still needs to improve much more to complete this process to the
T, and this can happen only when government & developers join hands and
work towards it imminently but things are definitely moving ahead for sure. The
presence of large highways like Mumbai-Nasik, Mumbai-Pune, Mumbai-Ahmadabad
highways make commute to & fro these places and major cities quite smooth.
When the road, rail and water transport facilities will be put in place, as is
envisioned to happen in next 3-4 years, the 2nd home destinations are bound to
become the most preferred 1st home destinations due to being value-for-money;
plus having fabulous amenities; good infrastructure; larger FSI; larger space
in the houses; and great eco-cover. Almost all these townships are getting
extremely talented architects from the world over to lend their expertise to
the way these townships and homes therein are being built.
According to the
first quarter review by the internationally renowned property consulting
company ‘Knight Frank’, prospective home-buyers are now fast shifting their
focus from the earlier preferred South Mumbai to the suburban fast-developing
destinations towards its north. While almost 75% of the land in these areas
remains to be developed, it is expected that by the end of 2011 almost 50 lakh
sq.ft. area will be developed with a range of property options from MIG to HIG
to choose from to suit every taste and budget.
So
if one is looking for a second home as an investment option , look for names of
repute who are developing the project, ensure that the project will be
professionally maintained once its completed, an attraction which will draw
people to it regularly is a must as it creates liquidity for future sale and
lastly the area in which the project is located should hold the promise of
development in the near future or should be ideally located for the specific
attraction which otherwise cannot be located elsewhere. Second Homes can
certainly be looked at as an option to diversify ones investment portfolio.
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