september 2021 one is not enough: spotlight increasing

One is Not Enough:Increasing Penchant for

Second Homes

SEPTEMBER 2021

SPOTLIGHT

Savills Research

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Table of contentsPrologue 03Introduction 04Second Home Market: Insights and Survey Analysis 05-2X2 purchasing trend-Holding period-Amenities-Gated communities are the clear winner- Location preferences

Location Profiling 12Afterword 22Acronyms and References 24

Across societies, at different times, people have invested in additional homes that are neither their regular residences nor meant for steady income streams. Occasionally, such homes serve both these purposes. Such properties could be one or any number of ownerships, subsequent to the primary residence. The meaning contained within the phrase ‘second home’ is therefore quite extensive. In this report, and in general, these additional homes are called “Second Homes”. The driving factors for such purchases are many, ranging from the need to create an asset pool, diversification of investment, future residence planning, lifestyle choices, or holiday and staycation homes.

In the current times, second homes have again come to the fore as the pandemic

appears to have created several resets in real estate. Several aspirational buyers appear to be evaluating alternate and additional homes, as the market seems to be providing value-based investment opportunities. But there are deeper motivations and thought processes at work, which we have endeavored to uncover through a survey carried out during June-July 2021. It is to be noted that we focus only on the tastes and preferences at this stage, without dealing with the tax and financial perspective of second home purchase.

In addition to highlighting the key factors, we have endeavored to map the second homes market in the country, focusing on select locations. The favored locations, investor insights and expected trends are based on real inputs obtained from respondents.

Prologue

One is Not Enough: Increasing Penchant for Second Homes

KEY TAKEAWAYS

Gated Communities• Preference for gated communities is higher

as compared to non-gated communities.• Buyer interest in independent houses,

bungalows and farmhouses increase moderately in higher price brackets.

2 cr & 2 Years • 70% of overall demand is for properties

priced within INR 2 cr.• Majority of the respondents (70%) are

looking to invest in a second home in the next 2 years.

Top Selection Criteria• Holiday destination • More space • Wellness

Location Preferences• Domestic: Goa, Lonavala, Dehradun, Shimla,

Alibaug• International: London, Dubai, Portugal,

Scotland, Canada

Holding Period• Almost 80% of potential purchasers intend to

hold the properties for more than 5 years.

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One is Not Enough: Increasing Penchant for Second Homes One is Not Enough: Increasing Penchant for Second Homes

Introduction

The Motivational Factors Driving Force for Second Homes

“Second Homes” as a concept can be traced back to the pre-British period in India. Even in independent India, the trend of buying additional homes, whether for self-use or as investments, has been fairly common among the financially secure sections of population.

A noticeable change in the post-GFC1 period is the emergence of organised market for second homes in the country. Reputed developers and operators have committed to this segment of homes,

offering curated products at various price points. Additional property management services for regular upkeep and maintenance, securing potential clientele for properties meant for renting, customised landscaping, bespoke interior designing, etc., have become distinguishing factors in the market. The transition to an approach focused on capital appreciation and rental yield has also been remarkable. Second homes in offbeat locations have grown slowly but

steadily. Among many reasons driving this phenomenon is better scope for capital appreciation.

The demand for vacation homes has witnessed an upward trend in these turbulent times. While international travel plans have been put on hold during the pandemic, a relaxing stay at a scenic domestic location does seem to have caught people’s fancy, thereby creating a niche for second homes.

Interestingly, the recent surge in demand of second homes can also be attributed to rebound in domestic tourism after tapering of the second wave of the ongoing pandemic. Domestic air traffic witnessed a growth of 41% month on month in June 2021. The growth increases to 51% when compared on a yearly

basis2. Occupancy rates have improved in premium staycation homes as well. Popular holiday home portal data suggests that people are in search of an extended stay (ranging from a week to a month) in picturesque locations across the country3. Investors in sync with the market trends have realised

the untapped potential and are continuosly scouting marquee properties across the country. As international travel norms for Indians are getting progressively relaxed, the surge in demand of second homes has extended to international hotspots as well.

The demand for second homes emanates from a variety of factors that have caused fundamental shifts in the industry over time. Driven by wider acceptance of work from anywhere and increasing advent of organised as well as professional players in this segment, latent demand for such properties have surfaced in recent times. Reputed players such as Vista Rooms, Luxury Escapes, Amã Stays and Trails by Taj to name a few offer end to end property management services and hassle-free hosting for property owners in offbeat destinations, providing assured periodical return on investment opportunities. Not to forget technological advancements that have enabled sales worldwide and led to emergence of aggregators and operators enhancing the income generation ability of such properties.

Improved affordability is one the major key demand drivers of second homes. Though the property costs have been rising over a period, so is the affordability due to rising income and lower interest rates. It is believed by the banking industry that the recent times are the best with respect to affordability over the last 25 years.

Risinga�ordability

Digital sales platforms

o�ering wide choices

Rebound in tourism

Organisedsupply and

broad spectrumof prices

Professional management and

operators

Staycation and income

generation

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Best aordability in 2.5 decadesGovernment support towards housing has helped improve aordability

22.0

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11.18.3

6.6 5.9 5.3 5.1 4.7 4.3 4.7 5.0 5.1 5.1 4.5 4.7 4.8 4.6 4.7 4.6 4.4 4.1 3.8 3.7 3.5 3.3

2. https://www.hindustantimes.com/india-news/domestic-air-passenger-traffic-sees-growth-in-june-amid-dipping-covid-19-cases-report-101625571649600.html

3. https://news.airbnb.com/en-in/live-anywhere-is-the-latest-trend-in-travel-reveals-airbnbs-report/

Factors Enabling Decision Making

Affordability Driving Residential Housing Market in India

Source Savills India Research

Source HDFC

1. Global Financial Crisis of 2008

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Property Cost Aordability Annual Income

Representation of property price estimates Aordability equals property prices by annual income

Best aordability in 2.5 decadesGovernment support towards housing has helped improve aordability

22.0

15.6

11.18.3

6.6 5.9 5.3 5.1 4.7 4.3 4.7 5.0 5.1 5.1 4.5 4.7 4.8 4.6 4.7 4.6 4.4 4.1 3.8 3.7 3.5 3.3

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Second Home Market: Insights and Survey Analysis

This section provides further insights on second homes, in light of the prevailing market conditions which are understandably shaped by the ongoing pandemic to a large extent. Simultaneously, finer aspects of second homes like price buckets, investment timelines,

holding period, type of property, favoured locations and purchase considerations in the decision-making process have been scrutinised, taking aid of an extensive survey carried out amongst prospective buyers in June-July 2021. The survey was purposefully

designed to capture a holistic picture of the second homes market not only in India but select international locations as well. We have analysed and arrived at the top five inferences, which are presented in the following sections.

The second home market in the country is poised to witness high traction in the near term. Prospective buyers are cognizant of these unusual times and have a greater near-term visibility. Our survey analysis reveals that almost 70% of respondents want to invest in a second home priced at INR 2 cr or less. However, the average purchase consideration for a second home, on account of super luxury destination homes, moves upwards and stands at INR 3 cr.

The survey also sheds light on another

absorbing trend- the propensity of potential clientele to make an immediate investment into second homes. 57- 70% of the respondents want to buy a second home within 2 years. This short-term commitment of less than 2 years is evident not only in the domestic market, but also in the preferred offshore destinations. Interestingly, if we compare both international and domestic investment destinations, maximum preference of investments is within India in a horizon of less than 6 months.

Be it a primary or a second home, a home has a sense of emotional attachment to buyers across age groups. A vast majority want to hold on to their second homes for a longer time horizon. The long-term investment option does not change, even when the end use of the property is renting out.

Across majority of the price points, the preference for a holding period greater than 10 years is higher than a 5-10 year horizon. In fact, as the ticket size of the property increases, so does the intended investment period reflecting an intent to attain capital appreciation and rental return before eventual exit from the cherished property.

2X2 Purchasing Trend

Holding Periods

Majority of the respondents are looking to purchase a home up to INR 2 cr over

the next 2 years

An overwhelming 80% of the surveyed potential second home buyers have a

long-term horizon in mind

46%

24%

INR 50 lakhs - 1 cr

INR 1-2cr

INR 2-3cr

INR 3-4cr

INR 4-5cr

More than

INR 5 cr

14%

5% 5% 5%

Preferred Second Home Ticket Sizes

34%

66%70%

30% 36% 40% 37% 43%

INR 50 lakhs - 1 cr

INR 1-2cr

INR 2-3cr

INR 3-4cr

INR 4-5cr

More than

INR 5 cr

Entry Timelines Across Price Buckets

64% 60%63% 57%

2 yr or less 2 yr more

Survey Insights 1- 2X2 results: Ticket Sizes and Investment Period

Intended Holding Period Across Price Buckets



Preferred Second Home Ticket Sizes Entry Timelines across Price Buckets

36%

57%

43%

50%

43% 43% 43% 43%42% 42%

46% 46%

INR 50 lakhs - 1 cr

Less than 2 years 2 - 5 years 5 - 10 years More than 10 years

INR 1 - 2 cr INR 2 - 3 cr INR 3 - 4 cr INR 4 - 5 cr More than INR 5 cr


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In order to understand the critical parameters buyers consider while purchasing a second home, Savills India Research analysed the responses in order of their importance while selecting a particular location. Studying answers collectively, helped us to arrive at a score against each parameter that drives the selection of a particular location. Scoring has been devised on a scale of 1-8 and higher the score, higher is the importance of the specific parameter.

Unsurprisingly, the most important parameter is the desire of having a spacious and comforting second home at a holiday destination, which serves as an ideal place to relax, unwind and rejuvenate as well. While overall, spacious and larger floor size is the second most important factor, within the under 30 years age group, it is the most important element and has a score of 6.8. Similarly, health and wellness factor, with a score of 6.1 is the most critical aspect

in 60 years and above age bracket. Direct connectivity from base destination, internet infrastructure and access and return on initial investment upon exit are other significant parameters buyers ponder while zeroing in on their perfect second home.

In the era of work from anywhere, people tend to cherish the limited sense of community living and the same is evident in the fact that prospective second home buyers have a clear affinity towards gated communities like apartments, condominiums, gated villas and penthouses within a large society. Gated fraternities allow the homeowners to enjoy salient facilities such as swimming pool, gymnasium, health centre and state-of-the-art sporting amenities even on a holiday, without

having to worry about the maintenance of such provisions on a regular basis. A sense of security is an additional and an important factor which works in favour of gated communities. Even in international locations, 61% of the respondents prefer gated communities as compared to standalone properties. However, preference for non-gated communities like independent houses, plots, farmhouses and bungalows increase moderately in the higher ticket size of more than INR 2 cr.

Amenities Gated Communities are the Clear Winner

Holiday destination

6.0

Spacious & larger floor space

5.7Health & wellness

5.6Internet infrastructure & connectivity

4.6Lifestyle & a�uence symbol

2.7

Asset diversification

2.6

Direct connectivity from home city

5.0Return on investment

4.9

42%38%

48% 49%

58%62%

52% 51%

Overall INR 2 cr or less

Non Gated/IndependentGated

INR 2 - 4 cr More than INR 4 cr

Factors Deciding the Investment Location

Property Type and Price Bucket Analysis

Source Savills India Research Source Savills India Research

OTHER KEY FINDINGS RELATING PURCHASE DECISION

Symbol of affluence and asset diversification are the least important

factors across age groups, price buckets and investment destinations

Respondents in search for a second home in international locations are highly

interested in getting a good return on their investment (third most important factor)

Almost 60% of the respondents in our survey, would like to invest in a second home in a

gated community


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Aspiring second home buyers are more inclined towards domestic locations, be it holiday destinations or staycation homes nestled in the mountains or beach side locations of the country. Approximately three-fourths of the potential buyers would like a second home in locations like Dehradun, Nainital, Shimla, Goa, Alibaug, Lonavala, Mahabaleshwar, Coorg, Ooty and Wayanad. While our survey respondents were willing to invest in second homes across the length and breadth of the country, starting from Kovallam in the south to Manali in the north and Gujarat in the west to Meghalaya in the east, the top 10 destinations emerging from the survey collectively have a share of 87% within the domestic locations.

Of the one-fourth of respondents who prefer purchasing their second home in international locations, the top 5 destinations- London, Dubai, Portugal, Scotland and Canada account for more than 75% of the share. Other notable investment destinations are Australia, Barcelona, Bali, Netherlands, Switzerland, USA, Oman, Qatar and South East Asia.

Savills India Research has clustered the domestic location preferences into specific regions and has depicted an incisive location profiling of major second home destinations

in the country. We have endeavored to provide insights on each of these clusters, elucidating various socio-economic and real estate aspects including active residential locations,

costs related to buying property, stage of second home market, type and price points of available units and challenges faced by stakeholders as well.

Location Preferences Location Profiling

Dubai

16%

Scotland

14%

London

20%Canada

13%

Portugal

13%

Barcelona

8%

Australia

8%

Others

8%

India: Big 10 vs Other Destinations

Location Profiling of Domestic Investment Preferences

Overseas Destination Preference

Source Savills India ResearchSource Savills India Research


Others includes U.S.A, Switzerland, Thailand, Bali, Singapore, Amsterdam, Qatar.


13

GDP: INR 0.815 lakh cr (2020-21)

Literacy Rate: 88.7% (2011)

Major Industries: Tourism, mining, fisheries, pharmaceuticals manufacturing, real estate

Existing Infrastructure: International airport at Dabolim, South Goa; Excellent road connectivity to neighbouring states of Maharashtra and Karnataka

Upcoming Infrastructure: International airport at Mopa, North Goa, Patto Plaza as a business hub, Atal Setu Bridge connecting multiple hubs of Goa and proposed IT park at Chimbel

Major Hospitals: Apollo Victor, Manipal and Vrundavan Shalby

Major Educational Institutions: Goa Engineering College (IIT), NIT Goa, BITS Pilani Goa Campus, Goa Institute of Management

SURVEY INSIGHTS

One-fifth of the respondents are interested in buying a second home

in Goa

Almost 70% of demand is within the INR Rs 2 cr price range

01

02

Types of Property Available

Select Locality Average Quoted Prices as of July 2021 (INR/sq. ft.)

Savills Second Homes Property Cycle as of August 2021

Stage of Market

Price (INR cr.)

Villa/ Bungalow Apartment Penthouse Farmhouse Plot

0.50-1

1-2

2-3

3-4

4-5

>5


Locality Apartment Villa

Mapusa 4,500 - 8,900 5,400 - 14,250

Candolim 5,500 - 12,800 9,200 - 13,000

Calangute 6,000 - 13,685 10,000 - 11,000

Dabolim 6,000 - 15,370 -

Alto-Betim 5,000 - 13,500 8,000 - 9,000

Anjuna 6,400 - 14,000 10,000 - 17,000

Kadamba Plateau 4,000 - 7,000 5,500 - 11,500

Dona Paula 7,000 - 14,000 9,000 -1 0,500

Siolim 4,600-8,500 9,000 - 15,000

Porvorim 5,600 - 11,000 7,000 - 12,500

Vasco Da Gama 4,000 - 9,000 -

Ponda 4,000 - 6,000 11,000 - 12,000

Margao 4,000 - 6,500 5,000 - 7,000

Vagator 7,000 - 13,500

LATE UPSWING

EARLY DOWNSWING

LATE DOWNSWING

EARLY UPSWING

Source Market Sources, Property Portals

Location Profiling

Goa

Rental yields have been in the range of 4-7% and are on an upward trend

More than 20% appreciation in land rates as compared to 2019 pre-pandemic era

• Legal aspects & litigation due to interspersed laws of Portuguese era and Indian laws on family ownership assets.

• Local panchayats have a significant say on approvals, charges on transfer of properties and coastal zone regulations.

Active Residential Locations

Highlights

Challenges

Stamp duty

Registration charges

< INR 50 lakhs

3.5%

< INR 75 lakhs

3.0%

INR 75-100 lakhs

4.5%

INR 50-75 lakhs

4.0%

>INR 75 lakhs

3.5%

> INR 100 lakhs

5.0%

North Goa Pernem, Mapusa, Candolim, Calangute, Vagator, Anjuna, Kadamba Plateau, Dona Paula, Siolim, Porvorim, Saligao, Assagao, Arpora

South Goa Vasco da Gama, Ponda, Margaon, Canacona

• Pristine beaches, colonial architectural wonders and a relaxed yet cosmopolitan local population make it a top 10 destination for foreign tourists in India

• Related cost of buying property:

• Active property management operators with a strong presence of brands like OYO, Trip villas, Vista Rooms, Amã Stays and Trails under the Taj Umbrella, Lohono Stays



15

Location Profiling

UttarakhandGDP: INR 2.93 lakh cr (2020-21)

Literacy Rate: 79.63%(2011)

Major Industries: Tourism, agriculture & food processing, floriculture & horticulture

Existing Infrastructure: Airports at Jolly Grant and Pantnagar; Excellent road connectivity to Delhi NCR, Uttar Pradesh and Haryana

Upcoming Infrastructure: Rudraprayag tunnel, new economic corridor between Delhi and Dehradun. More than 230 kms of highway projects improving overall road connectivity in the state

Major Hospitals: AIIMS Rishikesh, Max, Fortis Escort

Major Educational Institutions: IIT Roorkeee, IIM Kashipur

SURVEY INSIGHTS

Leads domestic demand for second homes in northern part of the

country

Only 3% of respondents want to purchase plots in Uttarakhand, reflective of the stringent local

ownership laws

01

02

• Non-residents cannot buy more than 250 sq. m. of land, for bigger parcel of land (only up to 1 acre) permission needed from state government.

• Supply is fragmented.

• Land values are not extremely high – ideal for individuals looking at second homes or even a retirement home





Dehradun

Sahastradhara Road 3,000 - 6,000 4,500 - 9,000

Mussoorie Road 3,000 - 5,000 -

ITBP Road 3,500 - 5,500 -

Rajpur Road 4,500 - 7,500 8,000 - 11,000

Haridwar Road 4,500 - 5,500 -

Shimla Road 3,500 - 4,500 4,000 - 6,000

Clementown - 3,500 - 5,500

Vasant Vihar 5,000 - 8,000 5,000 - 6,000

Ballupur 4,000 - 7,000 8,5000 - 9,500

Chakrata Road 4,500 - 8,000 -

Rishikesh

Shyampur - 5,000 - 5,500

Nirmal Bagh 4,200 - 4,800 15,000 - 17,000

Mussorie

Mall Road 8,000 - 9,000 -


Net yields of Uttarakhand properties have been in the range of 3-6%

LATE UPSWING

EARLY DOWNSWING

LATE DOWNSWING

EARLY UPSWING

Stage of Market


Price (INR cr.)

Villa/ Bungalow Apartment Farmhouse Plot

0.50-1

1-2

2-3

3-4

4-5

>5


Garhwal Region Dehradun, Rishikesh, MussorieKumaon Region Nainital, Ramgarh, Ranikhet, Mukteshwar, Bhimtal

Stamp duty

Tehsil fees

Female

3.75%

INR 50,000 - 2,00,000 / registration

Joint ownership

4.37%Male

5.0%


Highlights

Challenges



17

GDP: INR 1.57 lakh cr (2020-21)


Major Industries: : Tourism, agriculture & allied industry, pharmaceuticals

Existing Infrastructure: Airports at Shimla, Kullu & Kangra; Excellent road connectivity to Delhi NCR, Chandigarh, Punjab and Haryana

Upcoming Infrastructure: More than 220 kms of national highways and nine road corridors; Network of state-wide ropeway and cable car connectivity may be explored by the state government

Major Hospitals: Indira Gandhi Medical College & Hospital, Fortis

Major Educational Institutions: IIT Mandi, IIM Sirmaur, NIT Hamirpur

SURVEY INSIGHTS

Limited demand for second homes priced at more than INR 5 cr (only 3% respondents are in search of

such properties)

Low preference for plots in the hill state (less than 5%)

01

02



Locality Apartment

Shimla

Mall Road 6,500 - 10,500

New Shimla 5,250 - 10,500

Shimla Hill Station 5,000 - 8,000

Mehli 3,500 - 10,000

Chakkar 4,500 - 5,000

Panthaghati 5,000 - 10,000

Annadale 5,600 - 5,800

Bharari Road 6,200 - 7,200


LATE UPSWING

EARLY DOWNSWING

LATE DOWNSWING

EARLY UPSWING

Stage of Market


Price (INR cr.)


0.50-1

1-2

2-3

3-4

4-5

>5


Location Profiling

Himachal Pradesh

Net yields of Himachal Pradesh properties have been in the range of 3-6%

• Individuals with origin outside the state cannot buy land without state permission

• Non-farming communities cannot buy agriculture land

• Residential projects have proximity and better connectivity to Chandigarh & NCR


• Active property management operators with a strong presence of brands like Vista Rooms and SaffronStays

Shimla Division - Shimla, Solan (Kasauli)Mandi Division - Kullu, MandiKangra Division - Kangra

Stamp duty


Female

4.0%

Female & joint ownership 2% with cap of INR 15,000

Joint ownership

5.0%

Male

2% with cap of INR 25,000


Highlights

Challenges

Male

6.0%



19

GDP: INR 32.24 lakh cr (2020-21)


Major Industries: : Finance, IT/ITeS, electronics, textiles, auto & auto components, gems & jewellery, tourism

Existing Infrastructure: International airports at Mumbai, Pune, Nagpur and Aurangabad; Excellent road & railway connectivity to all parts of the country, water-taxi services connecting major beaches around Mumbai

Upcoming Infrastructure: Multimodal corridor from Alibaug to Virar, Delhi Mumbai industrial corridor- includes Igatpuri- Nashik section, coastal highway connecting Raigad & Sindhudurg districts

Major Hospitals: Alibaug Civil Hospital, Yash Hospital, Sanjivani Hospital, Fortis

Major Educational Institutions: SKN Singhad Institute of Technology & Science, JSM College, Kohinoor IMI School of Hospitality Management

SURVEY INSIGHTS

29% of the survey respondents would like investing in the popular second home destinations of the

state.

Across locations in Maharashtra, 65% of the demand is within

INR 2 cr.

01

02




LATE UPSWING

EARLY DOWNSWING

LATE DOWNSWING

EARLY UPSWING

Stage of Market


Alibaug

Alibaug Beach 9,000 - 9,500 9,500 - 10,000

Nagaon 6,000 - 6,500 7,000 - 7,500

Revdanda 5,000 - 5,500 7,000 - 7,500

Kihim 7,500 - 8,000 -

Chendhare 6,000 - 6,500 -

Telava 6,000 - 6,500 -

Lonavala

Lonavala Road 8,500 - 9,500 9,500 - 14,000

Tungarli 8,000 - 9,000 9,000 - 13,500

Kamshet 7,000 - 8,000 -

Kushgaon 5,000 - 6,000 5,500 - 6,000

Malavli - 8,000 - 9,000

Nagargaon 6,000 - 7,500 7,500 - 9,500

Khandala

Kune - 9,000 - 12,000

Mahabaleshwar

Panchgani - 8,500 - 11,000

Karjat

Karjat Road 4,500 - 6,500 7,000 - 10,000

Shelu 3,500 - 5,500 -

Igatpuri

Igatpuri Railway Station

4,000 - 7000 6,500 - 7,500

Girnare 4,000 - 4,500 -


Price (INR cr.)


0.50-1

1-2

2-3

3-4

4-5

>5 Source Savills India Research

Location Profiling

Maharashtra

Net yields of Maharashtra properties have been in the range of 4-6%

• Lack of adequate organised supply at select price points in Alibaug.

• High premium in properties with views especially in Khandala & Lonavala region.

• HNIs of Mumbai & Pune prefer second homes in the immediate vicinity

• Mature holiday market with ample options for buying & renting properties

• Presence of premium developers in popular second home destinations of the state


• Active network of property management operators such as Airbnb, Vista Rooms and Isprava

Alibaug, Lonavala-Khandala-Mahabaleshwar-Panchgani, Karjat-Igatpuri

Stamp duty


Depending on metro & non-metro location

3 - 5%

Whichever is higher

1% or INR 30,000/-


Highlights

Challenges



21

GDP: INR 21.72 lakh cr (2020-21)


Major Industries: : Agriculture & allied industries, auto and ancillary industries, IT/ITes and tourism

Existing Infrastructure: International airports at Chennai, Coimbatore, Trichy; Excellent road & railway connectivity to all parts of the country

Upcoming Infrastructure: Upcoming Metro in OMR will run parallel to ECR and improve connectivity in the region

Major Hospitals: Apollo Speciality Hospital, Van Allen Hospital, Saint Memorial Hospital

Major Educational Institutions: AMET University, JSS College of Pharmacy, International School of Business & Research

SURVEY INSIGHTS

Leads domestic demand for second homes in southern part of the

country

In Chennai East Coast Road, noteworthy (13%) demand comes from

penthouses (3-7% in other locations across the country)

01

02




LATE UPSWING

EARLY DOWNSWING

LATE DOWNSWING

EARLY UPSWING

Stage of Market


Chennai ECR

Thiruvanmiyur 9,500 - 19,000 12,500 - 15,000

Palavakkam 5,700 - 11,000 6,250 - 10,000

Neelankarai 6,000 - 10,500 7,300 - 10,500

Injambakkam 7,000 - 12,500 7,500 - 12,500

Uthandi 7,000 - 8,000 5,500 - 7,000

Kanathur 6,000 - 8,100 5,250 - 8,500

Muttukadu - -

Kovalam 5,000 - 6,000 4,000 - 8,000

Panaiyur 5,500 - 6,500 5,500 - 8,000

Coonoor

Attadi 7,500 - 9,000 -

Wellington 7,500 - 9,500 10,000 - 11,000

Kodaikanal

Kodaikanal Hill Stn 6,000 - 11,250 8,000 - 10,500

Naidupuram 6,500 - 7,000 7,000 - 10,000

Vilpaty 5,000 - 6,000 4,500 - 5,700

Pallangi - 4,000 - 5,000

Ooty

Lovedale - 7,500 - 11,000

Fern Hill 6,500 - 7,000 6,000 - 7,500

Kotagiri - 6,000 - 9,500



Location Profiling

Tamil Nadu

Rental yields have been in the range of 3-4%

15-20% appreciation in property prices as compared to 2019 pre-pandemic era

Price (INR cr.)

Villa/ Bungalow Apartment Penthouse Farmhouse Plot

0.50-1

1-2

2-3

3-4

4-5

>5

• Floor space index restrictions in city centres of hilly areas in the state specially Ooty.

• Beautiful coastline, rich cultural heritage and picture-perfect hill stations make Tamil Nadu a top 3 destination for domestic as well as foreign tourists in India

• Affordable rates and high appreciation benefits have elevated the real estate market in the region


• Active network of property management operators such as Airbnb, Vista Rooms and Isprava

Chennai East Coast Road, Ooty-Kodaikanal-Coonoor

Stamp duty


7%

4%


Highlights

Challenges



22savills.in 23

Contrary to initial apprehensions, the residential housing segment in India has managed to avoid being completely derailed by the ongoing pandemic. Policymakers have stepped in with numerous demand side measures including reduction of registration charges and benchmark lending rates from time to time.

Luxury housing segment, including the “Second Homes” market appears to be on a constant rise. Unlike earlier, when capital appreciation and rental incomes were the governing criteria, an additional dimension of a safe home away from pandemic hotspots appears to have become a key consideration.

Themed second homes are slowly becoming a noticeable trend in offbeat destinations around the country. Developers, taking cognizance of the rising demand, are making conscious efforts to bridge the demand-supply gap and offer quality products.

From a financial standpoint, while residential property prices seem to offer minimal scope for appreciation in the current market, the second home market does seem to be gearing up for generating increasing returns. Rental yields in popular second home destinations are reported to be witnessing an increasing trend. Technology has also played a vital role in strengthening the investor confidence. Virtual

home visits and eventual online purchases are gaining increasing acceptance. Affluent and financially well-off buyers can look forward to investing in second homes - not only in the country, but at select overseas destinations as well.

22savills.in

Afterword

Major Second Home Market & Current Rental Yields



24savills.in 25

Acronyms and ReferencesAcronyms

ECR- East Coast Road

OMR- Old Mahabalipuram Road

International conversions

One Crore - Ten Million (10,000,000)

One Lakh - One Hundred Thousand (100,000)

References

Ministry of Statistics and Programme Implementation

Tourism.gov.in

Censusindia.gov.in

SavillsSavills plc is a global real estate services provider listed on the London Stock Exchange. We have an international network of more than 600 offices and 39,000 associates throughout the Americas, the UK, continental Europe, Asia Pacific, Africa and the Middle East, offering a broad range of specialist advisory, management and transactional services to clients all over the world.

Savills IndiaSavills India is a group company of Savills

Plc. and is a premier professional international property consulting firm. With full-service offices in Bengaluru, Mumbai, Delhi-NCR, Chennai, Pune and Hyderabad, the firm serves Occupiers, Investors and Developers of Real Estate.

Savills India provides services across office leasing, project management, capital markets, valuations, research, consulting, industrial and logistics, and residential services. Starting in India in 2016, the company employs over 350 professionals.

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Savills, the international real estate advisor established in the UK since 1855 with a network of over 600 offices and 39,000 associates globally.This document is prepared by Savills for information only. Whilst the information shared above has been shared in good faith and with due care with an endeavour to keep the information up to date and correct, no representations or warranties are made (express or implied) as to the accuracy, completeness, suitability or otherwise of the whole or any part of the deliverables. It does not constitute any offer or part of any contract for sale.

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september 2021 one is not enough: spotlight increasing

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