Effects of the COVID-19 pandemic are abundantly visible across the various sectors of the global economy. India too witnessed a subjugation of macro indicators, that were once believed to be the fastest, and no sector was spared from the deluge of pandemic aftermath.
The real estate sector - the most vibrant among all was not spared. Yet, there is one segment within the real estate sector, 'holiday homes' that stands defiant of this ruthless onslaught. It is buzzing with activity amid hopes of heightened demand as people accept the 'new normal' post-COVID crisis.
Goa, being one of the most favored tourist destinations, is likely to be the sweet spot for the holiday homes or second homes for high net-worth individuals seeking better rental yields and people looking for luxury living including tourists.
With the 'work from home' gaining traction, people are seriously considering a shift of residence, away from the crowded cities to luxurious holiday homes, according to industry experts.
"What was once an aspirational 'want' is now emerging as a 'need' for a safe and secured home and sensible real estate investment. The earnest desire of buyers to log out of the choking, polluted and hectic city life and hit refresh in a serene space in the lap of nature is what has made holiday homes or dual homes a hot trend today and will continue to remain strong," said Lindsay Bernard Rodrigues, co-founder and director, Bennet & Bernard Group, a prominent custom luxury homes developer in Goa.
Considering situations like home quarantine, social distancing, health, hygiene, safety and comfort in one space, people have realised the importance of larger and self-sustained communities.
"Hence, the desire to have bigger spaces for the same investments is likely to shift focus from buying realty in cities to second homes in holiday destinations," Rodrigues said.
Another luxury developer from the state, Axis Ecorp, pointed out that the overseas investment in the Indian market has significantly grown owing to the fall of Indian rupees against the US dollar.
"NRIs are considering Indian real estate as the most sensible investment option during COVID-19. The possibility of NRIs coming back to India is high, and we have observed that they are willing to invest in real estate to utilise savings," said Aditya Kushwaha, chief executive officer and director, Axis Ecorp.
The developer has seen an uptake in the sales from the NRI market and has sold approximately Rs 50 crore value stock since lockdown announced in India for its project Axis Blues, a premium smart service suites project located in North Goa.
"From the investment perspective, second homes in non-metro cities are a relatively safe investment option with higher capital appreciation compared to homes in metros, especially during COVID-19, when alternative options such as mutual funds, shares have seen diminishing returns. These properties can be rented out to home-stays and tourism businesses, a booming market promising an assured and stable source of income to investors,” Kushwaha added.
Coining similar views, Rodrigues noted that owning a luxury holiday home in places like Goa was an increasing trend for buyers who look at it as a luxury living and also as a good investment option with better rental yields.
HNIs are becoming a force multiplier in fueling luxury housing demand, which is rooted in factors such as growth in disposable income and a shift in approach to life, he said, adding that NRIs were also now diversifying their asset exposure to ensure a steady income in future.
However, the overall real estate sector is still under the recovery phase and gradually witnessing an uptick in demand. A lot has been done by the government and a lot needs to be done. Developers expect the government to provide further stimulus measures for the sector.
A further cut in stamp duty will reduce the cost of a project and may pump property demand. Single window clearance to quicken the project execution and lower home loan interest rates are among such demand from the developers.
Kushwaha is of the view that the government should give 'Industry Status' to the real estate sector as a whole including secondary housing and holiday homes. Currently, the same has been conferred only to affordable housing. This is a long-pending demand that is expected to help developers raise funds at lower costs.
"More so, the government needs to push the active NBFCs to extend liquidity to the realty sector and should declare that the rental income received from any holiday home-based / tourism centric zones would be free from GST, to give further impetus to the holiday homes segment," he said.
Meanwhile, going ahead, developers will have to innovate their strategies to revive the sentiment of end-users in the current scenario. The coming times will see several technology interventions by developers in their projects to ensure the safety of the homebuyers.