How lucrative is it to invest in homes in vacation destinations, like Dharamshala or Goa?
By Ravindra Sudhalkar
The COVID19 pandemic, apart from the gloomy life and economy, was a time when many young people realized their dreams of owning a home. The prolonged closures and restrictions and the resulting reality of working from home have opened floodgates for real estate investment, especially in small towns.
As upward mobile individuals and families have moved from states with high numbers of COVID19 infections to popular vacation destinations such as Goa and Himachal Pradesh, to await the pandemic these have become hotbeds for property owners. In the meantime, many, whose work profile allows it, have settled permanently in these destinations. But beyond the idyllic appeal of these destinations, are these destinations really lucrative for homebuyers? Before answering this question, it is worth describing the state of the real estate market.
To be sure, Goa’s attractiveness as a second home or vacation home destination has grown in recent years, with domestic travelers flocking to the coastal state. The North Quarter has particularly attracted investors from across India, but that too is changing as the rather sleepy South slowly catches up. The state is open to people who buy both land and built property. Land titles can be a problem, however, titles in the former Portuguese colony may date from this time. Not to mention the multiple claims of family members on a single property. For buyers who don’t want to get caught up in the quagmire, serviced apartments and villas are a good option.
While loans are also readily available to purchase property in the state, residential property prices have been largely stable over the past two decades. In addition, the development of the MOPA airport in the far north of the state will boost property prices.
When it comes to destinations in Himalayan states such as Himachal Pradesh and Uttarakhand, buying land can be a bit trickier. While non-residents can freely purchase pre-built properties in the state, special permission from the government is required to purchase agricultural land. Even then, the ownership of a pre-built property is limited to the property only and not to the land. In communal areas, i.e. non-agricultural land, the process of land ownership is open. You can easily buy land in these areas.
Besides the resale value of these properties, whether in the hills or on the beaches, rentals are a good option to explore given the tourist appeal of these states. In addition to monthly rentals, daily rental platforms such as Airbnb and Booking.com have gained immense popularity in these destinations. The return on investment from daily rentals is very lucrative and is being explored more and more.
However, as a word of warning, hilly regions must be viewed through the prism of the environment. Being prone to natural disasters, you need to be prepared and carefully weigh your options before investing.
While as primary residences these destinations may have their own drawbacks, such as access to healthcare, education, etc. for investment purposes, their appeal is here to stay.
(Ravindra Sudhalkar is the CEO of Reliance Home Finance. The opinions expressed are those of the author.)