Why are people buying luxury villas as second homes – For Investment, Lifestyle or Both?

financialexpress.com:

The luxury second home market is witnessing robust growth, driven by evolving preferences and an increasing appetite for spaces that harmoniously blend luxury, practicality, and nature. Multiple factors seem to have influenced this phenomenon, especially the rise in disposable incomes as well as a shift in priorities brought about by the pandemic. Also, as hybrid-work culture becomes the norm, there’s a burgeoning demand for expansive homes designed to seamlessly combine beautiful residences with functional spaces.

In addition to the above factors, connectivity has significantly improved across many cities, wider penetration of the internet coupled with infrastructure like airports and highways, have made part-time living in serene, non-urban areas a highly appealing and pragmatic choice. Recognising the amplified rental yields and capital appreciation in these locales, it’s clear to many that such investments are not just personally enriching but financially astute as well. This segment’s potential is immense, and its trajectory points towards sustained growth and dominance in the foreseeable future.

Such properties not only appreciate in value, diversifying one’s investment portfolio beyond traditional avenues like stocks and bonds, but they also promise consistent appreciation and potential profit upon resale. Typically, buyers witness two main types of returns: yield-driven return on investment (ROI) and capital appreciation. Gross yields typically fall in the 7-10% range, with net yields at 3-5% depending on the specific micro location. The extent of capital appreciation largely hinges on the duration one retains the property, with potential growth ranging from 30%-300%. For instance, homes that once traded at INR