Tuesday, April 12, 2005

getting away from it all

Indians are buying vacation homes where they never did before.
By Jason Overdorf
Newsweek International

April 11/18 issue - Natarajan Viswanathan wanted a place to get away from it all. "Madras was getting too strangulating," says the 74-year-old retired leather exporter. But instead of looking to the southern hill station of Ootacamund—"Ooty" to the generations of British colonists and upper-class Indians who have repaired there to escape the heat of the plains—he chose to build a vacation home in the small, undeveloped town of Kotagiri, an hour's drive from the Raj-era hill station. As it turns out, Viswanathan was something of a trendsetter: since he built his place a year ago, he has seen a dozen more vacation homes pop up, and four of his friends now have him scouting out property.

The market for vacation homes is gathering steam in India, tracking the booming housing market. No separate statistics exist for secondary as opposed to primary residences, but the home-loan market is increasing at a compounded annual rate of 30 percent. With salaries rising and interest rates dropping precipitously—from 16 percent in 1995 to about 8 percent today—the average age of home-loan seekers has fallen, and the size of the loans sought has risen by as much as 50 percent. That means more and more middle-class Indians are joining the elite in buying holiday homes—not only in traditional hill stations away from the baking plains but in new beach and resort communities as well.

Developments like Sahara Group's Amby Valley, a 10,000-acre, resort-style getaway a few hours from Mumbai (formerly Bombay), are generating huge interest, according to international real-estate firms Cushman & Wakefield and Chesterton Meghraj. Market surveys also indicate strong demand for less-expensive homes in similar, if somewhat less opulent, environs. "The upper-middle class and middle class are definitely getting into [the vacation-home market]," says Sandesh Savant, a property consultant based in Pune, near Mumbai. In addition to resort communities, he says, Mumbai residents are looking at farmhouses or homes on the coast south of the city. Since India's poor infrastructure makes road journeys trying, proximity is key for those looking for a second home. "My work and everything is in Bombay, so accessibility is very important to me," says Niloufer Kapadia, a 55-year-old gallery and cafe owner from Mumbai who recently built a house in nearby Ali Bagh. "I wanted a weekend home that would eventually become a retirement home."

Crowded Mumbai, where the stressful lifestyles approximate those of bustling New York, is ahead of the curve. But vacation-home buyers are emerging in other major Indian cities, including Bangalore, Chennai (formerly Madras) and New Delhi. The area surrounding Shimla—a Raj-era hill station six hours from Delhi—has become a favorite among residents of the capital.

For now, most Indians buying second homes consider the property an investment, says Chanakya Chakravarti, joint managing director of Cushman & Wakefield India. That means that demand is highest for developments commuting distance from urban areas that offer "suburban lifestyles," complete with swimming pools and golf courses. But the firm predicts the nascent growth in the purchase of genuine vacation-homes far from primary residences—which make up perhaps two or three of every 10 second-home purchases now—will mature into a boom over the next three years. "All it takes is for one project to really take off," Chakravati says. And a few gracious invitations extended to unsuspecting weekend guests.

© 2005 Newsweek, Inc.

No comments: