Residential property prices in metros are nearing their peaks. With a studio apartment in the Delhi-National Capital Region (NCR) and Mumbai priced at as much as Rs 15-50 lakh or even more, people are looking at properties in new locations closer to the metros.
If you dream of having a home with a picturesque view of snow-capped mountains or lush green hillocks, it might be time to explore properties in hill destinations such as Nainital, Ooty, Coorg, Lonavala and Kodaikanal.
With growing popularity of real estate as an investment, these destinations also offer fantastic investment opportunities as people desire to break free from the fast-paced life in the cities and demand for properties in hill destinations is growing.
Rising disposable income and the desire to get away from the frenetic pace of city life is opening up new windows of growth for real estate in the hills. "There is a robust demand for hill destinations. We've seen a mix of young people looking for second homes or holiday homes-entrepreneurs, self-employed professionals such as doctors, lawyers, etc.," says Mudassir Zaidi, regional director (North), Knight Frank India.
Despite some fluctuations in the number of buyers for hill properties, high net worth individuals with deep pockets are flocking to these destinations. "The current economic climate has dampened the number of buyers for hill town homes. Those who are still buying tend to have higher disposable incomes, hailing from the middle and top management segments, usually in the age bracket of 35-45," says Mohammed Aslam, chief operating officer, residential services, Jones Lang LaSalle (JLL) India.
"Invest in a location and property which allows for sufficient resale value, should maintenance of the property prove untenable or if liquidity is required."
COO, Residential Services,
Jones Lang LaSalle India
"The market for residences in hill towns is still evolving in India. It will pick up, but not on the scale seen in the West. In the West, people tend to spend the entire summers at their vacation homes. The concept is emerging in this part of the globe, but the driving motives and scale are very different," Aslam adds.
"Though the interest in hill properties remains leisure-centric, these are being viewed as second homes, rather than holiday homes. The terminology plays an integral part in how they are priced and utilised. The demand is booming, as it makes for a viable economic investment for the buyer as well as the developer due to low construction cost and easy availability of labour and construction material," says Shailesh Sanghvi, director, Sanghvi Group of Companies, a Mumbai-based real estate developer, which has a project in Lonavala, a scenic hill location near Pune in Maharashtra.
Realty majors like DLF and Lodha Group are also developing properties in the hills among others. Most of these big realtors target the affluent by offering luxurious properties. For instance, DLF is developing a residential project in Shimla with villas being sold to select buyers through invitation. According to the company, 90% of the 24 villas (priced at Rs 4 crore onwards) in the under-construction project have already been sold. Enthused by the response to its existing project in Shimla, DLF is planning another residential project in Kasauli, Himachal Pradesh.
PICKING A PROPERTY
As hill properties are seen as holiday homes or weekend getaways, buyers prefer easily accessible destinations close to metros or their first homes. "In the case of Mumbai and Pune, Lonavala, Khandala, Baneshwar and Alibagh are preferred destinations. In the northern and the eastern parts of the county, the places of choice would include Darjeeling and other non-restricted areas around Dehradun, Mussoorie and Nainital," says JLL's Aslam.
Several property developers are selling plots, apartments and villas in these hill stations to capitalise on the growing market. You can easily find a suitable property starting from a few lakhs for economical apartments and plots to several crores for luxurious villas in popular destinations. How do you find the right property from the huge list of properties in hill towns?
"Social infrastructure, connectivity and proximity with the main city, view from the site location are the factors that an individual should look out for. An apartment with a mountain/hill view fetches good value," says Knight Frank's Zaidi.
Aslam of JLL advises that buyers should do proper due-diligence before purchase. "One should invest in a location and project that allows for sufficient resale value, should maintenance of the property prove untenable or if liquidity is required. Do a due diligence on the propertys antecedents and ensure that all necessary permissions and clearances are available. Also, since this property would be in an unfamiliar area, inquire about local property rates or have it valued professionally if in doubt about the builders asking price," he suggests.In places such as Nainital and Dehradun, several local realty companies have started offering small plots, which are available for as low as Rs 5 lakh per 100 square yard (83.6 square metre). However, when buying such plots, one should exercise caution. "You should check whether the plots in question are being marketed by known developers and have clear titles. The plots should be properly demarcated and fenced off and also have the basic infrastructure such as water and electricity," says Aslam.
"You should establish whether these plots are part of a bigger scheme or are stand-alone plots. If the plots are part of larger schemes, one needs to check how many of these have been already sold, what are the development plans for the project, including security measures being offered by the developer," Aslam adds.
Be warned that buying properties in the hills is not the same as buying a house in places like Delhi and Mumbai. Most hill states have laws to protect the ecosystem and prevent indiscriminate construction activities by restricting sale and purchase of land.
Due to historical reasons, only local residents can buy and own properties in Jammu and Kashmir. In Himachal Pradesh, people not originally from the hill state cannot buy land there without the state governments permission; and non-farming communities cannot buy agriculture land. In Uttarakhand, a popular summer destination, non-residents of the state cannot buy more than 250 square metres of land. If you want to buy bigger tracts of land, you need to take permission from the state government.
If you fancy the scenic beauty of Arunachal Pradesh, Sikkim and other states in the north-eastern states, you will have to be content with occasional trips to these lands. In Arunachal Pradesh, Sikkim, Mizoram and Nagaland, outsiders are not allowed to buy land or property. In Meghalaya, transfer of land or property to non-tribals is not allowed, except for certain regions in and around Shillong. Even when the buyer is a tribal from outside the state, clearance from the local government is required.
If you manage to get past the ownership restrictions and buy a property in the hills, you need to ensure that you have enough resources to take care of it. "The biggest challenge (of owning a property in an unfamiliar hill station) is the maintenance of the property after the purchase is made. Now-a-days, you can buy managed properties and solve the problem," says Knight Frank's Zaidi.
Though managed properties are mostly available in the luxury segment, these have their own advantages. "Owning fully serviced villas and apartments means everything right from gourmet cuisine to housekeeping is taken care of. The added advantage that serviced villas/bungalows offer to potential buyers is peace of mind regarding the upkeep of their properties," says Samujjwal Ghosh, vice-president, marketing, Lodha Group, which is offering managed residential properties in Lonavala.
As people often buy properties to park their surplus money, it is important to look at the trend in the real estate market of hill properties. "The growth prospect of properties in the hills is robust. With rising disposal incomes the propensity to consider such locations will rise," says Knight Frank's Zaidi.
Sanghvi of Sanghvi Group concurs with Zaidi. "The property rates are surely appreciating. Some of these hill destinations second as tourist spots, and have their basic infrastructure and amenities already in place to cater to the needs of the people. This has initiated fresh flow of investment in these destinations by buyers and developers alike," he says.
Appreciation of hill properties vary widely in accordance with the extent to which the hill town in question figures on the tourism map. Growing popularity of a destination will facilitate better appreciation of your property in the hills. So don't be the last one to spot the trend. Next time you plan a vacation, set some time aside for hunting for your new holiday home.