The business in pleasure

This seems to be a common story at other vacation destinations. Here's why such property makes good investment sense.

Even as real estate brokers were virtually running out of work as transaction volumes reduced drastically, Ravinder Negi, a smalltime broker near Shimla, was making more money than he had done in three years. Savvy investors were queuing up to pick up property at distress sales. "When the prices were rising in Delhi and Chandigarh, many businessmen bought properties here hoping to make a quick profit. However, having suffered losses in their businesses because of the slowdown, they are now selling at a loss, says Negi. He managed to sell at least one property every month between April and September last year, and has done so again in the past four months. This seems to be a common story at other vacation destinations. Here's why such property makes good investment sense. Hills The hills are at the top of almost every property buyer's dream list. Given the distress sales and discounts from developers, owning a house in the hills can be a reality now. Besides, it makes for a good investment choice; prices in Shimla have gone up by more than 200% over the past five years and experts anticipate similar appreciation in the future too. According to experts, those who buy homes in hill stations should look at locations close to accessible areas with convivial surroundings. In the west, the locations of choice are Lonavala, Khandala, Baneshwar and Alibag. In the north, Dehradun, Mussoorie and Nainital are popular. In the east, areas around Darjeeling are in demand, while in the south, Ooty and Kodaikanal are a hit. Says Rajeev Rai, vice-president (corporate) of Assotech: "Homes atop a hill always buck the slowdown as they offer luxury of a different kind. Some developers are also offering a model, wherein the buyer can use his property for part of the year; for the rest of the year, it is rented out to users, thereby guaranteeing a return on investment. Coast Though Goa is top of the mind when it comes to a seaside property, there are cheaper options across the country in Kerala, Orissa, Puducherry and Visakhapatnam (Andhra Pradesh), apart from the coastal cities. But compared with prices in the city, even Goa offers cheaper options. For instance, a 2,500 sq ft seaside villa at Morjim, north Goa, is being quoted at Rs. 70 lakh (Rs 2,800 per sq ft), comparable to the price of a property in a Delhi suburb. As far as the investment potential is concerned, a welllocated, sea-facing apartment in Goa can help the owner earn as much as Rs. 1 lakh a month. Some developers have also started taking up the maintenance of the property in the owner's absence. Says Anand of NA Properties: "Buyers find it difficult to maintain villas, whereas residential apartments have maintenance and security provided for. Religious Destinations As religious tourism has picked up in the country, the traditional destinations have become popular with developers and builders. Given the crowds that these places attract, it pays to invest here. "We have consistently seen about 15-20% annual rise in demand for such properties over the past five years or so, says R.K. Mittal, CMD, CHD Developers, which is developing townships at Vrindavan and Rishikesh. The places traditionally of interest to buyers include Shirdi, Haridwar, Trimbakeshwar, Rishikesh, Vrindavan, Madurai and Bhubaneswar. "Prices at these locations vary depending on the economic activity. Rates will be higher in places of religious interest if these locations also have other market drivers to push up values, says Raminder Grover, CEO, Homebay Residential (JLLM). For instance, a 2-BHK in Madurai that could cost as much as Rs. 35-40 lakh, would be available for Rs. 15-20 lakh in Trimbakeshwar. If you thought religious destinations were boring, take a look at some of the facilities in the new projects coming up at these locations. "A perfect blend of modern amenities such as golf courses, billiard rooms, tennis courts, ayurvedic spas, yoga centres, clubs and swimming pools fulfil the various needs of modern spiritual living. This has added to the existing demand for such homes, says Rajiv Rai of Assotech, which is building a township in Bhubaneswar. Before You Buy Look out for restrictions on construction or for buyers from outside the state. Hills: In Himachal Pradesh, the limit for plot sizes that outsiders can buy is 500 sq m. No new construction is allowed in Mussoorie and Nainital. State government permission is required for Mahabaleshwar and Matheran. In Munnar and Ooty, the collector's permission is required for construction of houses more than 2,500 sq ft. Coast: If a property is situated in the Coastal Regulation Zone, no approval can be granted by any authority for construction of property. Holy places: If a monument (including a temple) is protected by the Archaeological Survey of India, there are restrictions on construction within a certain radius. Source: Money Today