Shalin Raina, Managing Director, Residential Services, Cushman & Wakefield, one of the world’s largest global commercial real estate services firms, said luxury residential property has attracted greater interest as an investment asset class among HNIs and UHNIs.
He said investors evaluate established developers, execution track records and long-term value creation, while gains from earlier investments can also be redeployed into additional properties.
Family requirements
A second property may be purchased for parents, children or other family members.
Aakash Ohri, Managing Director and Chief Business Officer, DLF Homes, the residential real estate development vertical of DLF, said affluent families may acquire multiple residences within the same development to keep different generations close while maintaining individual privacy and independence.
Such purchases can also form part of longer-term family wealth and legacy planning.
Investment objective
The purpose of buying the property should be clear. It could be an upgrade, a second residence, a property for family members or an investment.
Ananta Singh Raghuvanshi, MRICS, President – Sales & Marketing, Krisumi Corporation, a real estate developer and a joint venture between Japan’s Sumitomo Corporation and India’s Krishna Group, said repeat buyers typically move towards higher-value residences, including larger homes or premium offerings within a developer’s portfolio.
Existing property gains
If an existing property has appreciated, the gains may be used towards the purchase of another home. However, past appreciation does not guarantee future returns. Buyers should consider the purchase price, location, holding period, rental potential and other costs before estimating the investment return.
Developer and project quality
The developer’s track record is another factor to assess, particularly for under-construction properties. Vikram Singh, President – Project, Central Park, an ultra-luxury real estate developer, said buyers may return to developers they already trust after a positive ownership experience and appreciation in an earlier property.
Buyers should independently check delivery history, project approvals, construction quality, maintenance arrangements and the terms of the purchase.
Loan and cash flow
An additional home loan means another EMI. Buyers should assess the new repayment alongside any existing home loan and regular household expenses.
The down payment should also be considered carefully. Using a substantial portion of savings for the purchase could reduce the liquidity available for emergencies and other financial goals.
Tax and other costs
The cost of a property goes beyond its quoted price. Stamp duty, registration, brokerage, loan charges, maintenance and property taxes can add to the overall outlay.
If an existing property is sold to fund the purchase, the tax implications and transaction costs of the sale also need to be factored in.
Portfolio diversification
A second property increases exposure to real estate. Buyers who already have significant wealth invested in property should consider whether another purchase could make their overall portfolio too concentrated.
Keeping adequate financial assets outside real estate can help maintain liquidity for emergencies and other goals.
Rental income and holding costs
If the property is being bought for rental income, expected rent should be compared with the total cost of owning the property. Maintenance, taxes, financing costs, vacancy periods and repairs can reduce the actual return.
A second home can therefore be assessed not just on its expected appreciation, but on how well it fits the buyer’s financial goals, cash flow, family requirements and overall investment portfolio.
