How buying a second home can open multiple business prospects and ensure financial security post retirement: Expert insights |

For many years, the value of second homes was based mainly upon their location, the prospect of appreciation of the asset, and the potential of the asset to generate rental income. Shifts in the way people travel and the lifestyles they lead have changed this way of thinking about a second home; current second home buyers (especially villas for tourist destinations) are placing more focus on privacy, space, and authentic experiences than they are about the asset itself. Villas are now becoming a blend of real estate and hospitality, with owners/customers more interested in a personalized experience when staying at a villa than just having a place to stay while on vacation. Second homes have become a valued part of an owner’s lifestyle, providing value beyond the financial return. The experience of the owner while staying at a second home is becoming more and more important. Harshal Dilwali, Director & CEO of Clarissa group in an exclusive, shares why investment in an additional home is not just a simple straight investment, but an opportunity for recurrent income.From rental yield to experience yieldThe COVID-19 pandemic accelerated a shift away from the traditional view of rental yield for travel accommodation toward the idea of “experience yield.” The new norm for travel & vacation accommodation is for people to look for private space, maximum flexibility and comfort similar to home; this has led to an increase in preference for larger, more exclusive residential properties, particularly when travelling for a long period of time or engaging in more immersive travel experiences.

Conversely, a second home for many property owners has begun to serve as something far more than just a rental yield-generating resource. Increasingly, homeowners are now designing their villas to create a unique guest experience through thoughtful interior design, inclusion of amenity offerings, engagement with the surrounding local community and a greater emphasis on personal service provided to guests. A focus on the product, service and experience by property owners has made an impact on the hospitality industry, forcing traditional hotel accommodation models to adapt to the new expectations of travellers who are looking for a higher level of privacy, customisation, exclusivity and meaningful experiences that add value to their lives. In the new era, the properties that are delivering guests valuable experiences and opportunities that hold meaning for them are outpacing those properties whose primary purpose is to generate rental yield. This is the continuation of the trend of finding value through experience-led creation.The rise of short-stay platforms and flexible ownershipAdditionally, the growth of short-stay platforms like Airbnb and others has been instrumental in making this transformation possible for prospective buyers. These platforms have greatly reduced the barriers of entry into this space, allowing personal properties to be marketed to a larger global audience without the need to invest in a standard operating structure. Most importantly, they have prompted owners to reconsider how their real estate is marketed. A villa is no longer simply a place to stay; it is now considered a product. With the understanding that repeat bookings and traveller reviews will result from design, amenities, storytelling, and guest experience, owners are now making intentional investments in these areas.Lifestyle investment, not solely asset allocationThe other significant factor responsible for this trend includes how buyers’ profiles are changing. Many of today’s second homeowners are urban professionals, entrepreneurs, or NRI’s who see their villa purchase as a lifestyle investment. They typically occupy their villa for part of the year and monetize it during peak travel season when they occupy it for a smaller amount of time. By utilizing their property for both pleasure and as a place to host other people’s experiences, buyers have created a model that blends hospitality and real estate. Due to this increase in the amount of time buyers will spend utilizing their property, buyers are willing to invest more upfront in the quality of construction, design & operational support, because detailed attention to providing a superior guest experience will provide stability for their long-term asset value.

The growth of experience as a differentiatorIn a rapidly increasing number of popular leisure destinations, a new way of distinguishing your property from others is now necessary. Properties that only provide standard accommodation are finding it much harder to find a unique selling point, while properties that provide integration of local culture, wellness attributes, curated food experiences (where guests have an option to order food from someone other than the owner), or nature-based experiences are now attracting increased customer demand.This shift is part of a larger trend within the tourism industry. Instead of just choosing where they want to go, travellers are now seeking experiences, creating memories, and living their stories. As second homes start to embrace this change in mindset, they will transition from physical asset ownership to lodges that offer true hospitality.Predictions for the future of second home ownershipThe second home will evolve at the intersection of real estate, hospitality and experience-based vacations. Rather than simply serving as a place to spend the night, many villas have evolved into platforms for providing a unique and personalised experience. This evolution will affect not only the single-family homeowner but will affect the developer, destination planner and community the owner resides in. This new model being adopted by the growing number of owners is also changing the way the market operates. Examples of these changes include greater responsiveness to the needs of guests in the design of properties, increasing professional property management, better integration into the local community, and more interest in experience-based vacations at locations other than major urban areas.As such the second home is changing from a passive investment to an active experience-producing asset. Buyer preferences are now shifting from traditional yield measures to a focus on the quality of the experience a property has to offer in a secondary home ownership opportunity, representing the beginning of a fundamental change in how second home sales will transpire in the future.