Invest In Real Estate At Tourist Destination

Buying property in tourist spots can be an exciting but confusing decision. With the variety of locations, types of properties, and different prices ranging from 2 million to 25 million rupees, it's natural to wonder if it's a good investment.

I'll break down the key points about investing in properties in tourist areas, including why people invest, the recent growth in these markets, and what factors to consider when deciding where and when to invest.

Why Invest In Tourist Destinations?

People buy property in tourist destinations for two main reasons: as an investment or for personal use. Investors generally look for an increase in property value over time (capital appreciation) or a steady income from renting it out. This rental income can come from traditional renting, Airbnb, or shared ownership models. 

On the other hand, people buying for personal use might want a vacation home, a second home, or a place to retire. Today, we’ll focus on the investment side and see how the real estate market in tourist destinations has grown. 

The Growth Of Real Estate In Tourist Destination 

Over the past five years, property prices in many popular tourist spots have increased by 30% to 150%. Prices have risen five to ten times in some places over the past decade. This isn’t just because developers are raising prices. 

Even in the secondary market (resale properties), prices have risen significantly. This boom is mainly due to the growing number of tourists in India. India's travel and tourism industry is expected to make around $24 billion in 2024, with a growth rate of nearly 10% each year for the next few years. By 2028, this market might be worth around $32 billion.

Three main reasons explain this growth: government efforts, rising incomes, and changes in people’s attitudes. The Indian government has been working hard to boost tourism by investing in new projects and launching campaigns like “Dekho Apna Desh” and “Chalo India Global.” These efforts are aimed at improving tourism infrastructure and promoting travel within India.

Rise In Income Level

Income levels in India are also rising. Between 2023 and 2028, the number of ultra-wealthy individuals is expected to grow by 50%, and the number of high-net-worth individuals will double. 

People earning more are more likely to invest in properties or buy vacation homes. Additionally, cultural shifts such as the desire to experience new places and the rise of digital nomads—people working from various locations—make tourist destinations more appealing.

How Tourism Is Helping In Growth Of Other Businesses?

As tourism grows, new businesses such as hotels, restaurants, and shops open up, creating jobs and attracting people from other cities. This increase in population boosts the demand for property, leading to higher prices. However, not all areas are the same. There are two main types of tourist destinations to consider: well-established ones and developing ones.

Well-established tourist destinations: These places like Goa, Manali, and Shimla are already popular. They have good infrastructure so that you can live there comfortably. Prices for property in these areas are high due to the strong demand and limited prime land. However, this also raises questions about whether prices have reached a peak or if they will keep rising.

Invest In Developing Tourist Destination For Future Growth

Developing Tourist Destinations: These places are not yet trendy but are being promoted by developers or improved by government projects. Prices here are generally lower, but the risk is higher since it’s uncertain when development will fully take off and how much property prices will rise. If you invest in these areas, you might have to wait a decade or more for significant appreciation, but you can buy land at lower prices now.

When considering where to invest, think about three key factors:

1. Location: Each tourist spot has its unique charm, whether it's beaches, mountains, or historical sites. For better returns, ensure your property is in a location matching the area’s unique appeal. For example, in a beach town, the closer the property is to the sea, the better. In a mountainous area, properties with good views are more valuable.

2. Type of Property: In tourist spots, land or villas are usually better investments than apartments. Apartments often have less demand because many buyers prefer more spacious and private properties. If you choose to buy an apartment, make sure it is premium. Land investment is often the best option because it is scarce, and its value increases over time.

3. Developer: The reputation of the developer is crucial. Well-known and experienced developers are likelier to deliver quality projects and ensure a smooth investment process. Avoid projects from developers with questionable reputations, as they might not meet expectations.

Conclusion 

Investing in tourist destinations can be a good idea if you have a long-term vision. Real estate markets go through ups and downs, and those who can hold onto their investments for several years are more likely to see good returns.

Focus on finding properties in prime locations, choose reputable developers, and be prepared to invest with a long-term perspective. With tourism in India expected to grow, investing in tourist areas could offer promising opportunities if approached wisely.