Real estate market for second home emerged over last 15 years in urban India and
was perceived as a sunrise market in states of Goa, Kerala & Uttarakhand. With the ever changing trends, the demand for second homes varied according to the consumer’s needs and tastes. Most people prefer to buy second homes in cool, hilly places or near sea side, so they can get away from the hustle bustle of the city life on weekends. For some, a weekend or second home can be a retirement home. Many families rent out their properties when not in use, making it an additional source of income. Location along with amenities provided, are important criteria for buyers investing in a second home.
The major negative risk factors for holiday homes projects are:
delay in obtaining approvals from government organization
Lack of data and decision making at the design and project execution stage
increase in prices of raw materials
poor site and inventory management by the contractor.
Some of these risks can be addressed effectively at the start of the project by implementing planning and project management. To address issues of raw material price increase, tie up with manufacturers and vendors at the project onset. The price and supply of raw materials can be negotiated based on initial project estimates. The issue of poor site and inventory management by contractor can be addressed through stringent specifications, contract terms and conditions and selecting a contractor based on his technical and financial strengths. For such projects, the lowest contract bid should not be the criterion for contractor selection.
Approvals from government bodies are often long drawn process, which should be taken into account by promoters during project planning. Sufficient time should also be given to the data collection, planning and design stage, so that there are no unpleasant surprises at later stage.
While some of the risks can be mitigated by good project planning and adopting
measures like contract management and insurance, bigger problems arise when the project scope is not well defined. The goals are not defined even at the end of planning stage, causing frequent changes, stoppages during construction and delay of crucial decisions.
The indecisive approach and inability to instill trust in consultants, project management team by promoter, demoralizes all stakeholders. In holiday home projects, this is observed as major cause of project failures.
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