Explained: Hill stations redefine second-home market amid boom for residential properties

Hill stations such as Nainital, Dehradun, Shimla, Panchkula, and Rishikesh emerge as hotspots for holiday homes.

The Covid-19 pandemic has reshaped India's second-home market in a big way. Hill station homes have emerged as top choices for getaways or second homes for high-net-worth individuals (HNIs) and urban professionals. Once considered seasonal getaways, these properties have transformed into year-round residences, largely driven by changing lifestyle preferences, digital connectivity, and enhanced physical infrastructure.

According to market data, residential demand for second homes or holiday homes in hill stations has reported up to 20 per cent increase over the past year. Homebuyers are focusing on popular locales like Shimla, Manali, Kasauli, Panchkula, Rishikesh and Lonavala. They are willing to spend more on lifestyle upgrade, wellness and exclusivity in scenic hill stations.

Experts said that for investors, hill station homes or holiday homes represent more than a luxury escape. These residential properties are a strategic asset in a portfolio seeking growth, balance, and sustainability.

The discernible trend not only reflects the evolving preferences of buyers since the pandemic fears subsided, but also highlights the rising demand for sustainable and well-crafted holiday homes.

Uptick in demand for holiday homes in hill stations

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Ashish Mishra

Prinicipal Correspondent|moneycontrol

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Data shows that there has been a sharp increase in residential demand across hill stations such as Nainital, Dehradun, Shimla, Karnal and Rishikesh, as homebuyers explore serene alternatives to bustling urban centres.

Data from Magicbricks shows that Nainital saw around 61 per cent increase in demand over the past year, while Dehradun reported a 43 per cent increase, followed by Shimla (34 per cent), Karnal (28 percent), and Rishikesh (26 per cent). The rising interest indicates a growing trend toward holiday homes and lifestyle investments in these scenic locations.

Also Read: Eldeco Group to develop 80 luxury villas near Kasauli in Himachal Pradesh, eyes top line of Rs 500 crore

The demand surge is mirrored by increasing supply of luxury villas in most hill stations. Supply grew by 10 per cent in Nainital, 12.8 per cent in Dehradun, 13.87 per cent in Shimla, and 9.35 per cent in Karnal. Rishikesh was an outlier. The residential supply in Rishikesh reduced by 14.5 per cent in the past year, the Magicbricks data showed.

Amar Kapoor, Founder, Terra Grande by Eldeco Group, said that the surge in demand for hill station homes aligns with the growing interest in Rishikesh and other hilly locales as a preferred luxury destination.

“With a 25 per cent increase in searches for properties in hill stations, Rishikesh has emerged as an ideal location for discerning buyers seeking a serene escape and holistic living. We have observed a significant uptick in inquiries — between 20 and 25 per cent — particularly from urban dwellers looking for luxury homes that offer both tranquility and modern amenities,” Kapoor told Moneycontrol.

Lifestyle-driven demand

Buyers prioritise wellness, privacy, and exclusivity. Remote work trends and the quest for a better work-life balance have added to the appeal of hill station homes. These locations offer scenic views, pleasant weather, and increasingly, modern amenities such as co-working spaces and smart home integrations.

Ankit Kansal, Managing Director (MD) of Axon Developers, whose company has projects in Maharashtra and Goa, said that the trend is directly linked to the pandemic.  "Second homes in hill stations have become more than just aspirational properties. They represent a lifestyle shift for urban dwellers seeking balance, tranquillity, and closeness to nature," he said.

“This is fuelling demand for villas, plotted development and farm stay. With remote working and staycations on an upswing, owning a second home in a hill station can make astute business sense. It can help in leveraging the long rental markets, giving stream of constant income to the investors. Average rental yields can be in the range of between 4-8 per cent annually,” he added.

Investment potential

Beyond their lifestyle appeal, hill station homes are becoming sound investment choices. Rental yields in high-tourism areas are rising, often surpassing returns from urban rentals.

"Solan, Kasauli, and Manali are investment magnets because of high tourist footfall and excellent infrastructure. Buyers are attracted by a mix of scenic beauty and high ROI [return on investment] potential. For instance, homes that once served as family getaways are now highly sought after for Airbnb or long-term rentals, making them viable financial assets," said, Prateek Mittal, Executive Director (ED), Sushma Group, which has housing projects in Panchkula and Kasauli.

Also Read: 71% of wealthy Indians seek luxury real estate, Goa top hotspot for vacation homes: ISIR Survey

Significantly, the non-resident Indians' (NRIs) interest in the segment is also growing by leaps and bounds. They view hill station homes as a sound investment option and a way to maintain a connection with India. According to market reports, NRI contributions account for up to 25 per cent of second-home purchases in certain regions in the country.

Manit Sethi, Director of Excentia Infra, said, "Hill station homes are redefining luxury investment in India. They are no longer restricted to seasonal use. Instead, they cater to buyers looking for extended stays or permanent residences. Many investors see these homes as an extension of urban living coupled with the added benefits of peace, privacy, and excellent ROI."

Real estate experts said that accessibility has been a game-changer in catalysing the demand of second home in the hills. Improved road networks, better healthcare facilities, and high-speed internet are making remote hill locations viable for extended stays.

Umesh Bhati, Director of Operations at Bayside Corporations, said that a push for improved physical infrastructure has given a significant boost to the second-home market in hill stations. Buyers demand connectivity, healthcare access, and even entertainment options. Besides, serviced apartments and Airbnb-like stays are creating a regular flow of income for owners as more tourists look for curated experiences.

The Road ahead

As urban sprawl continues and wellness remains a priority, hill station homes or luxury villas  in the hills are positioned for sustained growth. Annual property appreciation in these regions often outpaces those in metropolises, underscoring their dual value as retreats and financial assets.

“The segment will only grow stronger as buyers increasingly view these properties as holistic investments—a combination of luxury, wellness, and returns. Developers are innovating with modern designs, eco-friendly construction, and tailored amenities to meet the rising demand for hill station homes,” Mittal added.