Challenges Facing India’s Holiday Home Market: Regulations, Infrastructure, And Sustainability

For generations, people have been drawn to the idea of having a quiet place to call their own. In recent years, that dream has taken on fresh momentum. As remote work becomes more common and city life feels increasingly hectic, many Indians are now looking at second homes not just as weekend retreats, but also as long-term lifestyle choices. Reflecting this shift, estimates suggest the market for holiday homes has nearly doubled and could touch $4.021 billion by 2026. Even so, buying and maintaining a vacation home still comes with its own set of challenges.

Owning a vacation property sounds ideal. It offers a space of your own, away from crowds, with the chance to explore different places at your own pace. However, the reality is often more complicated. A major issue is that these homes are typically used only for short periods each year. That means maintenance costs continue, even when the property isn’t generating income.

Another challenge is competition. With the rise of well-run boutique hotels and short-stay rentals, private holiday homes often struggle to attract consistent guests. These commercial options are professionally managed, often staffed full-time, and offer a level of predictability that individual homeowners can find hard to match.

Infrastructure Brings Opportunity And Pressure

A strong transport network is essential for making a destination appealing. New roads, better rail links, and improved public transport have helped open up once-remote areas. Government projects over the last few years have made it easier for buyers to consider lesser-known places for their second homes.

That said, infrastructure development can also stir up conflict. Large projects often rely on public-private partnerships, which, while useful, have drawn criticism for sidelining public interest in favour of private returns. In some cases, road building or transport hub construction has led to disputes over land, environmental degradation, or forced relocation of local communities.

People living in these areas sometimes feel their voices are left out of major decisions. When planning doesn’t consider local needs, like sustainable land use or job protection, it can lead to unrest, lawsuits, or stalled projects. This, in turn, impacts the stability of the holiday home market in those regions.

Why Sustainability Needs a Front Seat

Another growing concern is how holiday home development affects the environment. Many of these homes are built in regions that are ecologically delicate, like coastal zones, forest edges, or mountainous terrain. Without proper planning, construction in these areas can disrupt water systems, increase erosion, and put pressure on already limited resources.

Climate change adds urgency. Weather patterns are shifting, and water scarcity is becoming more pronounced in many parts of the country. Yet, developers don’t always prioritise green building practices. Environmental impact often takes a back seat, with short-term gains given more weight than long-term consequences.

Unclear Rules Create Uncertainty

Policy around vacation homes isn’t uniform across India. What’s allowed in one state may be restricted in another. Getting approvals to build in eco-sensitive zones can be a slow, uncertain process. And in some instances, properties were constructed legally but later faced issues when regulations changed.

Taxation is another grey area. Owners who want to rent their homes face confusion over GST rules, income declarations, and property classifications. With demand for holiday homes on the rise, clearer, more consistent rules would go a long way in making the sector less risky for buyers.

The Evolving Purpose of a Vacation Home

The desire to own a getaway home is unlikely to fade. For the market to grow in a meaningful way, it needs the right foundations—clear regulations, honest governance, strong community ties and a genuine respect for the environment are key. At the same time, investors should think beyond just the numbers and consider the bigger picture. With the right approach, it can also be part of a more thoughtful and inclusive future.