How investors are using holiday villas to create long-term real estate value

Luxury villas are no longer limited to lifestyle-driven purchases. A rising number of second-home buyers now purchase high-end villas with the intention of listing them full-time on the rental market.

Varun Nagpal, Founder of Vianaar, said villas are being viewed as appreciating assets that also generate income. He noted that many people prefer villa stays when travelling with family or friends, given the space and privacy these homes offer compared to hotels.

Nagpal observed that people now value privacy, space, and a stronger connection to Nature. He added that villas offer features like private pools and gardens, making the stay more personal and comfortable.
Caroline Mulliez, CEO of The Blue Kite, which manages villa rentals, said about 80% of second-home buyers rent out their homes.

While they may use them occasionally for personal vacations, most view the property primarily as an investment. She added that homes managed professionally tend to be better maintained, and consistent upkeep helps preserve asset value.

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Nagpal pointed out that many of today’s homeowners are looking to generate passive income from their properties.

Returns from villa rentals often outperform urban rental yields, particularly when combined with long-term capital appreciation.

According to Mulliez, buyers are seeking homes that meet certain standards.

Properties are selected for their condition, design quality, and location.

Mulliez highlighted several common mistakes investors make.

• Buying in the wrong location — homes situated farther from the coastline or across highways are harder to rent.
• Overspending on décor and branded furnishings, which do not necessarily raise rental income but can lead to high replacement costs.
• Relying on part-time help or self-management, which often leads to inconsistent guest experiences.

Focus areas

Nagpal added that second homes today are being planned with a focus on both aesthetics and long-term usability. He said that many buyers now expect end-to-end support — from construction to maintenance to rental management — which helps them avoid the burden of daily operations.

Mulliez said strict quality filters are applied while onboarding properties. These include availability of natural light in all rooms, proper cross-ventilation, and practical design elements like split ACs. Such details, she said, make the difference between a basic rental and a comfortable, liveable home.

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