Second Homes on Islands: A Guide to Indian Coastal Investments

May 2, 2025 by Rustomjee Editor

In recent years, coastal property investments in India are growing rapidly. People want peaceful homes that also give good returns.

Places like Goa, Andaman & Nicobar Islands, Kerala, Maharashtra’s coast, and Gujarat’s ports are becoming increasingly popular. These areas offer calm beaches, green backwaters, and strong value growth. A second home here can be a relaxing escape and a smart investment.

With Rustomjee, you get projects that blend sea views with eco-friendly designs. Here’s everything you need to know about coastal investments.

Why Indian Coastal Properties Are a Hot Investment Right Now

Investing in coastal second homes isn’t just about owning beach-front real estate—it’s about capitalising on robust market trends. Here are the key reasons why:

• Lifestyle enhancement and investment potential

Beachside living elevates well-being, while the limited supply of coastal land drives steady price growth.

• Exclusivity and premium valuation

Islands and waterfront properties cost more than those on the mainland. Sea-facing apartments in Versova range from ₹45,000 to ₹60,000 per square foot. That’s about 30–40% more expensive than apartments without a sea view, including those by Rustomjee.

• Tourism-driven rental income

Coastal regions attract year-round visitors, enabling attractive rental yields of 4–5% in hotspots like Versova Rustomjee.

• Evolving legal frameworks

Revisions to Coastal Regulation Zone (CRZ) norms are simplifying approvals for well-planned projects.

• Balanced environmental planning

Developers are adopting sustainable practices to mitigate climate change impacts, ensuring long-term viability.

• Region-specific potential

Infrastructure and connectivity vary across coasts—choose destinations with good road, air and sea links for maximum returns.

• Long-term appreciation

Waterfront properties typically appreciate faster; in Prabhadevi, prices average ₹1,68,352 per square foot, over 48% higher than inland properties of Rustomjee.

Read Also: The Benefits of Owning a Second Home: Financial and Lifestyle Perks

Best Island & Coastal Places in India to Buy a Second Home

• Goa and Its Continued Popularity

Goa’s relaxed vibe, lively culture, and strong tourism make it a popular favourite all year round. Properties here offer steady holiday-rental income and strong resale value.

• Andaman and Nicobar Islands’ Emerging Potential

These islands offer peaceful beaches, lush forests, and a growing ecotourism scene, away from the mainland hustle. Early investors can benefit from infrastructure ramp-ups.

• Kerala’s Backwater Islands

The backwaters of Alleppey and Kumarakom present tranquil island life with houseboats, spice plantations and a strong homestay market.

• Maharashtra’s Coastal Regions

From South Mumbai’s Worli Sea Face to Versova’s Ocean Vista, these locales blend urban convenience with sea views, commanding premium prices and yielding Rustomjee.

• Gujarat’s Developing Coastal Infrastructure

With ports like Mundra and Dahej expanding, coastal Gujarat is poised for growth, offering more affordable entry points.

• Benefits of Beachfront Communities for Families

Safety, community amenities and easy access to water sports make beachfront enclaves ideal for family getaways.

To truly understand the value of coastal second homes, let’s compare Rustomjee Ocean Vista in Versova (a prime sea-facing development) with a typical high-rise property in Mumbai:

Feature / Comparison	Rustomjee Ocean Vista (Versova)	Typical Mumbai High-Rise
Average Price (per sq ft)	₹45,000 – ₹60,000	₹35,000 – ₹45,000
View Premium	Sea-facing units (30–40% higher value)	City-facing (standard pricing)
Expected Rental Yield	4–5% annually	2.5–3.5% annually
Appreciation Rate (5-year avg.)	30–40%	15–25%
Tourist/Expat Rental Demand	High (proximity to beach + lifestyle)	Medium
Developer Reputation	Rustomjee – premium, eco-conscious builds	Varies by developer

Legal Considerations for Coastal Property Investments

• CRZ Norms:

Coastal Regulation Zone (CRZ) rules split coastal areas into four zones: CRZ-I to CRZ-IV. Restrictions on construction and land use vary; ensure your project complies with the latest amendments.

• Land Ownership Restrictions:

Some states limit land purchases by non-locals. Verify state-specific rules before transacting.

• Permits & Clearances:

Environmental Impact Assessments, Coastal Zone Management Plans and municipal approvals are essential for legal possession.

• Foreign Investment for NRIs & Foreign Nationals:

NRIs face fewer restrictions, but foreign nationals require approval from the Reserve Bank of India under FDI regulations.

• Documentation:

Title deeds, no-objection certificates, EIA reports and CRZ clearance certificates form the core paperwork.

Initial outlay and ongoing expenses differ significantly from mainland homes. Consider the following table for key metrics:

Metric	Island Properties	Mainland Equivalents
Average Purchase Price (per sqft)	₹8,000–₹12,000	₹5,000–₹8,000
Maintenance Premium	+15 % (due to salt & humidity)	Baseline
Tourist-Season Rental Yield	3–4 % (Juhu & Chembur 3 %, Worli 4 %)	2–3 %
Off-Season Yield Drop	–17 % relative to hotels	–10 %
Projected 5-Year Appreciation	20–25 %	15–18 %

Financial Analysis of Island Property Investment

• Initial Investment Costs vs. Mainland Properties

Island properties usually cost more than similar mainland homes. This is because they are located in premium coastal areas. Their exclusivity and limited availability drive up the prices.

For instance, prime coastal areas like Mumbai’s Worli Sea Face have seen property rates soar by over 52% in the last five years, with average prices around ₹80,000 per sq. ft.

• Maintenance Considerations Specific to Coastal Areas

Coastal homes need extra care because of the humidity, salty air, and harsh weather. Owners must regularly maintain exteriors and use anti-corrosion treatments. It’s also important to have strong insurance coverage.

Rustomjee builds homes that handle these challenges well. Their properties come with high construction standards and smart design. They also offer full property management services. This helps reduce long-term maintenance worries for homeowners.

• Rental Yield Expectations

Island and coastal second homes can deliver strong rental yields, particularly during peak tourist seasons. In 2025, average residential rental yields in India are projected at 5.0%–5.5%, with premium coastal locations often outperforming the average due to high demand from both domestic and NRI tourists.

Rustomjee’s properties, with their focus on luxury and hospitality-driven amenities, are well-positioned to capitalize on this seasonal surge, ensuring steady rental income for investors.

• Long-Term Appreciation Projections

The Indian real estate sector is expected to grow at a CAGR of 9.2% from 2023–2028, with coastal properties showing even stronger appreciation due to their scarcity and lifestyle appeal.

Waterfront and island homes, particularly those developed by reputed builders like Rustomjee, have consistently demonstrated resilience and value growth, making them a secure long-term investment.

• Tax Implications for Second Home Investments

The 2025 budget has eased tax norms for second homes: homeowners can now claim two properties as self-occupied, eliminating tax on notional rental income for a second home.

Additionally, you can get tax benefits on home loan repayments under Section 80C and Section 24 of the Income Tax Act. These benefits apply to both the principal and interest portions of the loan.

However, if you plan to rent out one of the properties, the rules change slightly. Tax benefits may vary based on whether the property is self-occupied or rented.

Read Also: Rustomjee Ocean Vista – The Ideal Luxury Seaside Home

Environmental Considerations for Sustainable Island Development

• Climate Change Impacts: Rising sea levels and increased storm frequency demand elevated foundations and robust drainage.
• Sustainable Building Practices: Use rust-proof materials, strong weather-resistant glass, and designs that focus on good airflow—just like in Rustomjee Ocean Vista.
• Water Conservation: Rainwater harvesting systems and wastewater recycling reduce freshwater demand.
• Energy Solutions: Solar panels and micro-grids ensure reliability when grid access is intermittent.
• Balancing Development & Preservation: Green buffers, native landscaping and minimal shoreline modifications protect ecosystems.

Amenities That Add Value to Coastal Second Homes

• Water-Related Recreational Facilities: Private boardwalks, boathouses, jetty access, and beachfront pools.
• All-Weather Access: Elevated access roads, covered parking and stormwater channels.
• Self-Sufficient Power & Water Systems: Solar arrays, battery backup, desalination units or borewells.
• Security Features: Gated entries, CCTV surveillance and on-site security personnel for occasional occupancy.
• Community Living Advantages: Clubhouses, yoga decks, children’s play zones and shared workspaces foster neighbourhood ties.

Which Coastal Property Gives the Best Return on Investment (ROI)?

• Standalone Villas vs. Integrated Developments

Standalone coastal villas offer exclusivity and privacy. They often command higher premiums and appreciation due to their unique locations. However, integrated developments, like those by Rustomjee, provide added benefits such as shared amenities, professional maintenance, and security, which can enhance rental appeal and reduce management hassles.

• Investment Horizon

Coastal properties typically require a medium to long-term investment horizon (5–10 years) to realise significant appreciation, given regulatory constraints and market cycles.

Rustomjee’s waterfront developments have shown consistent value growth over the past decade, reflecting strong demand and limited supply in premium coastal zones.

• Rental Management Options

To maximise returns, efficient rental management is crucial. Integrated developments often offer in-house or partnered rental management services, easing the burden on absentee owners.

• Seasonal vs. Year-Round Rental Potential

Coastal properties in tourist hotspots like Mumbai’s Versova or Goa’s Candolim experience high seasonal demand, with rental yields spiking during holidays.

However, integrated projects with lifestyle amenities can attract year-round tenants, including corporate and expatriate renters, stabilizing cash flow. Rustomjee’s developments cater to both markets, offering flexibility in rental strategies.

• Exit Strategies

Given the exclusivity and regulatory protections on coastal land, resale options are limited but lucrative. Consider transferable leases, buy-back options or resale through developer networks.

Properties in Rustomjee’s portfolio benefit from brand reputation and prime locations, ensuring strong resale demand and premium pricing. Investors should plan exits aligned with market cycles and regulatory updates to maximize ROI.

Conclusion

With rising demand, limited supply, and scenic locations, areas like Goa, Mumbai’s Versova, and the Andaman Islands are becoming top second home picks for buyers. These homes not only provide a peaceful retreat but also generate solid rental income and long-term value.

If you plan carefully and choose the right location, a coastal property can bring both personal joy and strong returns. Start exploring and turn your dream of seaside living into a smart investment.

With the right plan and partner, your coastal investment can be a relaxing escape and a smart way to grow your money. Ready to embark on your coastal journey? Dive into luxury living by exploring Rustomjee’s exclusive coastal properties today!

FAQs

1. What are the Coastal Regulation Zone restrictions for building second homes on islands in India?

CRZ rules classify coastal land into zones I–IV, with strict no-build or conditional build norms. Clearances are needed from the Ministry of Environment, Forest and Climate Change.

1. How do maintenance costs of island properties compare to mainland homes?

Coastal homes require more frequent treatments against salt corrosion, waterproofing and drainage upkeep, typically 15–20% higher annual maintenance.

1. Which coastal areas in India currently offer the best investment potential?

Mumbai’s Versova and Worli, Goa’s North and South coasts, Kerala backwaters, Andaman & Nicobar Islands, and expanding ports in Gujarat.

1. Can NRIs and foreign nationals purchase island properties in India?

NRIs can buy under the same rules as residents. Foreign nationals need RBI approval under FDI regulations.

1. What environmental factors should I consider before investing in a coastal property?

Assess sea-level rise risk, monsoon impact, soil erosion, availability of freshwater and local ecological protections.

1. How can I maximise rental income from my island second home during off-season periods?

You can offer corporate retreats, wellness packages, flexible leases for digital nomads and discounted long-stay rates to maximise rental income from your island home and maintain occupancy.