REAL ESTATE AND DEMONETIZATION

This is the word that has been haunting us for a while since the night of November 8th, 2016 when the Prime minister’s office made a flash announcement to re-legitimize Rs 500 and 1000 notes already in the market. People all over India argued on social platforms and in real life about the peril caused by the action. Most of the hunches regarding this were washed out by facts, while some came out to be true. Many confusions still exists in the mind of people whether the demonetization really affected the real estate market in Kerala.

REAL AFFECT ON REAL ESTATE

The major uncertainty of people regarding the adverse effects of demonetization on real estate is because, most of us believe that real estate is solely dependent on black money. This is a misinterpreted information. A better perception of the ways in which demonetization affects Real Estate  business in Kerala  will enlighten us and help to get rid of some misconceptions on the matter.

Real Estate can be categorized into residential, commercial, retail, agricultural land and industrial segments. It is true that black money has an influence on real estate but the major influence is on agricultural sector. Real Estate sector can be again classified into organized, less-organized, non-organized. There are few dealers in non-organized sector who undertake transactions in cash, but the percentage of them are quite low now. This small proportion is however found to leave a blemish on the entire business. Generalizing a whole sector is obviously misleading.

Geographical aspects play a prominent role in Real Estate as well. If we consider the northern part of India, a larger number of prospective customers are self-employed where dealings in liquid cash are common. But in southern part people usually come under organized structure, as a result all the real estate dealings in south are more transparent and involves less fraudulence. Thus, it is quite clear that the real estate in north experiences more adversities by demonetization than the south.

The luxury, premium segments and non-bankable segments are more affected by the move as they are characterized by surpluses where possibilities of cash for partial payments is not remote. When coming to affordable house building or buying, most people transact money legally without  the involvement of black money popping in. Almost all the procedures associated with the purchase of a property, from land acquisition to construction to sales are effected via banking transactions. The very premise of asking prices at fiercive rates in the affordable housing segment is highly hinged on the degree of transparency that has been so established more so over the recent years. Quite obviously, in this case, the demonetization move will have less to almost nil effect on the business. This suggests that the affordable housing segment will see no price cuts as compared to the most premium segments of the business.

Rounding it off, the impact of demonetization on the Real Estate business especially the affordable housing (Apartments) is bound to take fewer hits than previously expected due to the reasons mentioned above. The impact of black money in the market will be curbed by the demonetization move but dealings in the affordable Real Estate segment will continue unabated.

<>apartments flats villas for sale in thrissur

Real Estate Trends in 2017

Real estate is the second largest employer in India, just beneath agriculture sector and is expected to grow by 30 per cent over the next decade. The real estate sector comprises of housing, retail, hospitality and commercial sectors and it’s growth is mainly caused by the growth of the corporate sector and the demand for land space. This sector is expected to have more NRI (Non-Resident Indian) short-term and long-term investments over the coming years. The most favourite property investment destinations are expected to be Bengaluru, Ahmedabad, Pune, Chennai, Goa, Delhi and Dehradun, exactly in that order. Here is a list of emerging trends in Indian real estate sector in 2017.

Developers reviving their business models

With the deadlines to carry out RERA (Real Estate Regulation and Development Act) closing in the states are having difficulty implementing their versions of RERA. This landmark law will accomplish transparency and accountability specifications for developers into the system while improving consumer confidence. Consumer involvement will increase in concerned growing projects. Along with RERA, the Goods and Services Tax (GST) and the Benami Property Act also have a huge effect on how many developers run their businesses. Most developers have realised that it is time to revive their current business models in order to stay in business.

Affordable Housing

Affordable housing has become a hit in the market. By 2019, over one crore houses will be built in rural India. With National Housing Banks (NHBs) refinancing their housing loans, the affordable housing sector is expected to receive a further boost. Tenure of loans under the Credit LInked Subsidy Scheme (CLSS) of Pradhan Mantri Awas Yojana (PMAY) was extended from 15 to 20 years will also ensure an increase in affordable housing market size across India. With the demonetization of high-value currency notes will cause in a reduced land price in the coming years.

Consolidation

The jam-packed real estate sector is going to get a lot thinner with all the merges happening around. Many real estate businesses have started joint developments between landowners and small developers with bigger and better-organized players, larger players buying smaller developers, and struggling developers selling off their land banks to bigger players. Indian real estate business will be seeing lots of consolidation over the next five years causing smaller players to be eroded and larger players staying in business.

<>3 BHK villas in Chevayoor