Developers Await The Arrival Of Genuine Home Buyers To Save The Day
Expecting a fall in property prices in the aftermath of demonetisation, “genuine” home buyers have put on hold their plans of investing in property. This lull in the real estate market, though temporary, has left developers high and dry.
"Property sales, in both primary and secondary markets, were affected during November-December due to demonetisation as consumers postponed their buying decisions not only in real estate but across all the sectors," CREDAI President Getamber Anand was quoted by the Press Trust of India(PTI) as saying.
Citing industry data, the PTI reported that the Centre's demonetisation has affected the resale market move the worst, and transactions have almost dried up in this segment, “barring some interest in marquee properties”. This has led to an estimated revenue loss of Rs 22,600 crore for developers across major cities. Owing to a decline in the number of property registrations, state governments, too, have suffered a notional loss on stamp duty to the tune of Rs 1,200 crore.
Prime Minister Narendra Modi's demonetisation move also led the World Bank decelerating India's growth projection for the financial year 2016-17 from 7.6 per cent to 7 per cent.
The bank expects currency demonetisation to disrupt business and household economic activities in the short term, weighing on growth. "The challenges encountered in phasing out large currency notes and replacing them with new ones may pose risks to the pace of other economic reforms," the report says.
However, as the positive effects of the move begin to show, India, the bank expects, would regain momentum in the years to come and register growth in the range of 7.6 and 7.8 per cent.
"A benefit of 'demonetisation' in the medium-term may be liquidity expansion in the banking system, helping to lower lending rates and lift economic activity," the World Bank said in its report.
This means real estate developers may have to wait for a while before the faith of genuine home buyers is restored in the market.
“The year 2016 is a landmark in the history of Indian real estate for its series of regulatory reforms, from the Real Estate (Regulation & Development) Act, 2016 to the Goods and services Tax law, from the strengthening of the Benami Act to the currency demonetisation. While all of these will affect the sector in the short-to-medium term, collectively they will provide the much-needed cleansing of the sector; one that would set the momentum for long-term sustainable growth based on sound fundamentals,” PropTiger DataLabs said in a report titled 2016- The Landmark Year for Real estate & What Lies Ahead.