Realty Sector - Expectations for 2017

Parveen Jain, NAREDCO President
Mr. Parveen Jain, President NAREDCO & CMD Tulip Infratech
As far as the Realty round for the year 2016 and the expectations for 2017 are concerned, the biggest happening has been in the later part of the year 2016 which is demonetization and which is having tremendous impacts all around. Before demonetization also throughout the year certain important developments have taken place this year like RERA ( Real estate regulatory act) and REITs ( Real estate investment trusts).

Now because of arrival of REITs ( real estate investments trusts) to attract investments and ease of doing business in the real estate market, the demand may grow on the commercial market front. Also India enjoys being the favourite outsourcing destination for global business companies like IT, manufacturing, food & health products, clothes, multifarious goods & products industries which need commercial and office space here and the demand for the same may all the more rise.

The Real estate regulatory act (RERA) is likely to bring in transparency in the Real estate sector and may lead the sector to be able to attract more FDIs. RERA establishes the state authority and vests authority on the Real estate regulator to govern both residential and commercial real estate transactions and by dint of this it shall improve the governance hold on the real estate sector reducing disputes and making the system more transparent.

The rule of RERA of depositing around seventy percent of funds in a dedicated account shall ensure sufficient funds for the projects to speed up, get completed and timely delivery to the buyers bringing in more transparency. This is set to improve the feasibility of financing options availability in the market leading to increased investments and propelling more FDIs and thereby making the system more efficient.

The impact of Demonetization on Realty sector may be divided in two major categories- short term and Long term impacts. Looking at the current scenario, the short term impacts may be slight slowdown of sale and purchase in properties till the prevailing banking situation for people normalizes but once the things come back to normalcy, the long term impacts may be beneficial for the end-users.

The Real estate sector market is basically having different segments like the primary and the secondary market. The secondary market is considered as the resale market. The impact of demonetization may bring a slowdown in the resale market or secondary market and it may give a boost to the primary market.

The real estate sector may also be divided into the organized sector and the unorganized sector. Here also the impact of the demonetization shall be that it may bring more transparency in the organized sector and shall be a blow to the unorganized sector bringing its breakdown.

After the demonetization step having been taken, the fund flow in banks is increasing tremendously which is going to have a positive effect as far as banks giving housing loans are concerned. It is expected that the bank housing loans’ interest rates may fall due to increased fund flow in banks and getting the bank housing loans may become cheaper. Positively predicting such a scenario, this may prove beneficial for the buyers and shall inculcate more interest in purchasing property. The low interest rates if they happen will create more enthusiasm in buyers and more people shall go for the buy in the situation of low interest rates and housing loans becoming cheaper.

As far as the necessities of the masses is concerned and to realize the mission of ‘Housing for all’ and due to the impact of demonetization bringing in more transparency, now the concentration shall be more on building mid segment and affordable housing which is the need of the hour. As metro cities like Delhi,Gurgaon have become the major job zone for all levels and masses are rushing to cities from far of places with each passing day, the demand for mid-segment and affordable housing is increasing manifold every day.

The major impacts of demonetization on Real estate sector shall be more transparency in the deals, boost to the primary market, slowdown in the secondary or resale market, total real estate market shall move further towards becoming more organized.
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