Pre­dic­tion 2017: ex­pect trans­parency in mar­ket; nor­mal­i­sa­tion af­ter 6 months

In­creased buyer con­fi­dence will also be good for the real es­tate sec­tor

Hindustan Times (Chandigarh) - Estates - - FRONT PAGE - Vandana Ram­nani vandana.ram­nani@hin­dus­tan­times.com

It ‘s been al­most two months since the gov­ern­ment de­cided to ban 500 and 1000 notes, widely used for pur­chas­ing prop­er­ties in black. The tur­moil that the storm called de­mon­eti­sa­tion un­leashed upon the real es­tate sec­tor re­fuses to die down and ex­perts pre­dict that it will be some months be­fore the dust fi­nally set­tles. When it fi­nally does, there will be much greater trans­parency and buyer con­fi­dence.

Ex­perts are of the opin­ion that the cur­rent slow­down in prop­erty sales will be short­lived and things will start im­prov­ing as the gov­ern­ment cracks the whip on be­nami proper ty hold­ers, banks re­duce in­ter­est rates and the Real Es­tate Reg­u­la­tion and De­vel­op­ment Act 2016 (RERA) gets im­ple­mented by the states.

For buy­ers the real ben­e­fits would mean be­ing as­sured of a ded­i­cated gov­ern­ing body, timely project com­ple­tion, and com­plete in­for­ma­tion on the project and ameni­ties promised. De­vel­op­ers, on the other hand, will have to ad­just to the new en­vi­ron­ment. More specif­i­cally, they have to change their busi­ness model whilst ad­her­ing to stricter com­pli­ance norms, says Shishir Bai­jal, chair­man and man­ag­ing di­rec­tor, Knight Frank (India) Pvt Ltd.

All of the above men­tioned fac­tors put to­gether point to­wards a sub­dued be­gin­ning for 2017. With en­quiries, walkins and sales dry­ing up as a fall­out of de­mon­eti­sa­tion, the first half of 2017 is ex­pected to be largely muted for the sec­tor with in­creased pres­sure on prices. As con­sumers are in wait and watch mode, de­mand could also be sub­dued due to the mind­set that prop­erty prices could come down with a sub­stan­tial low­er­ing of home loan in­ter­est rates, he says.

While there is still a lot of con­fu­sion among home­buy­ers and real es­tate stake­hold­ers fol­low­ing de­mon­eti­sa­tion, ac­tiv­ity in the mar­ket is slowly pick­ing up. “Some home­buy­ers have kept their buy­ing de­ci­sions on hold un­til clar­ity emerges on de­mon­eti­sa­tion. But in the long run, de­mon­eti­sa­tion will help or­gan­ised de­vel­op­ers pro­cure land at more ap­pro­pri­ate rates as such land will not be com­pet­ing with buy­ers who were chan­nelling their black money in land buy­ing and hold­ing. This will help in con­struc- tion of more af­ford­able houses and achieve the hous­ing for all ob­jec­tive by 2022,” says Ro­hit Modi, vice pres­i­dent, Credai national (the Con­fed­er­a­tion of Real Es­tate De­vel­op­ers As­so­ci­a­tions of India).

De­vel­op­ers keen to re­vive buyer in­ter­est in the mar­ket are of­fer­ing sev­eral schemes. Some are giv­ing home loans at 6% and 7% and oth­ers are of­fer­ing ‘book now, pay af­ter three months’ schemes. Buy­ers are also be­ing as­sured of ad­just­ment of com­pen­sa­tion if prices fall fur­ther. This has led to a sig­nif­i­cant rise in in­ter­est in ready-to-move-in prop­er­ties and projects near­ing com­ple­tion, says Brotin Ban­er­jee, MD and CEO Tata Hous­ing.

Fi­nally, ex­perts say that de­mon­eti­sa­tion is not enough and must be fol­lowed by con­sis­tent proac­tive mea­sures, oth­er­wise the seg­ment is likely to be flush with black money again.

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