Mar­kets to make grad­ual re­cov­ery af­ter note ban

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

While there was a V shaped re­cov­ery( when mar­kets dropped and re­cov­ered sharply) af­ter 2009, a U shaped re­cov­ery (grad­ual re­cov­ery) is ex­pected this time around, say re­alty ex­perts. The Lehman cri­sis hap­pened in Septem­ber 2008 af­ter which trans­ac­tions in the real es­tate mar­ket came to a stand­still.

“A V-shaped re­cov­ery be­gan in 2009. Mort­gage rates were brought down to around 8.25% in March 2009. In the first half of March 2009, a rate cut led to 18% growth in sales. There was an­other 50% growth in 2010. It was V-shaped re­cov­ery be­cause the mar­kets col­lapsed af­ter Septem­ber and re­turned with a bang boosted by a cut in mort­gage rates,” says Ra­jeev Bairathi, ex­ec­u­tive di­rec­tor and head cap­i­tal mar­kets In­dia, Knight Frank In­dia.

Low mort­gage rates this time will play a big role in the sec­tor’s path to re­cov­ery – a U-turn re­cov­ery, he says. This is be­cause the trough is deeper now than that of 2008. The slow­down in the mar­ket started way back in 2014 and con­tin­ued into 2015 and 2016. It lasted for over two years be­fore the de­mon­eti­sa­tion blow brought it to a sud­den halt. This could last for a few more months.

Mar­ket re­cov­ery now will be more durable be­cause the sec­tor has en­dured pro­longed pain for al­most three years. The first as­set class to lead the path of re­cov­ery will be af­ford­able hous­ing, says Bairathi.

Fis­cal in­cen­tives on home pur­chase could go a long way in re­viv­ing de­mand and any move to­wards ad­dress­ing this in the bud­get will give a huge boost to the real es­tate sec­tor.

Newspapers in English

Newspapers from India

© PressReader. All rights reserved.