One year since demonetisation, Impact on Real Estate

.Demonetisation on Real Estate

The demonetisation on Real Estate. With a lot of measures, the sector was clearly pointing towards a slow and gradual, but sure recovery when last year Demonetisation happened. The aim of demonetisation was to curb the use of black money, but the cash crunch it caused contributed to significantly lower real GDP growth in the subsequent quarters. However, the more significant blow to the economy was dealt by demonetisation on Real Estate :

While the economy was recovering from demonetisation, implementation of RERA and the GST caused further confusion. Globally policy changes are done over a period of time so that there’s enough gap to implement the same. However last 12 months saw three major scenarios – Demonetisation, GST and RERA implementation which meant that for almost 6-8 months. There were disruptions in the normal course of work. It also contributed more to the economic weakness that we are witnessing currently and created confusion in all the sectors which hampered growth more so in real estate.

Only in projects where cash component was involved and those in the secondary market saw a significant impact.

RERA  saw most developers go into wait and watch mode and not launch new projects  and the implementation of GST. Without having the necessary infrastructure had a negative impact on the industries connected to the real estate sector.

Having said that, last one year also saw transparency and accountability. Coming in the sector which has led to more institutional investments coming through. (Read PE shifts focus back to Real Estate). All the changes last year also meant market correction & rationalization at some places and hence the current levels are more steady, stable and should start seeing an upturn in next few months.

Implementation of RERA

The implementation of RERA will see consolidation in the industry. Where either the unorganised players with decide to shut shop or will align with the RERA structure. Thereby adding more credibility to the industry.

The next few months are going to exciting for the industry as there’s clarity in the system, attractive pricing is on offer and new projects (Check the most awaited pre launch of Sobha at www.sobhapristine.co) are being lined up by developers.

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