Last year 8th November’s announcement made by Prime Minister Narendra Modi, demonetising 86 percent of the country’s old currency overnight, widely impacted the economy and real estate sector was no exception.
The effect of demonetization in real estate sector can still be felt, but surprisingly the sector has shown resilience, demand has started slowly picking up in the Western & Southern markets which is contrary to the predictions made by most of the analysts
Discussing the impact of demonetisation, NAREDCO, a prominent association of real estate developers and other stakeholders in the country has expressed optimism with regards to the sector’s future. Dr. Niranjan Hiranandani, President, NAREDCO says “Past one year has been an eventful year and the real estate sector has experienced a roller coaster ride. There were ups and downs but fortunately, things are on revival mode as of now. Past one year not only witnessed demonetisation but also other big policy developments like the implementation of RERA as well as big taxation reform like GST. To be honest, all of these have had their own share of teething troubles but fortunately so far things are under control. Demonetisation has led to greater efficiencies and transparency in the real estate sector and we welcome this. Just like their impact on honest taxpayers, these developments have helped the sector as well.”
The government’s vision of “Housing for All by 2022” has also helped the real estate sector in overcoming any possible adverse impact of demonetisation. Particularly, the affordable housing sector has immensely benefited. With special incentives coupled with overall softening of interest rates, this segment is a ray of hope for the sector.
Government’s vision of Housing for all by 2022 will go a long way in promoting the real estate growth in the country. Affordable housing is a segment which particularly gets benefitted from this initiative. This will create a tremendous amount of opportunities for the sector and ultimately all the segments shall benefit. The government will surely look up to contribution even from the private developers to make this dream a reality with its newly launched PPP policy. In India, real estate is the second largest employment generator and is slated to grow at 30 percent over the next decade. The Indian real estate market is expected to touch US$ 180 billion by 2020. The housing sector alone contributes 5-6 percent to the country’s Gross Domestic Product (GDP).
The sector thus far has managed to stay afloat because of various government schemes introduced to incentivize Affordable Housing sector, but there is a growing need for tax rationalization and some stabilization now. We are aware that the implementation of GST and RERA, have added to the challenges of the real estate sector, but going forward, the net impact of these policies, would be positive and the sector should be able to witness an enhanced sense of transparency and accountability.