How demonetization has affected real estate companies and developers

1. How demonetization has affected real How demonetization has affected real estate companies and developers estate companies and developers After November 8, 2016, the hailing of ‘demonetization’ has probably turned out to be the most debated topic in the nation. The time has now come to tame these wild rumours and uninformed agony about its impact along with other macroeconomic and policy changes in 2016 on the real estate sector. Let’s have a bird’s eye view of the entire market. Pre-demonetization For the past few years, there has been a significant change in the real estate sector when it comes to sales and overall growth. With several measures implemented, the sector clearly indicates to a slow and gradual but a sure recovery. • Sales and prices After going through a constant stagnation period, the first half of the year saw an upward movement in the real estate industry. Prominent among all these was the growth in the Indian Economy, which encouraged real estate developers to offer attractive deals and discounts to their customers. The discounts offered by them encouraged potential buyers to finalize the deals at the discounted prices that were earlier put on hold. Hence, the scenario inspired the end users and they started entering the market.

2. • Unsold inventory Except few of prominent markets in Delhi-NCR including some NCR markets, had gradually seen a decrease in the unsold inventories that was choking up the liquidity of the builders. This was because the market was flooded with high priced residential properties against the demand for affordable ones, which was a clear indication of demand-supply mismatch. Therefore, the real estate companies started giving lucrative offers and negotiated the prices to sell off the properties. • New launches New launches significantly reduced in the financial year 2016-2017, as the developer was more focused in disposing of the developed projects. In addition, the new launches tried to cater to the demand for affordable housing instead of the high priced projects. Post Demonetization Demonetization created many confusions and uncertainty in the market especially, to the rumours related to reality sectors. Certainly, most were affected by this radical change in the market, which also slowed down the economic activities on a larger scale. Though everything settled and came back to its original position, the same thing did not happen with the real estate sector. Rather developers are on the verge of shutting down their shops, as there was drastic fall in the purchasing habit of properties in the buyers. Hence, it is a sentimental driven sector, which contributes 5-6% to the GDP. However, actually, the radical change has lowered the home loan rates and is in the process of going down more which is actually the ideal scenario for the end users to invest.