“The real estate sector has been hit badly by the government’s sudden demonetisation move, but it would see a turnaround after March next year.” – Construction magnate Niranjan Hiranandani
A lot of different emotions might be churning deep inside your heart after the sudden declaration of demonetisation. Among many reactions was this one – Many aspirants were looking into real estate as a dream career but paused due to utter confusion, wondering whether or not real estate is still a box of rewards!
Luckily, real estate industry is in excellent position to get past the heavy storm of currency ban. Confirming this very fact, Hiranandani assures that the move would ultimately prove beneficial for both customers and builders. To explain it little; Owning a home is a distant dream for many city dwellers where Unaffordable real estate prices are the culprits, compelling them to stay in rented properties instead. This scenario is soon going to change as the property rates are going with downward force making this distant dream a reality. With expected cooling effect on the pockets of the buyers, residential market’s boost will benefit the developers in equal measures, but in little long term!
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Okay, let’s face it. It does have some negative impact to offer for the real estate sector. But is it going to affect your existing or would-be job in real estate industry? Let’s look at threefold cons first & then decide!
- Eradication of corruption and bribery in this sector is one of the targets of currency ban, particularly while obtaining approvals. However, delays in approvals can still be expected as the authorities are used to receiving cash to fast track the process.
- We are also likely to see an impact on general liquidity in the market and therefore working capital needs for small and medium developers and other businesses will be lot higher in the short term.
- Of the property markets, Delhi-National Capital Region is likely to witness a hard landing as the market is known for highest involvement of cash component.
As it is evident, the negative impact is only going to last for short term. With positive image empowering this sector in near future, it has the power of rising even more as a dream career for aspirants wanting successful career. Leasing and compliance are still “IN” as the alluring areas for students, specifically because the number of deals will increase. Land sales and leasing will be affected only marginally. Wherever land has been transacted via joint ventures, joint development or facilitating corporate divestments, we will not witness any effect of currency ban as such transactions are institutionalized and have no involvement of cash components.
Let’s take a glance at some important pros that real estate sector will enjoy:
- This measure to curb black money will further increase transparency and credibility in the sector, at a time when the setting up of a Real Estate Regulatory Authority (RERA) in each state is set to bring in increased accountability in the markets.
- This move will address the affordability issue of real estate as the land prices will fall gradually improving the sales velocity.
- The primary market which is largely driven by large developers is unlikely to get affected that much as most large and reputed developers already do not deal with cash transactions.
- Institutional funding to developers is bound to see some softening. Also the interest rates are expected to lower.
To sum up, this sector has already taken its first step towards transparent dealings with the noteworthy demonetisation move. Now is the time to combine it with better certified experts dealing in this sector, to make India’s real estate sector touch the global level.
As an additional informatory help, you can look up to RMS which is a Hub Partner of well known institute TISS, aiming at a better developed nation through its level up courses – also in real estate!