Infra Talk: Positive days for buyers round the corner

The Union Budget in February is likely to bring in some positive announcements for first-time buyers
Infra Talk: Positive days for buyers round the corner
Fact File

Chennai

When considering the business sectors on which the demonetisation move has greatest pertinence and effect, the real estate sector comes almost naturally to mind, and Indian real estate industry has historically seen a high incidence of cash transactions. However, the largescale turmoil that many market pundits have been predicting is an exaggeration. The market is expecting a correction in the resale properties segment, which is very likely to happen.
However, the primary sales market in the larger cities is not going to be affected, especially when it comes to strong, established developers. Prices have already stabilised in view of the situation prevailing prior to the demonetisation move, and there is minimum chance of further correction – especially in low-end projects. High-end and luxury projects may see a correction to some extent. 
Land transactions, which have historically been driven by cash, are taking a major hit and we can expect a correction of 20-30% in land valuations in the unorganized sector. Lower land costs in emerging areas and smaller cities will eventually result in lower cost of budget housing, as developers will assuredly pass on the benefit of these savings to their customers. Pricing is a critical factor in the current market environment, and no player will lose the chance to offer more benevolent price tags in order to secure business. 
The full impact of demonetisation will be more visible only after the next Union Budget is announced in February. The negative sentiment currently prevailing is likely to be negated to a large extent by some very positive announcements. We expect the Finance Minister to roll out special incentives for first-time home buyers in the budget properties category, and also a positive revision of income tax slabs – which will help reduce the financial burden on home buyers and increase purchasing power. With home ownership always being a priority investment objective for all Indians, this will have very positive implications for the residential real estate sector.
- The writer, Kishor Pate is the CMD of Amit Enterprises Housing Ltd

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