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Good time for buyers to strike a bargain
The year 2016 saw the realty sector face one of its biggest changes in decades, especially on the policy front. Game-changers like the GST (Goods and Services Tax) and RERA (Real Estate Regulation Act) overcame barriers and are on route to fullscale implementation. However, 2017 promises to be a buyer’s year.
Chennai
The biggest disruptor on all fronts turned out to be the demonetisation drive that was launched on November 8. The move caused considerable turmoil to the sector, but along with the Benami Transactions Act, it promises to bring greater transparency to the real estate business. However, getting back into the groove of business might not be an overnight story as some insiders say.
Shishir Baijal, Chairman & MD, Knight Frank (India) Pvt Ltd, tells us, “The aforementioned factors point to a subdued beginning for 2017. With enquiries, walk-ins and sales drying up as a fall-out of demonetisation, the first two quarters of the year will result in a substantial slow-down in sales. In the first half of 2017, the sector is expected to be largely muted and there would be pressure on prices. With consumers in a wait and watch mode, demand could be subdued due to a mindset that property prices could undergo reduction along with a substantial lowering of home loan interest rates. Likewise, tax benefits in the forthcoming budget will be another factor that could hold back demand for property in the initial quarters of 2017. Since buying a house is a discretionary need –a need that can be postponed, it is anybody’s guess that the real estate sector will be the slowest to recover from the impact of demonetisation vis-à-vis other sectors.”
Others are more optimistic about where the sector is headed in the aftermath of the major reforms. Says, M Murali, MD, Shriram Properties, “With the Centre’s move of demonetisation and reigning in digital economy, the unorganised and under-organised segment of realty, like any other trade or service with high cash economy will be altogether wiped out in due course. This will leave space only for the existing and new reputed developers with best practices.” On the flip side, “It will also create a ‘High Demand’ ‘Low Supply’ scenario, more particularly in mid-market and affordable housing segment— given the lesser number of players on the ground. Home buyers should realise this aspect and understand that “pricing” is a critical factor in the current market scenario and no player will lose the chance to offer the best possible price in order to secure his business. Therefore, the present time is extremely favourable to home buyers to make their move to secure the best real estate bargains.
They should make the hay while sun shines instead of repenting later in terms of price and choice. Buyers are going to have the best time in 2017. With surplus liquidity and lower cost of funds for the banks, lending rates by commercial banks will come down which is good for the sector. Banks may further relax their margin requirement stipulations for the home loans. Home buyers will find it easy go in for housing loans. Consequently, demand for housing will go up.
According to a statement from JLL India, affordable housing will come into sharper focus now more than in previous years. “The country’s real estate markets are definitely poised for growth in the medium-to-long term on the back of further consolidation. Moreover, Real Estate Investment Trust’s promise to open up the real estate market to smaller investors in this year.
Demand in office space requirements of manufacturing, logistics, FMCG, start-ups, e-Com firms, will continue to grow. Even the office space required by eCommerce startups and consulting firms rose, as these sectors are expected to continue with headcount addition to accommodate their business growth in the years to come.”
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