Real estate sector to bounce back in 2017
After demonetisation, the fillip given to the affordable housing sector, coupled with remonetisation which is again bringing cash, as well as the hope of lower interest rates, would all help the sector see returns.
According to experts, there is a high possibility of prices softening in sub-markets or precincts away from city centres and which have seen a lot of housing supply in recent years. For example, in the Mumbai metropolitan region, precincts such as Vasai-Virar, Palghar, Kalyan-Dombivli, Shilphata and upcoming locations around Panvel have a lot of supply.
“Tier-II and III cities, especially those driven by business communities, such as Jaipur, Surat, Indore, etc, will see a higher impact of demonetisation and easing in land prices in the medium to long term. Certain projects in Kolkata’s northern sub-market might witness price reduction in the next three-four quarters. Vacant land in the north of Kolkata would see easing of prices in the next one year,” said JLL India recently.
Demonetisation upset that trend. “(It) pulled down the last quarter (Oct-Dec) sales across cities. The fall in Q4 was intense and the second half of 2016 ended below H2 of 2015. 2016 ends with launches and sales being the lowest since global financial crisis. Uncertainty is likely to continue in the next quarter. It will be important to see how developers recalibrate their businesses to the changing environment and whether buyerscapitalise the opportunity of various reforms and change their status quo position of ‘wait and watch’. In 2017,(there will be) a lower home loan interest rate, Rera (the new segment regulator) & GST (the coming goods and services tax), likely fiscal benefits for taxpayers in the Union Budget, and enforcement of the Benami Transactions (Prohibition) Amendment,” said Shishir Baijal, chairman, Knight Frank India.