New PM Policy Impact On Indian Real Estate Market

Sudden ban on Rs. 500 and Rs. 1000 denominations and instruction on depositing the notes in banks with only 50 days of time period have shook the country. This is not merely a change in currency notes but the entire economy of India. With respect to the rules and acts cited by the Modi government, the black money flow is expected to come under control.

Moreover, the penalties on cash deposit of the amount mismatching the income will change the entire market upside-down. With market shares seeing huge fall, the real estate is also to see a drastic change.

Expert View:

As the director and real estate expert of DNA Ventures, Mr. Ankur Maheshwari shares his views, he suggested that the change brought by the Government will have some positive as well as negative impact on real estate. “With the recent Modi announcement for demonetising Rs.500 and Rs. 1000 currency notes in India effective from 09.11.2016, real estate is expected to face another hurdle to revive,” says Ankur. “The real estate industry was already going through a phase of stagnation. With Modi government’s investment-friendly policies that encouraged Foreign Direct Investment (FDI) in property segment, the positive sentiments were evoked within real estate industry but, the transformational reform has again brought this segment on the verge of crash,” he added.

He also cited some of the expected impacts on real estate in time to come.

  • Decline in property rates are highly expected.
  • With fewer buyers in market now, the demand for the property is expected to go down. According to the demand-supply theory, once the demand deprives, the prices tend to fall due to supply of property on higher side as compared to demand.
  • People involved in an on- going property deals might face difficult time.
  • But on the positive note, this move by Modi’s government will bring more transparency in Indian real estate segment and will make it more lucrative as an investment option to foreign as well as domestic investors.
  • Moreover, this decision will bring institutionalisation in real estate and thus, bring in more credibility which was lacking till date.
  • Housing sector is expected to witness a revival in demand with downward pressure on the prices.
  • It will bring good opportunities to the investors who are willing to invest in real estate for future benefits.

With the reduction in currency circulation, economy may experience Deflation as a current impact. Both inflation and deflation balances each other, but inflation will take time to occur.

Expert Advice:

Looking at the current situation, Mr. Maheshwari gives some advices to the people looking forward to get involved in real estate deals.

To Do:

  • Deal with reputed builders.
  • Invest in real estate if looking for benefits in future.
  • Invest in ready to move in properties will be more beneficial.
  • Avoid Selling out your existing property
  • Buying second property can be beneficial for Long term Benefit.
  • Investing in commercial sector is recommended.
  • Read the Documents carefully for Land Ownership and NOC from Authority.

Not To Do:

  • Do not deal with Builders with new name and unknown background.
  • Investing in Under Construction Projects irrespective of their future plan.
  • In panic, do not invest in any Project without verifying it.
  • Do not get trapped with attractive Sales offers, expected to come in coming days through the builders.
  • Avoid getting into any Barter deal with any builder without checking their financials for project completion.