We are nearing the 60th day, where demonetization of high value notes are announced. People in the country still struggling to come to grips. Real Estate in whole ( land, plots, homes, resale properties) is the primary market where lot of black money is used. This looks like a surgical strike on real estate. Real estate as a sector is an highly unorganized sector, where anyone can become a builder or broker. Companies like DLF, Godrej and other established builders may be happy and may not going to get affected, since most of their inventories are highly valued and its funded by banks, resulting their transactions are transparent to some extent for the govt to track. But for the country like India, it is the middle and low level players get the most impact, in the middle to affordable property range.Let’s see, how is this going to affect or effect on real estate, on different factors,
People who I interacted, most of them prefers to wait and watch on how the market is going to settle the after effects of demonetization. A very good percentage of buyers prefer to wait for another 6 months and another chunk of people prefer to hold their buying decision for next 2-3 years. For an industry which is already reeling under pressure, this is a big blow. On the outset people initially who welcomed the idea of demonitization, now realizing the continous ever ending hardships. Buying a small piece of land or home to dwell is every indian dream, which now becomes a mess.
As there is clear supply and demand gap, everyone is looking for a correction in prices, at least 30%. Real estate builders are hoping that the market will improve in 6 months of time and home buyers are looking to wait for more longer time, its all about who blinks first. There is literally no buyer in market. But it is the time, to negotiate and buy at good rock bottom prices. I have already received good number of requests to help in finding a buyer for their flats at low, discounted prices.
This is the one area, home buyers would be happy, as banks are flush with money and no need to spend money in raising funds, interest rates are going to fall. So, it is a good opportunity for home buyers to buy NOW than never. Expect more interest cuts in the coming months, once the dust settles down. I guess will be lot of sops in the next budget slated for feb 1. Already modi has hinted about it.
Real estate regulator bill
2016, saw a major reform, where the govt.has passed the real estate regulator bill, which protects and bind every buyer, developer the country. It has to.be seen, how state govts are going to constitute a real estate governing council. The outcome of this bill is expected to bring huge change in industry.
So, recapping all, its time to invest/ buy at good low prices, the Warren buffet