Demonetisation has formalised real estate sector, ably supported by policy measures like GST, RERA: Knight Frank India Chairman

Three years since demonetisation, house prices have corrected by as much as 30 per cent in some markets. However, this has not been followed by active revival of demand from domestic buyers or non-resident Indians (NRIs).

“The measures like demonetisation have surely formalised the real estate sector, ably helped by policy measures like GST and RERA. A recovery is not in sight anytime soon due to the severe liquidity crunch following the NBFC crisis, and the overall economic slowdown,” said Shishir Baijal, Chairman & Managing Director, Knight Frank India.

The residential market has begun to revive from the affordable end of the market and there is a slow and steady increase in buyers. However, buyers are currently observing the growth in the Indian economy before taking buying decisions, he added.

He further said, “Potential buyers are only buying if there is a need to self-occupy. Speculative buyers are staying away from the market, thereby contracting the market size significantly.”

What’s even more alarming is that the future sentiment, or the outlook for the coming six months, has also turned ‘pessimistic’ for the first time for stakeholders in the real estate industry. “In terms of zonal data as well, all the zones have seen reduction in their respective future scores since the demonetisation period of Q4 2016,” said Baijal.

Sops for stuck projects

The slew of measures taken by the Central government for revival of real estate sector, especially for stuck projects to get funds, is likely to push up offtake.

“The positive news is that the government is taking measures to solve both supply- and demand-related issues, which will surely help in boosting the recovery of the sector,” said Baijal.

“The inclusion of developments under NPAs and NCLT into the gamut of eligible projects ― albeit these are net positive projects ― into the Special Window Funding is a welcome decision. The extension of this benefit to the mid-income segment ― beyond the affordable housing segment ― is a critical step forward,” he explained.