One common question on every property buyer and investor’s mind currently is whether the price of real estate will increase, decrease or remain constant. Especially when 2016 ended with a drastic step taken by Prime Minister of India to demonetize 500 and 1000 currency notes. Every sector of the country is affected by the move, including Indian Real Estate which is likely to face long-term consequences, mostly with a short-term drawback and long term benefits!
Here, we will get an insight on the new trends in the Indian real estate market, which is majorly contributing to its restructuring.
1.Global cash flow in India
The world is endorsing India with large investments after its improvement in some it’s ranking like 4th in developing Asia for FDI Inflows. The stable and strengthening modern economy is also perceived as a major reason for attracting more investors from all over the world. The foreign direct investment regime is more liberal as compared to earlier times, which has led to a better ranking of many Indian Tier-I cities in the global market, as per JLL’s Global Real Estate Transparency Index. The Real Estate Regulatory Investment Trust (REITs) is also making initiatives in increasing the transparency in the sector by increasing the regulatory framework.
2.Fall in Land Transaction
It is no surprise that majority of the property transactions in India happen via currency notes to avoid tax payment. Only 20% of value is transferred using cheque, loans from a bank or online transaction which are liable for tax return. Right from developers, engineers, and labourers, everyone prefers taking cash payments over another mode of transaction. Now, with the scarce amounts of cash in hand, the next few months will witness a deep drop in land transactions until the market settles down.
3.NRI Investors can expect higher ROI
2017 is probably the best time for NRIs to invest in Indian real estate market – one because the property price is expected to drop and secondly due to transparent transactions with low-interest rates will benefit NRIs in the long-run. Also, NRIs that are looking to invest in a luxury property in India can expect higher Returns on Investment in comparison to investing in their residing country.
4.Consolidation of the realty sector
With many schemes launched by the government of India providing affordable housing in rural and urban areas, providing finance to boost this sector, structural reforms, demonetization effect and still lack of financial prudence among many realty developers, is leading to a fair consolidation of the market. The consolidation will happen through more joint ventures between the small and big land owners or builders.
5.Real Estate Regulator Bill will encourage fair deals
Real estate (Regulation and Development) bill was passed by the Rajya Sabha on 10th March 2016 and the Lok Sabha approved it on 15th March 2016. The bill came into force on 1st of May 2016 with 69 of 92 notified sections. This bill will help property buyers to make an informed move towards accountable, clear and fair deals in real estate sector which is often denoted as notorious for delays and overpricing.