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Currency ban: Why this will make the real estate sector more transparent

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Jayashree Kurup, editor of Magicbricks.com says that PM Modi has actually brought the end-user into sharp focus with his move. Three years ago, when there was a spate of launches in the North Indian market, the end user was the eighth transactor in that process.

NEW DELHI: After the Narendra Modi government on Tuesday withdrew the Rs 500 and Rs 1000 note out of circulation in a major move against unaccounted wealth, the real estate sector has begun to feel the heat. But Jayashree Kurup, Editor of Magicbricks.com, thinks that in the long run, we’re going to see a more responsible, transparent real estate sector thanks to the PM’s move. Kurup on Friday also spoke to TOI about the immediate repercussions of the ban for the sector, and about the specific sub-sectors that will be affected most adversely.

Here’s the transcript of Jayashree Kurup’s interview with TOI.

Could you talk us through the immediate impact that the Modi government’s move to withdraw two denominations will have on the real estate sector?
The real estate sector functions differently in different parts of the country. So let’s talk about North India, where you saw the largest number of cash transactions in property. What we have noticed – and what has been told to us by the industry – is that the secondary market is definitely going to face the heat. If you look across the NCR (National Capital Region) market, or, say places like Chandigarh, you saw that if you were selling a property, a large volume of that – 30, 40 per cent of that – used to be dealt in cash to save on taxes.

Even small retail buyers are quite okay with giving cash. This volume of secondary market transactions is going to face the heat for at least the next five-six months. But end-users who are looking at formal means of finance – which means mortgages – are not going to be impacted. In the South Indian markets and in a large part of the West Indian markets, except maybe parts of Mumbai, we see that the markets were much cleaner, there were much less cash transactions.

You don’t really see this as a long-term problem, you see the market stabilizing pretty soon?
I don’t see this as a problem. I see this as a correction. I think with this, Prime Minister Modi has actually brought the end-user into sharp focus. Three years ago, when we had a spate of launches in the North Indian market, the end user was the eighth transactor in that process. There used to be somebody who would take 20, 40 apartments, and they would block those apartments. When the values went up another 200-400 rupees, they would sell that off to the first level of investors. There were five, six levels of investors before the end user actually entered – because the end user cannot take the risk of delaying construction.

Now what will happen is that all those petty investors who made 200, 400, 600 or maybe 2,000 rupees on a transaction will go away. And then, even if the consumer books at the early stages, and the leverage value goes up at the end of the cycle of construction, that’s a good legitimate investor who has waited out three years, four years, and then decides to exit and then go away. That is good for the market, and I think that is what is going to happen. You’ll see serious investors and you’ll see a lot of end users becoming extremely active in the market.

It sounds like you’re saying that we’re going to be looking at a more responsible, transparent real estate market.
Absolutely. Transparency was one thing that was completely lacking in this market.

You’re going to see by April 2017, all states have to notify the norms of RERA (Real Estate (Regulation and Development) Act, 2016), and they have to start setting up RERA councils, so that it becomes a reality. That’s the first thing that was very, very positive in 2016. The other thing is the Benami Transactions Act. That struck a body blow on a lot of cash transactions. And along with that this demonetization,I think we are going to see a lot more transparency in this market.

How does one account for that transparency?
Every one of the norms that have been issued in the last one year involves people declaring their assets, the construction of the assets, the stage of construction, and where the money is coming and going. Now that’s going to bring a lot of transparency because anybody can then go online, and check on the approvals, the status of approvals, the status of construction, and sales velocity. Today, nothing is declared. As more and more declaration becomes the norm, transparency in the industry will increase.

Do you think there are specific sub-sectors within the real estate space which will be more affected than others?
Yes, I think so. Actually, the maximum impact will be felt in the premium and the luxury markets, because that’s where a lot of cash transactions used to happen. Professionals, I think, largely go for mortgages, but you’ve seen the business community dealing with a lot of cash in that segment – which is already oversupplied in the country, and not a very buoyant segment of the market.

You’re going to see that segment under threat for some more time. But on the other hand, once the market picks up a little more, I see people who have smaller units selling those units, and upgrading to the luxury market.Source: http://realty.economictimes.indiatimes.com/news/industry/currency-ban-why-this-will-make-the-real-estate-sector-more-transparent/55381747)

Source: Economic Times

demonetisation cash,currency,market,modi,real estate,agents,cash,currency,economy,mortgages,professionals,development,transactions,finance,government,retail,construction

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1 Comment

1 Comment

  1. Rahul

    November 22, 2016 at 4:44 pm

    Thanks, for sharing the info.

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50% Growth For Nashik Realty Sector Since Ganeshotsav

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50% Growth For Nashik Realty Sector Since Ganeshotsav

The realty sector has witnessed a positive and welcoming development since Ganeshotsav after a two year phase of recession and other difficulties.

According to CREDAI, the real estate sector has recorded growth of 50 percent in Nashik as compared to last year.  During the same period of last year, approximately 300 flats worth Rs 120 crore have been booked or sold since Ganesh festival, against 150 flats worth Rs 60 crore across the city.

Sunil Kotwal, Nashik CREDAI President, said, “Last two to three years were very tough for us. Now, the RERA Act and the GST have been implemented. The monsoon has been good this year. Hence, a positive movement has started in the realty sector of Nashik, mainly from the Ganesh festival.”

He further added, “There has been around 50% vertical growth between 25 August and 28 September, compared to the corresponding period of last year. Dasara is an propitious occasion for booking properties. We are eyeing sale of more 150 flats worth Rs 60 crore on Dasara.”

He also stated that there are enough ongoing projects in the city and the builders have good inventory at reasonable prices. He concluded, “Hence, this is the best opportunity for those who are waiting to buy homes of their dream. The prices will go up after new projects come up.”

Properties ranging between Rs 15 lakh to Rs 2 crore are available in the city. About 15 new projects have been launched in the city on the occasion of Dasara.

Also Read: Insomniacs Bags The Digital Marketing Campaign Of The Year At The Realty Plus Excellence Awards 2017

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Raunak Group Presents Apna Pehla Ghar Campaign

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Raunak Group, a real estate developer based in Mumbai, has conducted an extensive research and discovered that for many customers in the real estate industry, the home that they purchase is the first true investment they make. Hence, they understand that very feeling and always thrive to help people in achieving their dream of owning their first home. It is with this thought process that they have announced the launch of their latest campaign, i.e. ‘Apna Pehla Ghar’ which aims at helping people own their first home close to the city of dreams, i.e. Mumbai.

Raunak Group presents Apna Pehla Ghar Campaign

The thought behind the campaign is to assist and enhance the vision of the Prime Minister’s dream mission of “Housing for All”, an initiative that was introduced in 2015 which promised affordable housing to the urban citizens. This movement brought in Pradhan Mantri Awas Yojana (PMAY) which gives the customers the subsidy they need, thereby acting as an incentive for them to purchase their very first home.

Hence, Raunak Group is presenting an opportunity to their customers to buy and move into their first dream home in the ready to move buildings in Raunak Group’s township development Raunak City in the upcoming smart city of Kalyan.

Raunak Group presents Apna Pehla Ghar Campaign

Actual Image Raunak City Sector 3 (With Kids Play Area)

The region of Kalyan stands as one of the best pocket-friendly locations where one can find and own their first every dream home. Thanks to its easy connectivity to Mumbai and the rest of the Mumbai Metropolitan Area via amazing roads and local railways, Kalyan caters primarily to the affordable housing segment.

Raunak City at Kalyan is the only biggest development right in the heart of the city and within the limits of the Kalyan-Dombivali Municipal Corporation. This meticulously planned development spans over 35 acres and will be developed in 4 separate sectors. The project has already built and delivered 10 buildings in Sector 2 along with 13 buildings in Sector 3. Raunak City offers 1 and 2 BHK homes at the best prices that one can find within Kalyan.

Raunak Group presents Apna Pehla Ghar Campaign

Actual Image Raunak City Sector 3

Raunak City stands as the best choice thanks to the most affordable prices of its flats. Each home comes packed with amenities like a landscaped garden, children’s play area, community hall, jogging track, common clubhouse with a swimming pool and a gymnasium. Raunak City also upholds its responsibility to the environment by constructing solar panels for hot water, rainwater harvesting and a sewage treatment plant.

Raunak City has an offer that is customized exclusively for their customers. Their ready to move in homes at Raunak City have received their Occupancy Certificate so that one can move in at a moment of their choosing. Along with that, the GST benefit allows an individual to save Rs. 4.08 lakhs while the Pradhan Mantri Awas Yojana (PMAY) benefit allows them to get Rs. 2.36 lakhs back into their savings account, thereby helping each customer save a minimum amount of Rs. 6 lakhs!

With over 5,614 happy home-owners vouching for their reputation, choosing a dream home with Raunak Group is the wisest choice a potential homebuyer can make.

Also Read: Raunak Group Launches Darr Ke Aage Ghar Hai Campaign

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Changing Patterns Of NRI Investment

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Changing Patterns Of NRI Investment

At present, there is more demand for mid-segment apartments in relatively affordable markets than ultra-luxury properties or saturated locations. The once high in demand prime locations are now facing a lull.

NRIs are now keen on investing in smaller projects which they are can either sell quickly or use on their own. Track2Realty data suggests South Indian’s are investing in Kochi and Coimbatore, rather than Bengaluru or Chennai just as Gujaratis are investing Vadodara or Ahmedabad instead of Mumbai. While the Mumbai-born NRIs are investing in Pune and Nashik, the North Indian NRIs are investing in properties in Noida and Ghaziabad, instead of Gurgaon.

Nowadays, it is seen in most of the cases that the clients who buy luxury and super-luxury properties are end-users. Nonetheless, every end-user may not have the budget to spend on luxury or a super-luxury development believes Kaizad Hateria, brand custodian, and chief customer delight officer, Rustomjee Group.

Hateria explained, “The self-employed segment of NRIs, prefer to have an investment portfolio of different projects, instead of putting their money in large developments. They divide their money among various small projects, which enables them to sell easily if they want to, or earn good rental from their various investments.”

Manju Yagnik, vice-chairperson of the Nahar Group says, “NRIs also like to keep the option of existing open, based on the movement of the global economy. A project with a large ticket size takes a longer time to liquidate. Over the years, NRIs have largely invested in properties across metropolitan cities, as it provides them with the lifestyle that they are used, in addition to appreciation and healthy returns.”

He adds that in the present market conditions NRIs are avoiding big-ticket projects. They invest in affordable luxury which ranges from Rs 60 lakhs to Rs 2 crores as this is an attractive and safe option.

According to a survey conducted by Pravasi Bandhu Welfare Trust, a Dubai-based non-governmental organisation, they found an alarming 95% of NRIs in the Gulf do not save anything and return empty handed to India, even after working for a decade. The organization works to improve the lives of Indian workers in Gulf Cooperation Council (GCC) countries.

Due to a high cost of living and low wages, a majority of them fail to save sufficient money. According to the study only 10% of Indian workers in GCC nations, live with families. Thus, the demand for housing from NRIs now reflects ground realities.

Some other NRI statistics:

  1. 95% NRIs are employees and wage earners and cannot afford luxury property in India.
  2. Small-ticket investments provide easier options for exit and better rental returns.
  3. Rich NRIs have burnt their fingers or have learned from the bitter experiences of their peers and hence, avoid luxury properties.
  4. Insecurity in the global job market is forcing NRIs to be realistic in their housing investments, back home.

Also Read: NRIs Fuelling Luxury Housing in Ahmedabad

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