NewsVoir
New Delhi [India], July 12: The real estate industry is moving beyond cyclical headwinds, according to “Primary Market Set To Gain”, the latest report by R&R, an independent research wing of Rise Infraventures Limited. Sufficient inventories ready for possession at promising prices and RBI’s recent Clean Note Policy that aims at transparency and trust building seem to have turned the wave in favour of the primary real estate market. These emerging trends spell optimism. The plan: Repositioning primary market for a new period of sustained growth and strong returns.
The Key Highlights:
- With the secondary and cash-driven market losing its sheen, new launches and fresh bookings are expected to soar to a new high in the primary market.
- RBI’s recent move to discontinue Rs. 2000 note from September 30 has reinforced buyers’ trust in the primary market which is equipped with sufficient supply and offers promising price points in complete transparency.
- Most Indian homebuyers are end-users who want their purchases to be well-documented and legally above the board. With developers more cautious now about engaging in fair business practices, the buyers’ confidence is at an all-new high.
As part of the Clean Note Policy, the Reserve Bank of India's recent decision to withdraw Rs. 2,000 currency notes from circulation might have raised questions and concerns about the decision’s potential impact on the housing sector. But a recent survey conducted by R&R clearly signifies that this move will have a positive impact on the primary housing sales market. While there are a few who are comparing this move to the 2016 demonetization drive, and fearing a negative impact on the real estate market, but that’s clearly not the case now. The experts predict that this is going to further strengthen the real estate sector in India.
Vishesh Prakash, Head, R&R, explains the trend, “It’s quite evident that the homebuyers will now increasingly prefer to invest in the primary market thanks to multiple favouring factors, including ample supply, comforting price points, and realigned trust and transparency, which has been further strengthened given the recent Clean Note Policy.”
The Clean Note Policy, in no way, can be compared to Demonetization of 2016, as the latter adversely impacted the real estate market, owning to the cash crunch post-withdrawal of Rs. 1000 and Rs. 500 currency notes. It also psychologically impacted the homebuyers, investors, and market players alike, who were left to wait and watch the long-term implications of the move.
But this time around, when the RBI has decided to withdraw Rs. 2,000 notes from circulation, it is not a cataclysmic event, but a gradual process. It is NOT a ban since the Rs. 2,000 currency notes have not been demonetized, and would rather continue to be legal tender till September 30, 2023.
Though it can't be denied that the sudden withdrawal or demonetization of currency notes had negatively impacted the real estate markets of other countries that have faced similar situations, but India’s story has been somewhat different.
On a comparing note, when in 2016, Venezuela demonetized its 100 bolivar note, it adversely affected the country's real estate market. Similarly, Zimbabwe ban of 2019, where it banned using foreign currencies and reintroduced its national currency, the Zimbabwean dollar, which made the country experience hyperinflation and economic challenges.
But even though the Indian Real Estate Market took a hit in 2016, it laid the foundation for a stronger real estate sector. And, in the last six years or so, things have changed in India, for good.
A recent survey indicates that cash transactions in Indian real estate have reduced since demonetization, and, will continue to go down further. In fact, the percentage of respondents who admitted to having paid over half of the amount in cash has dropped from 16% in 2021 to 8% in the new survey.
This indicates that the Indian housing sector has strengthened in a big way since 2016. Buyers and sellers have consciously moved away from cash components. Most Indian homebuyers are end-users who want their purchases to be well-documented and legally above board. And, with the recent Clean Note Policy, a more transparent and trusted ecosystem is awaiting to be unveiled.
Impacts & Insights:
- With a lot of inventory getting ready for possession and market sentiments being bullish, the buyers are once again beelining the market.
- With secondary and cash-driven market losing sheen, new launches and fresh bookings are expected to soar to a new high.
- Despite RBI’s recent move to discontinue Rs. 2000 note from September 30, the homebuyers will continue to prefer primary market, on several accounts, especially due to sufficient supply and heartening price points.
- The graded Rs. 2000 note withdrawal will also not hit the first sales market involving developers and homebuyers.
- Most Indian homebuyers are end-users want their purchases to be well-documented and legally above board, which is now possible with enhanced role of RERA and the recent Clean Note Policy.
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