Reflections by Shishir Baijal, Chairman and Managing Director, Knight Frank India
The aftermaths of demonetisation have perhaps come to a full circle. A year back when the government decided to derecognise high denomination currency, momentum in the real estate sector came to a grinding halt. There was widespread heartburn across stakeholders but somewhere the industry was hopeful about a greater good in store.
The expectations stemmed from the government narrative to flush out black economy and bring consolidation back in the sector. While the industry continued to grapple with hope two more structural reforms such as the Real Estate (Regulation and Development) Act 2016 and the Goods and Services Act came into effect earlier this year.
Time and again the back-to-back policy regulations reinforced a slowdown of sorts in an already sluggish market. The residential sector in particular was the worst affected. New projects dried up, home sales slipped to newer lows and piles of unsold stock remained untouched.
The festive period also passed by without bringing any cheer to the sector. Today when we look back at this year full of reforms, it gives us a much more matured view on demonetisation and the subsequent policy interventions by the government.
The short to medium term impacts of this new order is likely to be much more than we had expected. In fact the findings of our latest real estate sentiment index for the September-ending quarter have reinstated this late realisation.
Going forward I feel that the next 12 to 18 months are likely to be the ‘under observation’ period for the real estate sector. Industry stakeholders should spend the period in reorienting businesses in line with the new order.