Today we talk about Demonetization. In the simple language we will discuss about the effects of Demonetization on Real Estate. The People who were thinking of buying property or doing investment on property, I want to share some information on the basis of information and experience I have in real estate industry.
Friends, In India If we define property,we have to define cities in our country. Here we can find 3 kinds of cities. One is the mainstream cities like Delhi, Mumbai, Bangalore,etc. Second Mainstream cities like Lucknow, Kanpur, Allahabad,etc. If I would consider the main effects of Demonetization on real estate is will be on 2 or 3 tier cities where main mode of investment was cash. If we talk about mainstream cities the major mode of investment is Loan which was Bank dependent. So it is clear that buyer from mainstream section today has better opportunity while buying a property. For the buyer from 2-3 tier cities have wait for a while to buy a property.
Now we will talk about the main segments of Real Estate to discuss effects of Demonetization on real estate;
1) Residential(Flats,Bungalows,Villas)
2) Commercial(Shops ,Offices)
3) Land
4) IT/ITES Offices
If we talk about commercial spaces,land & IT Offices ,On these segments Loan facility was not available,Cash was mainly involved so theses segments will definitely suffer due to Demonetization(Effects of Demonetization on Real Estate). But when we talk about Residential flats and Primary market , then there are two sections comes in Residential flats as primary market and secondary market which we call as Resale. When we talk about Resale,then it will also get affected by Demonetization because here also the mode of transaction was cash.
But if we talk about Delhi/NCR primary market then in coming 3-6 months it will get an hike of Rs300-500. There are specific reasons for this which I want to discuss here. Firstly due to Demonetization 5-7 Crores will come under tax slab,will pay tax and become eligible to take bank loans easily to Buy property. That means around 4-5 Crores new buyers will be introduced to in real estate market across India.There will be around 2-2.5 Crores buyer will be under 5-10 Lakhs tax slab. The time when we reach a slab of 5-10 Lakh will try to find the best possible way to save their tax as much as they can. On that way there is a facility of EMI which will be the best way to save tax for buyers.
In EMI Process there is no tax have to pay on amount of up to 1Lakh,according to our Government policy. So in Residential and Commercial section buyers will be interested and involve in real estate market in investment point of view which is a good Effects of Demonetization on Real Estate.
Today while taking loan the interest we are giving to bank is around 9.5 to 10% is expected to be lowered down up to 7% according to survey. If believed to the fact When it will be 7% the major section of buyers who are eligible to to pay EMI will also involve in property buying. If we have to pay less interest in loan then there will be less interest in saving as well. If saving interest will be less than people will don’t put their money on Bank rather than doing investment any where else. According to recent survey, around 5% interest will be reduced on saving on bank.
It will give a scope that there will be a major section of people who want to invest their money on real estate rather than keeping in bank. If we do calculation on real estate property of last 5-10 years we’ll find there is a ROI of 15% in real estate market.
I want to say that those buyers who are waiting for the price of the property will be lowered in future,this is the correct time to invest in property as major builders are providing very attractive schemes and offers which is a good effect of Demonetization on real estate for buyers.
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Residential Property will impact on those areas where property rate is over circle rate like Delhi, Gurgaon and main mode of transaction was cash. If we see noida market i.e noida and noida extension where property rate is around circle rate and 99% of the investment is through Bank loan. Here all builders are planning that price will be increased up to 100-200 every month or it will be stable, but not going to decrease. So there will be a major section of buyers will invest at this point of time there is a major chance that there will be a huge price hike on coming 3-6 months .
So Choose your Correct option rather than waiting for correct time as according to Effects of Demonetization on Real Estate ,because this is a Correct time to invest your hard earned money in your Dream Home.
Summary :
So by far on the basis of above information we can say that demonetization will give a positive effect on residential buyers as it deals with Loan EMI but has negative impact on buyers Commercial, Land and IT Offices . This is the correct time to invest in property as major builders are providing very attractive schemes and offers which is a good effect of Demonetization for buyers. So we can say that after demonetization Real Estate will be a booming sector like never before.
