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Demonetisation has Beneficiary Long Term Impact on Real Estate with Initiatives of RERA and GST

The transparency brought in by demonetisation, aided by RERA, GST reforms and liberalisation of FDI norms, has boosted the performance by fair Real Estate companies.

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Long Term impact on Real estate
Long Term impact on Real estate has been depicted by Demonetisation.Wikimedia.

New Delhi, October 4: Though the government’s radical measure of demonetisation has disrupted the economy and has hit the real estate sector — already reeling under prolonged slowdown — it will turn out to be a blessing in disguise in the medium-to-long term.

As an asset class, real estate has been a big source of generating and consuming black money. The cash component in real estate has been there at various levels, beginning with land transactions where it amounts to 30-50 per cent. The cash payout is quite high in luxury housing too. The consumption of cash has been as high as 30 per cent in secondary market transactions.

The primary market transactions, however, are by far bereft of cash component as home purchases are financed through loans from banks and housing finance corporations. It is another matter that even in primary market deals, developers have been encouraging cash payouts by luring property buyers with good discounts on property price.

The speculative buying by investors through offerings like underwriting and pre-launches has also been involving cash payout, leading to artificial price hike and in turn making homes out of the reach of masses.

Demonetisation, coupled with the government’s move to check benami transactions through legislation and curbs on cash transactions, was meant to clean up the system.

This sudden ‘shake up’ was, however, not without its adverse impacts. Demonetisation badly affected the liquidity in the capital-intensive real estate sector, deepening the problem of massive fund shortage/cash crunch faced by developers reeling under delayed deliveries, which deterred buyers from purchasing property.

long term impact on Real Estate
There are long term impact on Real Estate due to Demonetisation. Pixabay.

The impact was more evident in markets like NCR and Mumbai which were largely investor-driven, compared to southern markets of Bengaluru and Chennai and even Pune in the west, which have been end-user driven. The premium/luxury residential segment, in which the cash component was more in transactions, got impacted by demonetisation.

Real estate experts’ belief that the impact of demonetisation is only short-term and will not have long-term impact, stems from the fact that developers who have been following transparent and fair practices have not been affected by demonetisation and instead it worked out to their advantage.

This also turned out to be a positive development for big global real estate consultants like JLL India which doubled its profits in 2016 over 2014-15, with 60 per cent revenue growth.

One key positive impact of demonetisation and RERA (Real Estate Regulation Act) has been that speculative investors deserted real estate and end-users/genuine buyers, who were all these years pushed to the sidelines, came out in large numbers. Now, it is the property consumers who are driving the real estate market, especially residential market, aided by the government’s pro-industry and pro-consumer initiatives.

The step to promote affordable housing and according real estate industry status for the purpose of making easy and cheap funds available to the sector also helps.

Demonetisation has particularly boosted foreign funding. The transparency brought in by demonetisation, aided by RERA, GST reforms and liberalisation of FDI norms, has boosted the confidence of foreign investors, which is clearly evident from the spurt in foreign investments, particularly from pension funds.

This will inject much needed liquidity in the sector starved of funds. Targeting consumers, the government under the Pradhan Mantri Awas Yojana (PMAY), is providing substantial interest subsidy to home buyers. The clampdown on floating cash in the system has contributed significantly to curbing inflation which, in turn, helped RBI in cutting interest rates, thereby boosting home buying.

The proposed measures to liberalise FSI norms and rationalise stamp duty, will give further fillip to the residential sector, particularly affordable housing.

Demonetisation had a salutary impact on property prices by curbing cash transactions and checking speculative pricing, in turn increasing affordability, which is a key to achieve the government’s flagship mission of ‘Housing for All’. RERA & GST are further aiding demonetisation to control prices.

long term impact on Real Estate
Demonetisation aided with RERA and GST will put long term impact on Real Estate. Pixabay.

The key provisions in RERA, to speed up project completion, by checking diversion of funds through mandatory escrow account, stringent penalties to check project delays, together with the government’s move to make all building sanctions online, will go a long way in checking time and cost overruns of real estate projects, thereby controlling home prices.

The ban on pre-launching of projects under RERA will also check artificial spurt in pricing. GST has come to tackle the flow of cash in the purchase of building materials by introducing input credit tax. Further, the government’s plans to liberalise FSI norms, especially for affordable homes, and rationalising stamp duty will have a sobering effect on property prices.

But for some little lingering effect, economists and real estate experts believe that the overall downside impact of demonetisation has faded and its impact is not going to be there in the next quarter.

Says Ashwinder Singh, formerly CEO of JLL India & now CEO of leading real estate consultancy, Anarock Consultants: “Other than in terms of the initial confusion-induced decline in sentiment, the trend that is emerging now, points towards a recovery in buying sentiment with serious buyers already returning to primary markets.”

The entire demonetisation exercise undertaken by the government and aided by other reforms, like Benami Property Act, RERA and GST, is to be looked at in the backdrop of the government’s multi-pronged policy to create institutional and regulatory framework for speedy and steady growth of the economy. And at the centre of all these initiatives is real estate, which is a key contributor to GDP. Going forward, these policy initiatives will help make real estate more organised, transparent, credible and affordable, making the sector investor and consumer friendly. (IANS)

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Top 3 Cities in Florida to Buy Real Estate in 2019

Looking forward into 2019 and beyond, Florida is a friendly and welcoming place to invest

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If you are like most people, then for summer vacations or to retire has crossed your mind. There is so much to enjoy for the whole family, either indoors or outside, having fun in the sun. Florida is one of those states that has it all because the weather is ideal year-round, the beaches are pristine, and there’s always a new way to take it all in.

When you think about buying in Florida, you probably think of a few places first, like Miami, and you would be right to do that. But, there are several other cities that will give you a high-quality lifestyle, while providing you with a solid financial real estate investment, as well.

Let’s take a detailed look at the top 3 cities in Florida to buy real estate, and why.

Florida
Buying a home in Florida In 2019, Pixabay

Miami, Florida

When you think about Miami, many things come to mind, but if you haven’t visited in person, it’s hard to get the full picture. Miami is a vibrant mix of old-world character and new modern lifestyle, all wrapped up in one. You can find neighborhoods in Miami, such as Belle Meade, that have homes built in the 1930’s that stimulate your senses and imagination. You can literally imagine yourself living in a new beach-side, pioneer town, just discovered by people. But, amidst the old-world feel, are touches of modern amenities, giving you the perfect balance of history, character, and contemporary creature comforts.

Another well-known fact about Miami is that it’s home to the best nightlife in the world, literally epic, and people flock to Miami’s South Beach to be a part of it all. There are famous night clubs like Liv in the Fountain Bleu hotel, where celebrities can be seen any day of the week, partying and having fun. Of course, there are luxurious condos on South Beach in buildings built by world renowned architects and designers. They can be small, yet well-appointed studios, to large, over- the-top penthouse condos.

Miami
Another well-known fact about Miami is that it’s home to the best nightlife in the world, literally epic, and people flock to Miami’s South Beach to be a part of it all. Pixabay

Another way to invest in Miami’s real estate market is buying a luxury mansion on Star Island, Coral Gables, or any number of prestigious addresses in Miami. These properties are ultra-exclusive and can have 10 bedrooms or more. They can be adorned with stylish furnishings, and have amenities like saltwater swimming pools, arcades, Italian marble, and more.

Before you run out and see the homes for sale in Miami, you might want to contact a respected Realtor, because investing in Miami real estate comes with a hefty price tag. It’s not uncommon to spend a million dollars or more on a property that still may need renovations.

Orlando, Florida

The one place everyone with kids is already familiar with is Orlando, FL. Home to Mickey Mouse and the entire Disney World family, Orlando represents some of the most innocent times and memories we have as children. It also has one of the hottest real estate markets in the nation, with a median home value of $250,000. It is much different than Miami, since most of the homes in Orlando are newer and full of cutting-edge technologies and building materials.

Orlando real estate investing makes sense, and with so many attractions (Universal Studios, Epcot, Sea World) bringing millions of tourists per year, it will stay that way. Orlando’s home values have increased steadily through the years and investors can expect to see that trend continue in the future.

Treasure Coast of Florida

If you enjoy a more laid-back lifestyle, and you appreciate the outdoors, beaches, and waterfront activities, then the Treasure Coast may be the place for you to invest in 2019. It is comprised of several small cities, such as Port St Lucie, Stuart, Palm City and Hutchinson Island. The reason that it makes sense to invest here is because there’s any and every type of real estate available at affordable prices. But, just because it’s more budget friendly, doesn’t mean there aren’t new and breathtaking waterfront mansions that can cost millions.

But, for the most part, you can buy a property for considerably less, depending on what type of real estate you want. The Treasure Coast is truly special, and one of the untouched coastal gems in Florida. The waterways are pristine and wind through all the cities, respectively. People love all the golfing communities, which are built around championship courses and amazing golfing centers.

According to top Treasure Coast Realtors, there are numerous single-family homes for sale in Port St Lucie situated on oversized, waterfront lots. Owners have deep-water ocean access, plus room for large yachts and other water toys.  

For those looking to retire beach-side, there are oceanfront condos available on Hutchinson Island in full-service buildings. Who wouldn’t want to wake up to a salty breeze from the Atlantic Ocean from your bedroom window? These buildings offer full fitness centers, concierge services and endless outdoor activities at your doorsteps.

Also Read: How Real Estate Regulatory Bill can help ailing Real Estate sector

Conclusion

Looking forward into 2019 and beyond, Florida is a friendly and welcoming place to invest your money that will not only pay dividends, but give you the quality lifestyle you want to enjoy. No matter if you want to live on the beach, near Florida attractions, or near the electric nightlife in Miami, Florida delivers. Just remember that hiring a local Realtor will save you both time and money, because they know the areas better than anyone else. Make sure you research the agents before you hire them to ensure they are the authority in the cities you want to live and invest your money.