Demonetisation has changed the way the industry functions. With no scope left for developers who were highly dependent on the cash support mechanism, affordable housing became the new mantra post the move.
The market witnessed the emergence of new developers post demonetisation. Not only it helped to reduce the land prices, but also left the customer spoiled for choices, avers Agnelorajesh Athaide, Co-Founder –SAVV Global VNCT Venture, in an exclusive interaction with 99acres.com.
Three years post demonetisation, is the industry still reeling under the impact it brought along?
It has been three years post the announcement of Demonetisation. While majority of the people have now forgotten the impact it brought along, the move definitely changed the way the real estate game is played. It is now more transparent and accountable. It has created a level playing field. By limiting the power of money, demonetisation has made the customer more powerful.
Has the industry inched towards a full-fledged recovery yet?
The developers who were initially dependent on the cash support mechanisms have eventually left the market. The power of cash investments had motivated many developers to buy land at non-practical rates. These projects have now taken a beating as the investments were illogical, and the market does not support offering distorted rates to the customers. The market has witnessed the emergence of new developers. Moreover, the corporates who are developers are witnessing growth and expansion. To apprise, these were never a part of the cash economy initially.
How is the current scenario of housing demand and supply in Mumbai?
The real estate market majorly depends on two factors-the size of the unit and property prices. While the supply is not matching the size and price of the property at present, the demand is definitely present. However, the demand of the customer in terms of specific preferences is not being fulfilled. Affordable housing has become the new mantra. If Bandra, for instance, is at 50,000 per sq ft, a product at 35,000 per sq ft would be considered as an affordable offering. Similarly, in thane, if the average rate is 7, 500 per sq ft, an offering of 4,000 per sq ft would be considered as affordable.
Was the move successful in rationalising property prices in your Mumbai? If yes, to what extent?
Yes indeed. It has completely changed the game. First and foremost, it has brought down the land prices, which is the most crucial aspect of real estate development as an input cost. The customers have been on the beneficiary end, as the developers have been offering multiple choices. Therefore, the customers have the advantage of negotiation.
What are the current challenges that are hampering the realty revival in your city?
Some of the major factors that have been hampering the growth of real estate in Mumbai include lack of financial backup for realty projects, cost of government charges, speed of approvals, and lack of encouragement from the government.
How do you expect the market to fare in the coming 5-6 months?
The market is indeed on a path to revival. The improved transparency and accountability in the market have instilled confidence amongst the buyers. A lot many Non-Resident Indians (NRI) are investing in real estate. This is because of the strong value of dollar and the easy availability of real estate at convenient prices.