Property To Become More Accessible For Common Man, Says Gulshan Homz Director

Prime Minister Narendra Modi's demonetisation move, touted as a bitter pill that will cure the real estate sector of many of its ailments, is a step which is being cheered by developers across the country. Many are of the view that the move is likely to make property more affordable, among many other positive things. Deepak Kapoor, Director of Gulshan Homz and President of CREDAI-Western UP, shares this view. In an exclusive interview with Anindita Sen, Kapoor tells PropGuide that property is expected to turn more affordable for the common man.

Edited excerpts:

Sen: Which cities do you think will be the most affected by the demonetisation move?

Kapoor: All cities would be equally affected, Tier-I, Tier II and Tier-III. However, primary real estate would not be a sufferer in any of the cases as this market formed by projects undertaken by reputed developers; buyers, too, take home loans to finance their home buying process. But, the secondary real estate market might take a hit as a large part in most deals is paid using unaccounted money. Also, transactions on plots may take a big hit in the metro cities, where the existing circle rates are much lower than the market rates. 

Sen: What kind of price correction will the property markets witness?

Kapoor: Again, it is only the secondary market where we can expect a price correction. Prices of plots and villas would also see a correction.

Sen: Will developers reduce property prices? If yes, what could be the limit? 

Kapoor: There is neither the scope nor the need for developers to reduce prices, as the market is already running at a breakeven price. Property prices in the secondary markets will see a correction but that will be nowhere in the hands of developers. Developers who conduct their business with honesty will survive. 

Sen: How far the land prices will get affected?

Kapoor: Land parcels which are purchased from the authorities towards plotted development will not be affected but independent developments and builder floors will be affected, where cash transactions were predominant.

Sen: As property prices are expected to decline, which segment (apartments, individual house, raw land) is going to experience the highest number of sale? 

Kapoor: The volume of sales would still be the highest for apartments because there are a lot of benefits which one gets while purchasing them.

Sen: Because of demonetisation, who will be the ultimate winner in real estate sector, buyers or developers?

Kapoor: Real estate has always been a sector driven by buyers, and if buyers are not the ultimate winner in any given scenario, the sector will not survive. There must be provisions where the developers and buyers should attain a common ground, allowing the system to run smoothly. 

Sen: Because of a liquidity crunch, developers might go slow on construction part. This may delay the completion of projects. How far is this going to effect in long term?

Kapoor: There is not going to be a liquidity crunch at any stage in any of the channels. In fact, banks will witness greater liquidity, allowing them greater opportunities to lend at lower rates. Lower interest rates are bound to impact the output cost, and as a result, the overall cost of housing would decline in the long run. Even in the short term, there will not be any deflection in the growth graph of the sector. 

Sen: What will be the impact on FDI (foreign direct investment) investors?

Kapoor: Funds are required to complete any project, be it residential or infrastructural. Even the government requires funding from external bodies to complete its projects. In such a scenario, when there is no parallel economy running, everyone's eyes would be set on funding which is available and FDIs are bound to be more in demand and much sought after. 

Sen: With demonetisation, buying a home will be within the reach of a common man as there will be more transparency in the sector. How so? 

Kapoor: Monetary transparency was already prevalent in the market, and with the government's move of demonetisation the ultimate dream of buying a house will get more accessible for the common man. With the implementation of the Real Estate (Regulation & Development) Act, 2016, and the Goods and Services Tax regime, things will become even more transparent.