Mumbai : It was a year when India’s realty sector was shaken to its foundation. A majority of the big, medium and small realtors across the country suffered from a severe liquidity crunch, stalled projects, elusive investors and buyers and a near-blanket stay on new projects — especially in the lucrative commercial and luxury housing segments. How did demonetisation result in such a severe impact on this segment?
“Essentially, demonetisation completely drained the markets of liquidity, which is still continuing. Banks have all the money but it is not being lent out. Nor is it adequately compensated by alternatives like digital growth,” Niranjan Hiranandani, leading developer and Chairman of Hiranandani Constructions, told IANS. Hiranandani, who is also President of the National Real Estate Development Council (NAREDCO), a powerful body of construction companies, admits that the realty sector took “a battering” at close quarters in the past 12 months. The high-investment construction industry was the worst affected.
The Goods and Services Tax (GST) and the Real Estate Regulation Act (RERA) have not helped either. If anything, they have come in as additional dampeners. The result is that the realty industry is passing through a phase where it seems to be all decked up and having to go somewhere. Hiranandani said that, on an average, around one-third of the realty market was down nationwide, with the impact even higher in the north and the east, even as the cash crunch continues.
The realty sector operated on the basis of unaccounted wealth, which may have taken a hit. Also, the sector was largely unregulated, allowing builders to delay projects at their whim, and investing money raised from customers in other projects or land banks.
Grim outcome
