“The market has started recovering after the twin impacts of demonetisation and GST. Each quarter we see an improvement over the previous quarter sales,” says Sanjay Jain, Managing Director of Kolkata-based Siddha Realty.

This is the story across real estate developers who feel that the market is finally witnessing an upswing.

As Surendra Hiranandani, CMD, House of Hiranandani, points out, the residential sector was more impacted with subsequent implementation of GST and RERA. Developers got busy in registering their projects under RERA and buyers decided to be in a wait-and-watch mode, which hampered growth in the sector and led to loss of sales for six months.

In fact, if one takes out the hiccups due to GST, the story a year post demonetisation is different. Industry sources say there has been no long-term negative impact, as was perceived. Rather, demonetisation helped bring in more transparency.

According to Anshuman Magazine, Chairman, India and Southeast Asia, CBRE, overall, demonetisation has proved to be a good move for the sector. “It was one more way to bring in more transparency into the real estate sector,” he told BusinessLine .

“While, demonetisation did result in some short-term pain, primarily in the secondary sales market, there was no long-term negative impact,” Magazine added.

One of the side-effects of demonetisation was that construction activity took a hit. Developers, mostly smaller ones, stopped construction work albeit for some days. Many also admit to have run short on meeting operational expenses like wages or procurement of raw materials. Credit or repayment cycles to suppliers were hit.

But things started recovering March onwards, says developers.

In fact, developers agree that user-driven markets like Kolkata hardly saw price of property dip or there being a pile-up of unsold stock in such markets.

South side story

In Chennai, real estate took a hit with demonetisation. Ajit Kumar Chordia, President, Confederation of Real Estate Developers’ Association of India, Tamil Nadu Chapter, says sales and collection during the period after demonetisation came down by 80 per cent.

Shankar Arumugham. National Director - Strategic Consulting, Jones Lang LaSalle, says the continuing lull in the market is the combination of demonetisation and low employment generation due to a global economic slowdown.

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