Demonetisation for sustainable growth

Landmark move by the Modi government to demonetise currency notes to stamp out black money will have a far-reaching impact on the capital-intensive real estate sector where almost one-third of transactions still involve unaccounted money. Though initially, in the short term, the government’s bold move will hit the sentiment of the real estate market, already reeling under a recession, in the medium to long-term, the sector will reap the benefits of the greater transparency ushered in by government’s “surgical strike” against black money.  This is especially so when in the last couple of years, the government has initiated a number of key reforms in the real estate sector like Real Estate Regulation Act (RERA), GST, REITs and Benami Transactions (Prohibition) Amendment Act, 2016, besides reforms related to FDI, to bring in transparency.

In a recent development, global player Xander has formed a joint venture with Dutch Pension Fund Manager APG Asset Management to deploy $1b in real estate. Much to the relief of cash-strapped and debt-ridden developers, institutional financing will also come with lesser risk weightage.

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