Demonetization and fund management
Various fund management companies with their investments into the real estate sector have not seen growth in the recent past, irrespective of whether they were into commercial or residential projects. But in the recent wake of various developments by the government the overall scenario of the real estate sector is improving and will improve further as expected by industry experts.
The recent demonetization drive from the government which banned the use of 500 and 1000 denomination notes to be used as a legal tender is also likely to help the real estate sector to grow. The notes of the mentioned denominations were mostly unaccounted and were used to buy resale properties, thereby affecting new projects. Now, all projects will have a level playing field which will be beneficial in the longer run. Moreover, Owing to the demonetization drive the deposits in the banks have grown on a handsome scale. This will help in the recapitalization of banks and will bring down the overall fiscal deficit. This will in turn lead to lowering of interest rates by the banks. Lowering of interest rates will definitely promote liquidity and thereby the customers will find it easier to avail a home loan from the banks. The lower fiscal deficits may also encourage the government to invest in infrastructure and low-cost housing schemes, thereby providing a boost to the real estate sector.
The demonetization and a number of other activities of the government will ensure two things- more transparency in business, which is very much required for overall development of the sector. Secondly, it will promote the development of various infrastructure and other facilities.
The companies which are going to invest into commercial projects are going to reap the benefits, thanks to the development of infrastructure. The fund management companies which are going to provide lease rent discounting or are into project financing business are going to get benefitted in the sense that there will be transparency, which will help them grow their business and the infrastructure development will increase their customer base in the market as well.