Demonestisation: Real estate sales in 2016 dip lowest in 6 years

Mumbai:  Real estate already reeling under slowdown received a jolt in 2016, and sales dip to lowest in 2016 due to cash crunch unleashed by demonetisation.

As per PTI quoting real estate consultancy Knight Frank, demonetisation has taken the sheen off the real estate sector as 2016 ended with the lowest launches and sales of residential projects since 2010, a report said.

Sales volume and new launches fell by 23 percent and 46 percent each in the second half of 2016, a report by real estate consultancy Knight Frank said.T

he fourth quarter of 2016 saw a significant drop by 44 per cent year on year and new launches fell by 61 percent, it added.

"Political stability, regulatory environment, enhanced infrastructure, strong investments, approval to the GST bill amendments to REITs led us to the feeling that the year would end on a high note. However, the demonetisation move pulled down the last quarter sales across all cities," Shishir Baishali, chairman and MD Knight Frank India said in a statement.

"The fall in Q4 was intense, H2 2016 ended below H2 2015...2016 ended at launches and sales being lowest since the global financial crisis," he pointed out.

Further, the real estate sector has witnessed a notional loss to the tune of Rs 22,600 crore, in the top eight cities. The government has witnessed a loss of Rs 1200 crore by way of stamp duty revenue loss, in the residential segment, the report said.

The national capital region was the most affected witnessing a de-growth in demand and supply by 29 percent and 73 percent respectively.

The Mumbai Metropolitan Region (MMR) saw launches plummet by 53 percent and sales by 26 percent, the report said.

Bengaluru, which is seen as a resilient market saw a fall for the first time since 2013 with new launch and sales declining by 17 percent and 7 percent year on year, respectively.

The report noted that uncertainty is likely to continue in the next quarter. "It will be important to see how developers recalibrate their business to the changing environment, and whether buyers capitalise the opportunity of various reforms and change," it said.

In comparison to residential, the office market has grown with 2016 office demand holding steady in top six cities and consistent with the 2015 level, the report noted.