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What Has Been the Impact of Demonetization, RERA and GST on the Real Estate Sector?

August 31, 2017
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Important points first –

Demonetization in India was announced on 8th November, 2016

Implementation of the RERA Act started from 1st May, 2017

GST implementation started from 1st July, 2017

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These three have come as the biggest reforms of the year and no matter how much you would want to deny their effect, you would still agree that all three of them have already made huge impacts especially when talking about real estate in India.

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However, it is still worth to note what will be the extent of the overall impact of Demonetization, RERA, and GST on the real estate sector and that is what this blog will cover.

 

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The triple impact of these reforms and changes has brought spectacular changes in the regulatory tax and business environment of the country. Also because these landmark developments have happened within a short span of time it is estimated they are bound to create problems till the economy gets accustomed to these changes. However, considering the long term demonetization, RERA and GST are certain to make the real estate industry more transparent for the investors and buyers, boosting the confidence of both the parties.


The Current Scenario

The current scenario of real estate in India is such that the sector is already witnessing a huge and strong rise in the investment inflow from both the domestic and foreign institutional investors. If the reports and analysis are to be believed then the real estate investment has been a whopping $3.15 billion from the various investors in the first half of the current year. There has also been an increase in the transparency after the launch of REIT (Real Estate Investment Trusts), acted as the catalyst for drawing the attention of more investors. These triple policies will lead to consolidation over the next few years. The problem however is that the larger players might gain a lot of strength while chances are that the smaller players will be eradicated due to increase in the compliance cost.

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While it is clear how these three reforms have already and will in future acts like major landmarks affecting the real estate sector in India, it is also important to note that the government must look at addressing the inadequacies plaguing the sector at the earliest.

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