Monday, 5 December 2016

Real estate industry will boom again post demonetization!

Real estate and accommodation industry is the mother of all Industries with 100% capital,  100% labor. It's our own industry with 100% Indian contribution for its development.

Reasons why real estate industry will be in demand?

The below views are from an various industry experts on how the demonetization will boost real estate.

Last few days there has been a surge of messages from "Whatsapp Economists" with the simple theme that real estate prices will fall drastically due to Demonetization. That is ban on Rs. 500 and Rs. 1000 notes.

Here's a few Point summary of what actual experts with business and economic logic say:

  • Demonetization will flood the banking system with funds driving down both interest rates on deposits and loans.
  • If interest rate on fixed deposit comes down to 5-6 % then home Loans will come down to 7-8 % (since banks keep a margin of 2%-3%).
  • Historically at such low interest rates real estate industry gets a massive boost as property becomes attractive to everyone which includes real buyers, investors and middle class working professionals.
  • Even if the prices are kept as it is, small apartments, residential plots and duplex come within the reach of buyers due to lower EMI on loans.
  • Investors find investing in property more attractive than earning a paltry 5-6 % on bank deposit as  simply buying and renting out gives them more return and apart from it they create an asset and earn appreciation over a period of time.
  • Shopkeepers, retail malls, corporate houses and even professionals like doctors, consultants, chartered accountants can invest their money in real estate if they are getting loans at very reasonable rates from banks.
  • Demonetization will see the most money flowing in banking system from people in the unorganized / small scale sectors like farmers, traders, artisans, hoteliers, beauty shop owners, tuition classes, small contractors, maids, drivers, security guards etc. Crores of new people will enter into the banking system and they will be able to get loans from the banks to fulfill their dreams.
  • Government will have money to invest in infrastructure as banks can deploy huge amount of money in government securities. With a few lacs crore at its disposal, government can boost funding to infrastructure schemes such as smart cities, swacch bharat mission, affordable housing, new airports, national and state highways which will lead to better connectivity which can increase demand in tier II and tier III cities.
  • It is interesting to note that real estate prices show slower rise in countries which have a fully ready infrastructure like USA, UK, Japan etc. Whereas in a developing countries like India, there is a vast difference in prices in a cities before and after the development phase of quality Infrastructure.


Recent developments such as passing of Real Estate Regulation Act (RERA), demonetization, GST Bill combined with government focus on infrastructure will only serve as positive factors for growth of real estate industry

Important factors of real estate industry:

  • Real estate industry contributes 7 % to India's GDP. 
  • Second highest employer after Agriculture.
  • Real estate industry supports more than 140 allied industries from large ones such as steel, cement and transport to smaller ones such as bamboo and rope making.
  • Real estate industry caters to the basic need of shelter for every citizen.
  • As per Government of India, more than 90 per cent of demand for real estate is in affordable and mid range category.
  • Biggest industries which contributes large share of taxes at all levels of Government: Municipal Corporations, State Government (VAT and Stamp Duty), Central Government (Service Tax and Income Tax).
  • Investments such as equity shares, commodities like Gold, Silver, Mutual Fund etc have seen large ups and downs. Real Estate is the only asset class which have given stable and constant growth over last several decades.
  • Real Estate has both value in use and value as investment.
  • Real estate investment is the best investment from a very long term angle as taxation happens only on sale and in case of reinvestment 100% tax can be saved.

With Indian economy becoming increasingly urbanized, it is expected that more than 50% of India's population will live in cities by next decade. This massive change in demographic and economic profile of the country will give big boost to real estate market.

Wednesday, 5 October 2016

Investment In Smart City - Gujarat - Dholera Sir

Dholera SIR – The most promising location for Investment in Gujarat

Dholera SIR is becoming the most promising location in Gujarat as of now even for multinational companies and foreign investors. If you look at the reports of Vibrant Gujarat Summit 2015, there has been lot of MOU’s signed by Indian Companies as well as MNC’s for putting up their setup at Dholera. Looking at the development perspective Central and State Government are also putting their energy and money for faster development of DMIC, Metro Rail, International Airport, 6 Lane Expressways and much more.

“Make in India” campaign launched by Honorable Prime Minister of India supports the development of Industrial Corridors in India which will increase manufacturing capacity of our country and generate sufficient amount of employment for the youth.

Current scenario of Dholera SIR indicates that its development is now going to be on fast track. If we see the last year and current year development many new projects and plans have been given green signal. For example Airport Site is been given clearance and area for the same is also decided, Work of 6 lane expressway has been started and Gujarat Govt. has opened up a local office on 17th Feb 2015 at Dholera SIR to boost the development.

Recently the Gujarat government has already floated RFQ’s for about Rs 2,000 Crore of infrastructure works that it plans to undertake in the 22.5 square kilometer of “activation area” within the Dholera SIR that has been created to act as a catalyst for further investments from local and global players. Various infrastructure projects that will be developed in this “activation area” include 72 kilometers of roads and utility services, potable water supply, desalination plant, waste water treatment plant, 430 MW of power infrastructure, 500 kilometers of conduits for creating an Information and Communication Technology (ICT) network and 14,000 square metres of built-up area that will form the administrative and business centre for Dholera in Phase-I. Gujarat Government has also approved 6 town planning schemes till date.