First, it was the demonetisation drive of November 2016. Seven months later came the GST, executed haphazardly. And now, the economic slowdown spread across the nation.
The slowdown has struck the real estate sector in Kozhikode at a time when it is gradually wriggling out of the double whammy of stagnant growth and rising debts. People are increasingly turning reluctant to put their money in real estate, and those who have been planning to buy houses, flats, and properties are now postponing their purchases in view of the recession.
“The real estate sector in Kozhikode is in a bad shape with even genuine buyers keeping away, thanks to demonetisation,” says K. Rajeev, a real estate investor.
People who have cash prefer to invest in gold despite the prices of the metal ruling high, he noted. In the past, land brokers and dealers used to jack up prices. “Probably, property prices are in for a correction,” Mr. Rajeev said.
Many feel that land offers no liquidity during an economic slump. “Gold is a better option as it can take on inflation and deliver better returns. It can be pledged or sold for cash to tackle liquidity issues when the economy is on a patch” says P. Gafoor, an investor.
According to him, property transactions are quite low compared to the pre-demonetisation period. “Many buyers have money with them but are afraid to invest in property for various reasons including the anticipation that land prices will come down,” he says.
However K. Arunkumar, president of the Confederation of Real Estate Developers Associations (CREDAI), Kozhikode chapter, feels that land prices have already stabilised after a rise and fall.
“Problems in GCC countries have triggered panic among investors. Real estate is no exception. All businesses have shown a decline. Traditional methods are being replaced by new policies,” he observves.
Mr. Arunkumar says GST has put a burden on builders, thereby forcing them to hike rates. “But we are positive as an economic slowdown is the best time to invest. So also it is true to invest in an apartment rather than purchasing land,” he observves.
Meanwhile, real estate brokers say land prices have turned cheaper in Kozhikode city and its suburbs. But land deals have become complex and more systemised. Documentations at the Registration Department have declined in the district post-demonetisation. “Only genuine buyers opt for purchasing land. In the case of sellers, if they face a liquidity crunch, they will sell off,” says K. Rasheed, a real estate agent.
Those who have invested in shops or commercial complexes are also feeling the heat. “I have not received payment for four to five months for a shop leased to a food outlet. Maybe footfall will increase in the coming months,” an investor, who wanted to remain anonymous, says.
