India Real Estate Report 2017
BMI View: Implementation of demonetisation and incoming goods and services tax (GST) will boost thecommercial real estate sector over the long-term. However, the business environment is still coming toterms with the new norm, and the shortage of cash has harmed transactions and sent real estate pricesspiralling. Nonetheless, we opine a decent performance across the sector in 2017 on the back of probusinessreforms, and we believe there is good investment opportunity in office the sub-sector.
Shock introduction of the demonetisation policy in Q416, aimed at reducing the weight of black money inthe market, has been a particular burden for the broader Indian economy. Financial institutions are underpressure from high demand and a shortage of cash; consumer spending has slowed and is dragging oneconomic activity.
Businesses are bearing the brunt of the recent changes. However, governmental reforms are considered tobe imperative to tackling corruption and pushing a pro-business economic environment. The implicationsfor the commercial property sector are significant, considering a large proportion of transactions are dealt incash, with near term demand likely to ease, though the long-term potential for the sector is presenting greatopportunity.
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