The Market of Residential Real Estate Projects in Lucknow Makes a Comeback

When demonetization drive was carried out in November 2016 by the central government, it was widely anticipated that real estate sector in India would be badly hit. However, housing prices in the third financial quarter of 2017 in eight major cities sampled by Reserve Bank of India (RBI) actually showed an increase. There has been a significant recovery for India’s housing market from the slowdown that followed the government’s decision to ban 500 and 1,000 rupee notes to control the menace of black money.

According to a leading property consultancy firm, property sales in India rose to highest level in 7 years during the second financial quarter of 2017. The recovery was witnessed not only in Tier-I cities but also in Tier-II cities such as Lucknow, Jaipur, Bhubaneswar, Ranchi, Ghaziabad, Noida, etc. The percentage of flats for sale in Lucknow also went up by 6 percent, showing a marked recovery after demonetization, as per the report.

Market analysts and economists have noticed significant real estate recovery in affordable housing sector, which has been given infrastructure status by the government. Houses costing less than US$ 78,000 accounted for 60 percent of all sales. It must be noted that homes costing less than US$ 40,000 are categorized as affordable houses in India. Affordable residential properties in Lucknow actually accounted for 18 percent of house sales in second financial quarter of 2017. Moreover, inventory levels, which are calculated based on the time it will take to sell flats or apartments in Lucknow, fell from 46 months to 42 months.

When the central govt. decided to take large denomination notes out of circulation, which made up 85 percent of cash circulation, sales of residential properties declined across the country. Nevertheless, real estate consultants expect the currency ban to help the growth of residential real estate projects in Lucknow in the long run.

On the other hand, Real Estate Regulation Act (RERA), which has been introduced recently, will now require real estate builders in Lucknow to upload all the relevant information and details about their projects on the website and register their respective projects with official RERA authority. Under RERA, real estate developers in Lucknow would be penalized for any delay in completion of the project and need to pay yearly interest rate of 10.8 percent to home-buyers if the deadline for completion expires.

Another factor that is likely to impact real estate projects in Lucknow is the Goods and Services Tax (GST), which was implemented on July 1, 2017. The GST is a consistent tax regime, which has replaced the complex structure of separate taxes both at national and state level. Trade pundits say that so far no negative effects of GST have been visible on flats in Lucknow for sale.

The government’s move to discontinue Rs. 1,000 and 500 currency notes was expected to hit real estate market but the surveys and opinions of experts suggest that property market will benefit from demonetization in the years to come.

About the Author: Rajeev is sales and marketing consultant at Azea Botanica, an upcoming residential property in Lucknow being developed by Azeagaia Development Pvt. Ltd., promoted by Singapore-based firms through foreign direct investment. Azea Botanica offers luxurious 3 & 4 BHK apartments in Lucknow for sale at a prime location of Vrindavan Yojna, Raebareli Road. Rajeev has a hobby of writing articles, blogs and likes driving sports bikes and cars.

Rajeev is an avid writer and regularly writes articles and blogs on Lucknow real estate.