It all started with an announcement of yesterday when Indian PM announced that Rs 500 and Rs 1000 rupee currency notes would be extracted from circulation at midnight to inhibit the corruption and counterfeit currency. Now being one of the best routes of generating market inflow the real estate sector is like to gawk home and land prices to crumple. Specifically it would shock the property market of the metro cities. In West Bengal experts are apprehending that the prices of new-built flats in Kolkata set to go down with the jettison of 500 and 1000 notes. Thus it could be a favorable time for the investors as housing prices could witness downward pressure.
The resale property market and small builders will have a blow with this revelation made by Indian PM. Unorganized builders and secondary property market will be massively hurt with this government’s decision to demonetize 500 and 1000 notes. In a recent interview DLF CEO Rajiv Talwar said: ‘’We are moving toward the cashless economy which is a sign of maturing economy. It’s a step in the right direction.’’ Talwar also added “The black money was mostly in land purchase. But in last 6-7 years, there has been no major land buying in this sector. Big builders and organized players are already using bank channel and they would gain from this decision. Unorganized players and the secondary market would be impacted.’’ Being asked on the realty market prospect Talwar mentioned that he with the downward pressure of market prices there would be noticeable boost in real estate demand sector.
JLL India Country Head and Chairman Anuj Puri said: “It will not have any impact on the primary residential segment as the buyers in this sector are driven by mortgage. The impact will be felt in the secondary market and the unorganized developers community where there were still cash dealing.”
Expressing it as a very good move, Puri said: “This decision will help institutionalize the real estate sector.’’As per the market speculation this stride is likely to hit the real estate sector tough. Real estate sector has the massive transaction with black money; with this movement real estate is now likely to move towards improved transparency and fair deal operation. The move is expected moderate property prices, including land prices. For it’s a good time for the property investors with budget limitation and thereby forcing builders to sell the existing inventory property at lower prices. For the decades real people have been putting all their unaccounted money in real estate investment. The latest decision will make the builders’ lives under the axe. There can be halt or slow down in several project development process for restricted capital inflow as well.
“Property markets will see around 30% correction in prices. Even builders who claim that they accept only cheques will also be forced to reduce prices given the market conditions around them. Apart from big property markets, tier II and III cities will be worst affected,” said Yashwant Dalal, president of the Real Estate Agents Association of India. “Land prices will also move downward as these deals used to see at least 30% cash component.”
By LNN (Liyans News Network)