No points for guessing that one thing which has been a big surprise for the entire nation. It is but of course the announcement of demonetisation of the higher currency notes by the Indian Government. Though it will take some time to see how exactly this will affect all sectors, it has already started showing its effect. One sector which has definitely felt the impact is the real estate sector. Due to various factors like recession etc this sector already was reporting slow growth. Now with the move the effect is going to be even more.
How Would the Real Estate Sector Be Affected?
This move was mainly to get rid of the black money. Everyone knows that residential real estate is one place where there is plenty of black money. Where the transactions involve financial institutions and banks there is nothing to worry. But where there is cash involved, there will be some amount of disturbance. The demonetization impact on Indian real estate sector will mainly involve high end properties, premium properties, and resale properties etc which have the cash factor involved and hence these are bound to be affected. The decrease in sales could be around 30% because here most of the times the financial institutions are avoided while making payments and hence the possibility of the black money factor is higher.
What will be the long term impact?
Experts believe that this intelligent and daring step will shape up a better future. Though people may experience a cash crunch as of now, but one has to remember that this is just a passing phase which will be settled down with time and there will be no dearth of cash in a few months time. This move is also good for the residential real estate. Most of the big builders, which belong to the primary market are involved in cashless transactions have nothing to worry. But the demonetization impact on Indian real estate sector will mainly be felt by those in the secondary market who have cash transactions. The buyer has the biggest advantage. He will get to deal with better lucidity and the chances of getting duped are reduced quite a bit. With more transparency involved the investors will be keener to invest which will be a positive thing for the real estate. The real estate regulatory bill, GST etc are only going to make things better. The buyer will have the advantage of buying properties of his choice at economical rates and will also get possession of the property as promised by the developer.
The move was a must in order to get rid of the black money menace. People have to understand that due to the current shock treatment there may be a drop in sales and unsold properties might be too many but this will change with time. But this move will only strengthen the Indian real estate and it will have sustainable growth. Even now those sellers and buyers who have made legal transactions have nothing to worry. We all have to remember that this demonetisation was to hit those black marketers who are like termites for the society. This move of demonetising 500 and 1000 rupee notes will only help in strengthening not just real estate but the entire country.
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