View: Demonetisation’s bearing on Indian real estate

The government’s demonetisation move has sent shock-waves through the entire Indian business community, and the real estate sector has definitely been affected as well – though not, perhaps, to the magnitude that market pundits have been predicting. 
In addition to this, the imminent nation-wide deployment of the Real Estate Regulation Act (RERA), will drive the Indian real estate landscape towards a lot more transparent scenario.This, in turn, means that the sector will become far more attractive to both domestic and foreign investors.
In the residential property sector, the secondary or resale market will definitely see a backlash, as it has historically seen quite a large volume of cash components being transacted. This also holds true for the luxury and high-end housing segment, where sales have already slowed down on the back of the demonetisation move.
In the residential property sector, the secondary or resale market will definitely see a backlash, as it has historically seen quite a large volume of cash components being transacted. This also holds true for the luxury and high-end housing segment, where sales have already slowed down on the back of the demonetisation move.
Generally, we will see Tier-II and Tier-III markets being impacted to a higher degree. However, the primary sales segment is not going to see much of an impact as it is driven by the salaried class availing of home loans. Such transactions happen in a transparent manner. That said, the business of many smaller developers in the unorganised sector, especially in the smaller cities an outskirts of larger cities, will suffer if their business model has included accepting cash components in primary residential sales. However, the bigger institutionalised developers with a strong brand and solid governance framework in place have long since moved away from this model and will not be affected. In that respect, Modi’s ‘surgical strike’ on the parallel economy will lead 
to a faster clean-up of marginal, non-serious players.

(source by:-The Economic Times( ET REALITY) )

 

 

 

 

 

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