On November 8,2016, a landmark judgment was passed by our government which made the use of then existing Rs. 500 and Rs. 1000 notes illegal in the next 4 hours.
Though there has been a mixed response from the public, it has been a great move for the economy.
The real estate industry has also been affected by the demonetization policy. Let’s have a look at how –
1. Benefit to Organized Builders
This move has given a huge benefit to organized developers who do not get involved in cash transactions. Now, the people who were preferring transactions in cash would be more interested in checking out properties of organized builders as well since they would have to pay in white only.
2. Transparency & Trust Boosted
Since all the transactions now will be only in white by each and every builder, the common notion about the real estate industry would also change. The entire notion about the real estate industry created by a handful of players, primarily in the tier II cities, the unorganized builders as they are also referred to as would now change and it would be considered as a more transparent and trustworthy industry.
3. Long Term Benefits
The real estate industry is expected to gain a great deal in the long run from this policy. Since real estate industry was a lucrative one for investments, certain people would divert their investments to other sectors just because of the perception created by a handful of builders.
Now, the scenario has completely changed. Now, all sectors would be looked at par, and since the real estate industry would gain a lot of transparency and trust from investors, investments are expected to increase a great deal.
Overall view on demonetization and impact on real estate market?
The landmark move or say a master stroke by the Modi Government to demonetize high-value currency notes will have a far-reaching impact on the capital-intensive real estate sector that’s what we are hearing everywhere. But according to my observation Primary market or organized developers and big developers will not be affected. It will have its effects on the Secondary market and resale. The land would become cheaper helping end users to buy property at the affordable price. The sales in primary market will improve.
In the long term, though, these measures to curb unaccounted wealth will increase transparency and credibility in the sector. The setting up of a Real Estate Regulatory Authority (RERA) in each state will also bring about increased accountability in the markets. While the general mood of a not-so-desperate property seller will be to wait and watch, these times may actually prove to be a boon for homebuyers who can look forward to some affordable deals that suit their pockets. Also, home loans will get cheaper and Institutional funding will become slightly easier for real estate developers .Expecting approval processes to become better and faster.