The curtains have finally risen. The solution for the rampant corruption and black money issue prevalent in our country which our government has been secretly working on is finally out. Yet another ‘surgical’ strike taken for the better good, but one that literally took the nation by storm. Hundreds flocking outside ATM’s across the country, half of them panicked while the other half absolutely confused. How the 500 and 1000 Rupee Note ban affects the Real Estate Market
Although, the steps that were taken will almost eliminate black money, it will be at the cost of discomfort for a lot of citizens, especially the small businesses which run mostly on loose cash. But its no rocket science to figure out which sector this decision affects the most. What’s the industry that has been dealing with the most amount of black money for decades? You got that right! Real Estate.
Between 10% to 70% of the property values being sold or bought take place in cash. But now, after this new ruling, the stock of unaccounted money lying around equates to almost nothing. Almost 90% of all cash payments have been in the form of 500’s and 1000’s. Another point to note is that the big builders and organised players don’t really get affected that much as their transactions are majorly through bank channels. Its the secondary market (Read: Secondary real estate transactions to become transparent) and unorganised players who will be counting their notes.
The Black Money
“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 organised players are already using bank channel and they would gain from this decision. Unorganised players and the secondary market would be impacted,” says DLF CEO Rajeev Talwar.
Now we can safely assume that the demand for properties especially the luxury segment or big tickets will drastically fall. A lot of those people who have been planning all this while on making an investment in the coming days or months will probably have to reconsider their decision. We can only imagine how many people are currently backing out of their investments.
As of now this is the current situation faced in India. What will happen in the future or how things may change still remains uncertain. But, no doubt the Indian Real Estate market has felt this tremor right in its boots, including the performance in the stock market. Read – Real Estate stocks bleed.
Looks like Modi has finally brought ‘change’ to our country!