New Delhi: Real estate sector, particularly resale market, will be adversely impacted in terms of pricing and demand following demonetisation of Rs 500 and 1,000 notes, according to property developers and consultants.
The experts, however, believe that the move by the government will help improve transparency in the industry that has a reputation of being a safe haven for black money.
“Prices coming down to more reasonable levels in the housing market cannot be ruled out. In the immediate future, the sector will be under serious pressure with volume and number of transactions in residential and land markets seeing a substantial downward trend,” Knight Frank India CMD Shishir Baijal said.
Expressing similar views, Cushman & Wakefiled India MD Anshul Jain said: “The Indian real estate market which is largely fragmented and unorganised has had a reputation of being a safe haven for black money and therefore we expect to see impact on the sector.”
The impact is likely to be seen in secondary markets thereby making real estate more “illiquid” for a period of time till the market adjusts to a new normal, he added.
“The primary market which is largely driven by large developers is unlikely to get affected that much as most large and reputed developers already do not deal with cash transactions,” Jain said.
Likewise, realty industry body CREDAI President Getamber Anand said that primary market will not be impacted but resale market will feel the pinch.
Terming the demonetisation of the Rs. 500 and Rs. 1,000 notes as “a bold move”, CBRE Chairman India & South East Asia Anshuman Magazine said: “While it may cause some pain in the short-term, the long-term outlook for the industry looks positive.”
He said this decision along with real estate regulatory law, GST and Real Estate Investment Trusts would further improve transparency and increase investor confidence in the real estate market.
An Emaar spokesperson said this decision, along with real estate regulatory law, will bring long-term fundamental changes in the real Estate sector and organised developers will be leading the way to this change.
JLL India Country Head and Chairman Anuj Puri said: “It will not have any impact on the primary residential segment as the buyer in this sector are driven by mortgage. The impact will be felt in the secondary market and the unorganised developers community where there were still cash dealing.”