An analysis on the impact of demonetisation on Indian real estate market

1. Demonetisation and Real
Estate – The Impact

3. • Impact on property buyers:
• No cash component
• Transaction value close to guideline value
• Registrations to take place at transaction value
• Buyer to account for source of funds used for property purchase
• Formal bank finance to become the norm
• Home loan interest rates to drop
Demonetisation
Rs 500 & 1000 notes not legal tender

4. • Quoted values to be close to guideline values
• Capital Gains Tax paid on entire transaction amount
• Deal to be registered soon after purchase
Impact on sellers

5. • Formally funded transactions to continue
• Demand from professionals to drive sale along economic corridors
• Builders unlikely to drop prices
• Completely a buyer’s market – negotiate better for car park, fittings
and fixtures
• Banks to chase serious buyers
• Best time for end users to buy ready built property
Primary market – new property

6. • Cash driven markets like Delhi NCR and parts of Mumbai market slow
• Prices likely to go down by about 10-15% in about 6 months
• Sellers likely to negotiate better rates with end users
• Bank funding available to serious buyers
• Registrations at actual transaction value
• Guideline values to become benchmark values
• Land transactions likely to slow down as cash exits
Secondary Market- resale market

7. • Primary markets will remain stable with formally financed deals
becoming the norm
• Secondary markets will settle down 10-15% on exit of cash
• Speculative prices out. Land prices expected to drop as formal finance
replaces cash. Less formal finance available for land purchase
• Many buyers hold back hoping for lower values
• Serious buyers to benefit from good negotiations
• Credit Linked Subsidy Schemes to sweeten the deals for those with
less than Rs 50,000/month income for budget housing
What will happen to prices

8. • GST - Goods and Services Tax, a comprehensive indirect tax, aims at
creating a transparent taxation system. Its enforcement will resonate
in all sectors and real estate will also be impacted
• Prohibition of Benami Property Transactions Act – All property to be
bought in the name of the buyer who funds the deal
• RERA - Consumer, developer, and regulator stands to gain once Real
Estate Regulatory Authority Act is implemented in all the states.
Transparency will ensure that project specific risk is reduced. This will
enhance the buyer- seller relationship positively
Supporting legislations

9. No black
component in
deals
Interest rates
coming down
Lots of ready
built stock
Values flat for
two years and
dropping
Deals
sweetened by
sellers
Consumer Perspective

10. Builders can not meet their overheads
without sale. No more black money to
meet their deadlines. So obviously they
have to reduce the prices due to
competition and fund crunch or else will
be eliminated. - Prakash
The idea of Rs 2000 goes against the
entire cleansing of financial system.
Again the same situation will crop in
few years. Doubt about the real
intention? – VR Ganeshun
Why is the new 2000
note re-introduced?
what is the rationale
behind it? - Nikesh
The govt’s decision to curb black
money is good. Those hoarding
black money, which affects economy
are the real estate tycoons, big infra
contractors and middle-men who
arranged these deals - Sachin
Oommen
Make all govt office processes
online. Avoid multiple taxation,
delink politicians from public
projects, as they should not
decide on who should execute
project - Karthik
Consumer Voices

11. Magicbricks Coverage
Exclusive website on
Demonetisation with
latest stories, videos,
poll and Twitter buzz.
Check it out here

12. Real Estate, last bastion of black money, under attack
An analysis by E Jayashree Kurup on how demonetisation is going to
change Indian real estate.
Demonetisation: What all will be affected?
A report on views on impact of demonetisation by Credit Ananlysis &
Research Limited (CARE Ratings).
How note ban will make real estate more transparent
An analysis by E Jayashree Kurup on how transparency a rare feature in
real estate is going to be common.
How it impacts you!

13. Why you should use demonetisation opportunity to buy now
Is this the right time to buy a property? E Jayashree Kurup makes a
detailed analysis.
How currency ban can change real estate
A report on the efforts of present government to make a better and
brighter economy.
Property registrations dip 37% since demonetisation
The number is dropping due to cash crunch, the inspector general of
registration and controller of stamps says.
Demonetisation of currency notes: Impact on real estate
Real estate is going to be affected in many different ways, the report
explains.

14. Currency ban: Input cost of developers may increase
How is the developer community going to change after
demonetisation? A report.
Next 3 months is going to be disruptive for real estate
Niranjan Hiranandani, Managing Director, Hiranandani Group, talks
about the importance of black money crackdown on the market.
Massive deposit bonanza for banks pulls down interest rates
A report conforming that the money flooding into banks has resulted in
such a massive bonanza that it’s pulling rates down.
How it impacts developers