A DAY after Prime Minister Narendra Modi announced the scrapping of currency notes of the Rs 500 and Rs 1000 denominations, the real estate industry in Pune said the move will bring in a lot of “transparency” in its dealings. However, builders and developers are divided on whether property rates will fall or go up. “This is a historic and positive decision taken in the interest of the Indian economy. It will have a long-lasting effect on the real estate sector. It will surely clean up the system by improving transparency. It will boost foreign investments which will boost the realty sector in the long run,” said Shantilal Kataria, president, CREDAI Pune Metro.
Anant Sardeshmukh, director-general, Mahratta Chamber of Commerce, Industries and Agriculture (MCCIA), said that the move will “substantially” affect the real estate segment where some transactions are outside banking channels and in cash.
However, he added that in the last few years, many large and mid-sized real estate players have professionalised and the transactions have become transparent and go through normal banking channels.
Sardeshmukh said in today’s real estate, many transactions are loan-based and the banks and financial institutes pay directly to the builders. “There is not much scope for cash transactions. The high cost of flats also prohibits any cash transactions. There could be some cash transactions in second sales where two private parties or brokers are involved but in this case, it is individuals who are engaging in such transactions and are really out of the purview of what we can term as company transactions or corporate transactions,” he said.
Shrikant Paranjape, vice-president, CREDAI Pune Metro, said, “Though it is a popular belief that the real estate sector attracts black money, the ground reality is different. The black money element has vanished in mass housing and all the established and organised developers do not indulge in black money in the current era where the customer goes for maximum possible housing loans.” He added that the move will be complementary in their endeavor towards absolute transparency and reliability.
Kataria said, “Due to this unexpected decision, psychologically, the market will have a temporary effect on particular segments of real estate like high end luxury products, secondary markets like plotting schemes, raw land deals, unauthorised structures or plots.”
Land deals may also slow down due to the current market situation, he added, but the primary market will be undisturbed as inventory is always sold to end users who avail home loans. Kataria said the organised part of the real estate sector will continue to do well. “The operators who do un-authorised work will be affected badly… Ultimately transparency will be improved and will help attract the purchasers towards the real estate sector.” He also said people’s trust in real estate will increase in the long run.
Atul Goel, managing director, Goel Ganga Developers (I) Pvt Ltd, said all sectors will benefit from this move. “As far as the real estate market is concerned, for general curiosity about whether property rates will increase or decrease, considering all logic the rates will go upward. But we will have to wait and watch. People who are holding money will have no option but to move the money which will lead the market to start moving.”