Real estate resale mkt to be adversely hit by demonetisation

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 deonetisation 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.

DLF CEO Rajeev Talwar said the country is moving towards
cashless economy, which is a sign of maturing economy.
"The blackmoney 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," he said.
Talwar said: "There could be downward pressure on prices, which will boost demand".
"It is a fantastic and bold move by the government. A lot of money will get into the banking system," CREDAI Chairman Irfan Razack said.

"Listed entities and organised players will not be affected from this decision," he said, adding that there would not be much impact on housing demand and sales.
Razack, who is chairman of Bengaluru-based Prestige Estates, said there could be some impact on secondary market of big cities but primary market is largely through banking channel.
Baijal of Knight Frank said the real estate law and this recent move will prove to be a game changer for this sector and next year this time the realty sector will be a totally different industry - a more evolved, transparent and a corporatized one.

Lodha group MD Abhishek Lodha said: "The professional, well organized companies in the real estate sector will significantly benefit from this move and the scourge of black money will eventually vanish from the sector and the overall economy."
Housing.Com CEO Jason Kothari said: "The organised segment of the market shouldn't be majorly impacted since most homes are now bought by end-users who avail home loans. The unorganised segment which relies mostly on cash transactions, will be impacted significantly".