Late on 8th November, PM Narendra Modi took the country by surprise and scrapped Rs 500 and Rs 1000 notes. The scrapping of these currencies led to chaos outside the banks where people were looking either for currency exchange or depositing their old Rs 500 and Rs 1000 currency.
While the majority of the business industries have reacted to this decision in an overwhelming support, there is one industry which has majority of their transactions taking place in cash and is sure to face a hard time after demonetization is The Real Estate Industry! As a lot of transaction in Mumbai’s Real Estate take place on cash basis, a very high involvement of black money has been seen in this sector. Also, in the real estate sector, there is one specific market which is sure to be the one which will suffer the most and that is the secondary market or as we call it the resale market.
Well, the Myth is that the real estate market will go down and face loss, but the truth is, the only market to be affected is the resale market and plot buying market. In Mumbai, specifically Ghatkopar Real Estate, which is well known for resale properties will see a major impact from this demonetization as the payment module followed in buying the resale property is 40% cash and 60% on legal documents which clearly means that 40% of the cash payment is black money and only 60% of the payment is shown white. Well, if the ministry’s 2012 assessment is to be believed, then the realty sector accounts for more than 50% of the current black money market! Ghatkopar, a Gujarati and Marwadi driven area, will see a down slope when it comes to the secondary market in the coming 6 months as the cash transaction here comprises of 30-40 percent! Which is a huge number! At the same time, the primary market need not worry at all as they are to remain stable because most of the people buying an upcoming project tend to take loans and pay through legal channels. Mumbai’s Real Estate market expects an upside on rental transactions after the demonetization exercise as people who are desperately looking out for an apartment to settle down would now want to settle for a rental home due to lack of cash in hand.
If you are someone who is planning to buy a property which is least to be affected by demonetization, then you can opt for upcoming MICL, Dhamji Shamji, Neelkanth to name a few, are among those who are completely safe and are available on Mumbai Property Hub!
This Demonetization exercise is sure to bring stability and transparency to this unorganized real estate market and will also help the customer to know about their rights and will ensure zero cheating. Demonetization will also make customers buy their dream home at an affordable price as it is also believed that the luxury segment of realty industry will fall by 25-30%.