How The Real Estate Sector Will Be Affected By The Demonetization Of INR 500/1000 The Government's Bold Move Is Expected To Demoralize The Real Estate Sector

By Nidhi Singh

Opinions expressed by Entrepreneur contributors are their own.

You're reading Entrepreneur India, an international franchise of Entrepreneur Media.

Shutterstock

Millions of Indians were shocked by PM Narendra Modi's midnight announcement on banning Rs.500 and Rs.1000 notes.The news diverted all the attention from US Presidential election results to Modi's big move against black money.The government's decision is expected to demoralize the real estate sector the most as it deals with a lot of cash flow on day to day basis.On the other hand, it will also encourage organized and professional developers who are favoring cheque payments growing further.

Three Real Estate experts share their predictions on how the ban will affect the market.

A Win-Win Situation For Developers And Home Buyers

Ashwin Sheth, CMD, Sheth Corp declared it a courageous move that will help bring transparency in the Real Estate sector.

"The real estate sector is in a revival mode and already the implementation of RERA has brought a lot of confidence amongst the buyers. Investments made with unaccounted wealth will be eradicated bringing transparency in the sector," he said.

Sheth believes, this move will now help to curb many inconsistencies and unfair trade practices bringing professionalism in the sector.

"Reputed builders would not feel the pinch as they have been making use of bank channels for transactions. With the RERA Act and the demonetization of the 500 and 1000 currency notes, we can expect to witness positive reforms and sales growth in the affordable housing sector. This is a win-win situation for developers and home buyers", he added .

Demonetization Will Keep The Real Estate Prices Up

Sachin Sandhir, Global Managing Director – Emerging Business, RICS said that it will not be surprising to see real estate prices go up in the market.

" Secondary markets would be affected as unaccounted cash payment would no longer take place leading to some dips in the sale process for assets that are sold or purchased in the short term. However, with the progress of time, it will not be surprising to see prices go up as sellers come to terms with the fact that capital gains tax has to be paid on monies. Sellers are likely to factor that liability into the sale price," he said

He also further added that a closer look at the primary market would indicate that there are several components of informality within the production chain .

A Call For Professionalism In The Real Estate Sector

Mr. Munish Doshi, MD, Acme Group feels this is a big leap forward for a truly digital and modern economy to emerge, given that housing sector itself contributes 5-6% of India's GDP.

"The professional realtors have anyways been selling property in cheque payment only for more than a decade now. If anything, this move will bring in more professionalism and organization in the sector," he said.

"It is encouraging. However, in all, the organized Developers affiliated with MCHI-CREDAI will benefit in long run – although there will be little hurdles in the sentiment of flat buyers in short run – in long term for the Real Estate Industry, this is a welcome move.Even The Real Estate valuations will also see a correction now," Doshi added.

Nidhi Singh

Former Correspondent, Entrepreneur Asia-Pacific

A self confessed Bollywood Lover, Travel junkie and Food Evangelist.I like travelling and I believe it is very important to take ones mind off the daily monotony .

Business News

'I Love Doing Product Reviews': Bill Gates Stepped Down from Microsoft in 2020, But Admits He Still Spends 15% of His Time Working at the Company

In a new interview with the Wall Street Journal, Gates also said he is still close with Microsoft's CEO Satya Nadella.

Franchise

Franchise Models Explained — How to Choose the Right One for Your Goals

Navigating the franchise world starts with understanding key business models. Here's how project-based and subscription franchises differ in investment, scalability, and recession resistance.

Business News

Uber's CEO Says Drivers Have About 10 Years Left Before They Will Be Replaced

Uber CEO Dara Khosrowshahi says the jobs of human drivers are safe for the next decade, but after that, another type of driver will take over.

Business News

Elon Musk's DOGE Is Hiring People Eager to 'Work Long Hours' to Eliminate 'Waste, Fraud and Abuse' in the Government. Here's How to Apply.

The Department of Government Efficiency is hiring U.S. citizens to help cut spending and headcounts in the federal government.

Business News

'Everyone Can Profit From It': What Is DeepSeek? China's 'Cheap' to Make AI Chatbot Climbs to the Top of Apple, Google U.S. App Stores

DeepSeek researchers claim it was developed for less than $6 million, a contrast to the $100 million it takes U.S. tech startups to create AI.

Starting a Business

Market Research: What It Is and How to Conduct It

To boost your competitive advantage, you may want to do market research. Entrepreneur is here with a guide on market research and how to conduct it.