Be it about Mumbai or any other city, the real estate sector is doomed. The last time, a realtor has done a transaction in Mumbai is when he resold the two bedroom home on Monday after Diwali which is like almost ten days back. The home, with a floor area of 700Sqft, is an apartment of an old high-rise building which was built around 30 years back. It only weighed around Rs 3.80 crore roughly with the market price that was going in the Southern Mumbai belt. The price has been calculated at 47% which is why it is fixed at Rs 1.80 crore. The rest 2 Crore, however, is paid in cash because of the reckoner rate, and this is not an anomaly but a practice.
This is the usual method that the real estate people follow as they break up the entire amount in cash and cheque while a building is resold. We many not know how the seller has been coping up with this issue now as the Government has decided to demonetise the Rs 500 and Rs 1000 notes out of the country’s wads. The Realtors will be the ones to suffer the most as the entire sector will be shaken up over the next one half and year in the least and can only recover in the long term.
While a 2012 paper talked on ‘Black Money’ by the Finance Ministry expressed that the land division in India constitutes right around 11 for every penny of the GDP, a late report by Ambit Capital said India’s ‘Black Economy’ remains at over Rs 30 lakh crore or around 20 for each penny of the aggregate GDP. On the off chance that the service’s 2012 appraisal remains constant today, then land represents more than 50 for every penny of the present dark currency advertise. Which is the reason, land designers and specialists say, the late demonetisation leaves the business at the intersection. Where it goes from here on, they say, is impossible to say.
“The impact is likely to be seen in secondary markets for all asset classes, thereby making real estate more illiquid for some time,” says Anshul Jain, MD (India) of Cushman & Wakefield, a leading real-estate services company.
“This decision will have a significant impact on the real-estate industry,” says Pravin Bavadiya, CMD of City Estate Management, a leading real-estate broker in Ahmedabad. For the last few days, since the demonetisation announcement, Bavadiya has been sitting in his posh office on Gurukul Road, fielding calls from people who seek his advice on where to park their cash — devalued notes of Rs 500 and Rs 1,000. “Most of these land deals are now likely to be cancelled or renegotiated. People have been asking me if they can make a back-dated real-estate booking or if they can exchange gold for property,” says Bavadiya, adding, “In Ahmedabad, only 20 per cent of developers accept cheques for 100 per cent of the value of the property. However, the cash component is higher for commercial real-estate dealings.”
However, personally I feel that Modi has done a great thing which people from long weren’t able to do despite the consequences.
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