The surprise move of the Modi government targets the unaccounted money, popularly known as black money. The sudden announcement of the demonetization of Rs 500 and Rs 1,000 notes has tremendously shaken up the India’s Real estate business. Since the sector is believed to be a prominent conduit for such potential, the recent demonetization is expected to significantly impact this business.
End of corruption in real estate:
The biggest advantage of the demonetization is that, it will eliminate black money to a large extent in the industry, which will lead to bring down the corruption in the real estate sector. The transactions which went unaccounted due to being dealt with in cash will now come under the government’s scanner.
Lower Home Loans:
The flow of money from the small scale industries and the organized sectors to banks will increase with demonetization, which may lead to huge deposits. The liquidity will bring stabilization in price and it may result in home loans at very low rates.
The decision will promote cashless economy and thus, will bring transparency in the segment, especially in purchase of lands.
The move will also help put a check on the unorganized developers, who tend to dupe people through unaccounted transactions. There is no doubt, the demonetization will enhance the transparency of this sector.
Greater foreign investment:
It is expected that, the improved transparency and the positive government attitude about policy norms may attract the greater foreign investment into the real estate business.
Realistic price points:
The move will be a downward push on property prices, including lands. Due to demonetization, the investors will now be unable to deploy their unaccounted funds in real estate sector, which may force developers to set lower prices.