As per an analysis, the property prices in major cities across India could drop by up to
30 per cent over 6-12 months after the demonetisation of high-value notes,
wiping out over Rs 8 lakh crore worth market value of residential properties
sold and unsold by developers since 2008.
Maximum fall on total market valuation will be in Mumbai followed by
Bangalore and Gurgaon.
The black money and the subsequent demonetization might deeply impact the
core of unorganised real estate in Bangalore, as the final or the majority of
the buyers in Bangalore are Home Loan buyers.
As we had seen, 10% to 20% of the end products (apartments, sites, malls
etc) are bought with 100% cash and accounted money, the rest is all under loans
or mortgage.
We expect lot of secondary market transactions (re sales) coming down in volume
and a sharp drop in cash transactions, even, if such transactions are
concluded, The sellers might not be able
to get the price and at the same time end up paying a huge CAPITAL GAIN TAX.
(both short term and long term)
The benami investors in the real estate will feel the real pinch soon.
There may be almost a complete stop in re sale properties in the coming months
and the properties without proper documentations and approvals will be worst
hit, especially, the buildings with deviation and violation and without
OCCUPANCY CERTIFICATE.
It is expected that Organised sector will extend its arms to the real
estate business and the established builders will definitely reap a good
harvest or will have a good standing in the market.
There might be some downfall in the short term and the industry will
recover in the long run.
Established and Standard builders will have no issues, except temporary
backslide.
Investors, who are in a hurry will lose and those whose investments are
irregular or bad (laced with black money), may not survive this holocaust.
