We don’t know if it was intended or not, but Modi government’s crackdown on black money could give a big boost to Housing For All! Now, why wait for banks to cut home loan rates or prices to come down to buy your dream home? The unprecedented move against black money by making the existing Rs 500 and Rs 1000 notes illegal, may spell a short-term blow to real estate developers, but would also imply that housing across segments would become cheaper! Real estate as a sector is often seen as one of the biggest areas where black money is deployed.
Dhruv Agrawala, CEO of PropTiger.com sees the step as a fantastic move for the common man and also the real estate sector. “I believe the capital chasing land will come down. I don’t see an immediate fall in land prices, but transactions will certainly freeze. The overall decline in land prices will have a cascading effect. I shudder to think of developers who have a huge pile of inventory, they will be in deep trouble. Eventually, they will have to reduce prices,” he told FE Online. “This is a fantastic move to bring sanity and transparency in the real estate sector. I think there will be a lot of inflow of foreign capital, because land prices will come down. But, more importantly, ‘Housing For All’ would finally become a reality, as cheaper land will eventually translate into cheaper homes. While there will be short-term pain, but in the long-run, the real estate sector will benefit fundamentally,” he feels.
Agrees Anuj Puri, Chairman & Country Head, JLL India, who also sees inflow of foreign capital in the sector. “The banning of higher currency notes is a major move which will help curb unaccounted-for cash in the real estate sector. We have just witnessed a tremendous step towards increased transparency in the Indian real estate industry. The effects will be far-reaching and immediate, and shake up the sector in no uncertain. Stricter measures against black money have for long been required to help bring about greater transparency, give the Indian real estate sector more credibility and make it more attractive for foreign investors,” he says. “Black money deals are more common on the unorganized market, but this practice has, in fact, been on the decrease with greater awareness on the part of buyers. Before too long, the caricatured version of black money driving Indian real estate is no longer applicable,” he adds.
Nirmal Jain, Chairman, India Infoline also believes that housing will no longer be a distant dream for people now. “This is a very powerful measure to curb black money. PM Modi has kept his promise of taking stern measures against black money. It will have deflationary impact in general and more specifically on real estate prices and make homes affordable, and is indirectly a boon to honest tax payers,” he says.