The impact of demonetization, compounded by RERA, GST and other reforms, has disrupted India’s real estate market severely.
By Varun Singh
On a positive note, due to demonetization, the pouring of unaccounted capital into the real estate sector has become virtually impossible. The future growth in the sector will be based on much more credible and sustainable principles than ever before. In the post-RERA era, all the property transactions today are already taking place on the basis of transparent cheque payments and legal online payment gateways.
From a consumer’s perspective, due to demonetization, the influx of liquidity in the system has ensured attractive home loan rates which are at their lowest in almost a decade. Owing to the ongoing transformation, developers have also been offering attractive rates and payment plans to draw potential buyers.
The real estate industry share their views on demonetization on its 5th Anniversary:
Pritam Chivukula, Co-Founder & Director, Tridhaatu Realty, and Hon. Secretary, CREDAI MCHI
“It has been five years since the government took a stringent step by announcing demonetization while encouraging to adopt digital transactions over cash transactions. An important goal of demonetization was to reduce the use of cash in transactions and inspire people to pay using non-cash modes. The real estate industry has welcomed this move towards the positive side since it helped the sector to increase the direct tax collections. This has brought a large number of evaders in the tax net. It has indirectly made things more systematic, accountable and transparent. Overall, the move has declined cash transactions, increased the bank deposits and financial savings has seen an uptick too.”
Kaushal Agarwal, Chairman, The Guardians Real Estate Advisory
“Even though the sudden and initial impact of demonetization over the economy was severe and real estate was the worst hit sector. However, today I feel that it was a much-calculated move by the government to streamline the economy and bring transparency in key sectors. It has helped the sector to consolidate the market, it brought a level playing field for the organised and transparent entities. It has prevented the inflow of black money and nearly wiped-out the unorganised players. More importantly, it has paved the path for corporate and listed companies to expand and grow, which in other cases was tilted in favour of local and unorganised players.
Demonetization has also increased the awareness about digital payments and online transactions amongst the home buyers. This has drastically helped the sector to eradicate the age-old menace of illicit transactions and dubious sales. In a nutshell, Demonetization along with RERA has made the sector more organized, transparent, and robust which appears to me as the stepping stones towards attaining the much-awaited industry status for Real Estate.”
Himanshu Jain, VP – Sales, Marketing and CRM, Satellite Developers Private Limited (SDPL)
“Just like the Covid-19 pandemic, initially we thought that demonetization would affect all the major industries including real estate. But the move has created a positive impact and the real estate industry has done better in the last 5 years. Demonetization has led to a level playing field in a lot many sectors including real estate. It led to further consolidation in the category, nearly wiping out the non-serious players. It has also led to an increased understanding of digital payments and financial transactions amongst the people of India. Since the announcement, the government has incentivised digital payments and desires to envision a country which survives with limited requirements of cash based dealings. Demonetization has brought in much needed transparency and helped to double the trust of the investors in the real estate sector.”
Vedanshu Kedia, Director, Prescon Group
“The impact of demonetization has had a positive impact in the long run on the real estate industry. The move has had an impact on the perception of real estate transactions. All the 3 major objectives of curbing black money, fake notes and most importantly creating a cashless economy have been achieved as India has become one of the largest markets for digital payments. After demonetization, a large share of the population has gone digital and have adopted cashless transactions. There are many proptech startup’s now that are working on creating platforms that allow homebuyers to experience property and make a block on their inventory by committing an expression of interest. This will definitely enable ease of doing business and bring liquidity to the real estate market.”
Piyush Gupta, Managing Director, Capital Markets & Investment Services, Colliers India
“The big-ticket Reforms in Indian Business started with Demonetisation in 2016 followed by RERA, single tax regime of GST and Real Estate sector has witnessed the significant impact of these reforms. Overall past five years, there is a significant improvement in Corporate Governance and Transparency in Real Estate and the confidence of Investors and end buyers to acquire Real Estate has got better. The Real Estate Sector as a whole has moved up the curve on organisation and administration since reforms started, it helped navigate the crisis such as NBFC and then Covid”
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