The decline in gold prices over the last two months and the Assembly elections in May have seriously impacted revenues from the real estate sector, resulting in the Stamps and Registration Department missing the target for the first two months.

Department officials attribute this to the migration of investors from real estate to gold, which has suddenly become a “hot instrument” for speculative gain for its comparatively low cost. So much so Union Finance Minister P. Chidambaram on Thursday appealed to investors to look at other avenues for investments.

Gold price fell from its peak (about Rs. 32,400 per 10 gm) last September to its recent low (about Rs. 26,000) in April this year.

“We feel that the number of property transactions have declined because of the thawing of gold prices. If the same trend continues, small investors will be favourable to gold than the real estate,” a source told The Hindu. “With the May elections, purported investments in real estate may have been diverted also.”

“Another reason for lower registration in Bangalore could also be a calmer Hyderabad where the pro-Telangana protests have come down, boosting investor confidence,” a department official said, conceding that the annual target of Rs. 6,100 crore would be a tough one if the trend continues.

Venkatesh Babu, former president, Bangalore Jewellers’ Association, acknowledged that the comparatively lower gold price had been good for the jewellery business for the last two months. Small investors look at gold for gains, he added.

Balakrishna Hegde, managing director, Chartered Housing, and former president of Confederation of Real Estate Developers’ Association of India, said: “Declining gold price will have marginal impact on the industry. The low [property] registration was due to elections. Many registrations would have been postponed due to the financial year ending March that would come with a tax burden for buyers.”

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