Demonetisation | The story so far

Property registrations plummet 35%

Homes and offices in the city likely to see a fall in rates.—FILE PHOTO  

MUMBAI/PUNE: The Union government’s decision to ban Rs. 500 and Rs. 1,000 notes has dealt a body blow to the real estate sector, experts say.

Data from the office of the Inspector General of Registration and Controller of Stamps (IGRCS), Pune, indicate that registrations of properties have declined 35 per cent decline across Maharashtra since November 8, the day on which Prime Minister Narendra Modi announced the demonetisation move. The key affected markets include Mumbai, Pune and Nashik.

N. Ramaswami, IGRCS, said property registrations dipped to an average of 3,461 per day from November 9-17, when compared with an average of 5,297 registrations per day across the State in the first eight days of the month. The IGRCS registered an average 6,409 documents per day from April to October.

As per IGRCS data, the average revenue per day for this period (April to October) stood at Rs. 64 crore. For the month of November so far, the revenue collection has been Rs. 281.85 crore, averaging about Rs. 31.22 crore per day. At the same time, Mr. Ramaswami cautioned against jumping to conclusions. He said revenue collection picked up on November 16 and 17, and averaged Rs. 42 crore.

Maharashtra finance minister Sudhir Mungantiwar said the impact of demonetisation is being felt across all sectors. However, it is too early to judge its long-term impact. “There is no doubt property transactions have come down,” he said. “People have limited cash to buy. We have no concrete figures yet, but it will take eight to nine days for the situation to normalise.”

Real estate developers confirmed the downward trend. Sandeep Runwal, Director, Runwal Group, said, “The campaign against black money and counterfeit currency has led to a sharp drop in property prices. People are postponing their home purchases to hedge on price trends in the near future. Apartment sales are almost at a standstill.”

Pankaj Kapoor, Managing Director, Liases Foras, said land prices would go down by more than 30 per cent in the next few days. “Though apartment registrations have dropped, there is no decline in real estate prices in Mumbai,” he said. “In the long term, medium and affordable housing prices will drop. There will be no increase in Mumbai apartment prices for the next three years as the Mumbai Metropolitan Region (MMR) is saddled with unsold inventory of 2.46 lakh apartments,” he said.

Interest rates are also expected to come down as banks are loaded with cash. Along with home buyers, developers could also benefit as they will no longer borrow from private financiers or non-banking finance companies (NBFCs) at more than 20 per cent interest. Analysts say 25 per cent of real estate development cost is bribe. They expect corruption to be under check, and therefore, development costs to reduce.

Mr. Kapoor said the long term impact of demonetisation is that the parallel economy will go away. There will be moderation in land cost so that affordable housing can come up in cities rather than in far flung places. “This was needed to provide housing for all,” he said.

Anuj Puri, Chairman and Country Head, Jones Lang LaSalle India, said the resale market will plummet and plotted developments will slow down due to a fall in land prices. However, he said, residential real estate segment will see limited impact in large cities where primary sales are largely influenced by home finance players where deals are facilitated in a transparent manner.

“Some tier 2 and tier 3 cities, where cash components have been a factor even in primary sales, will see a business crunch. The secondary or resale market will certainly be impacted given the fact that this segment involves lot of cash transactions.” Mr Puri said.


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Printable version | Jan 23, 2022 5:26:11 PM | https://www.thehindu.com/news/cities/mumbai/property-registrations-plummet-35/article16645387.ece1

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