Demonetisation Good for Real Estate

There have been a lot of talks these days about Demonetisation and its effects on the economy as a whole, and Real Estate in particular. I am no Economist and may not be able to comment on the impact of demonetization on the Indian economy, but being a person associated with Real Estate for the last 25 years, can surely confirm, that the effects of demonetization on real estate will be only a knee jerk reaction. It will be more about the sentiment and the uncertainty, which will make most buyers defer their decision. The reason I say Real Estate will not be impacted due to Demonetization is because to a large extent Cash component was eliminated from the Real Estate sector, atleast in most parts of Mumbai, and especially in the transactions with the Builders and Developers. Let me explain to you the reasons behind the elimination of CASH from Real Estate:

(1) Sweeping reforms in Real Estate in the last decade, including valuation of all properties as per Ready Reckoner, has ensured both buyer and seller do not undervalue their property. As a consequence, most transactions are all cheque and clear of any CASH.
(2) Also with the current purchasing power vested in the hands of the working professionals, and a double income nuclear family, who, on the basis of their salary income, are entitled to large Home Loans. This Home Loan, along with their lifetime savings, have ensured all transactions are in full cheque and there is no CASH involvement.
(3) Besides with the corporatisation of the traditional but large Real Estate companies, like the Raheja’s, Hiranandani constructions or the Lodha and Oberoi’s, and also with large corporate’s like TATA, L & T, Shapporji Pallonji entering the Real Estate Development, the CASH component has been virtually eliminated.
(4) Most Developers and Builders today are not dependent on the traditional individual money lender (Loan Sharks) for their funding and have access to loans and funding from Banks, Institutions, and Funds which have eliminated the CASH component from the Real Estate sector.

So relax and be rest assured, this Demonetisation will not affect Real Estate beyond the temporary knee-jerk reaction, infact with the current market sentiment, there will be OPPORTUNITIES which you should fully exploit. For its very wisely said, “Do not WAIT to buy Real Estate, buy Real Estate and WAIT…”