High-value deals and housing sales to face little impact
Mumbai | Delhi: The Reserve Bank of India’s decision to phase out the ₹ 2,000 currency bill could potentially have a mode-
rate impact on high-value property transactions, although the real estate markets have been thriving for the past two years.
However, it is unlikely that sales momentum will be significantly affected solely due to this change, as many developers are already inclined to avoid transactions involving substantial cash components, say experts. Land transactions, especially in smaller towns and peripheral areas of tier cities, may witness some uptick, as suggested by the marginal rise in inquiries for the same so far,
Following the demonetization in 2016, the cash component in real estate deals has come down across key property markets,
and several developers have already intimated their channel partners not to encourage such transactions involving large
cash dealings. “One of the biggest deterrents has been the gap between market and ready reckoner rates,
which has been narrowing further in many micro markets, allowing less room to accommodate cash in property deals, ”said a Pune-based realtor. The currency in circulation with high denominations is around 10% this time, as compared to the 2016 demonetization, when ₹500 and ₹1000 notes, which were banned overnight, formed over 85% of the currency in circulation.
“The cash circulation is significantly lower and may not see the rush like 2016.
There have been queries for residential assets and land-related transactions, but builders are also cautious, as most have had ED and IT raids recently,” said the CEO of a Bangalore-based broking firm, “In a bid to get rid of cash, some developers themselves are offering to pay in cash to brokers to settle dues.”
While the new residential sales are not seeing a major impact, clients with pending payments are insisting on paying in cash. In Gurugram, Noida and Delhi, people are trying to absorb ₹2,000 in currency in the secondary transaction as the builder is not
accepting too much cash.
“Those who had pending payments, are trying to pay in advance to get rid of the notes. Before this directive, developers were ready to take cash, but now they are not accepting more than 30% of the balance or pending amount in ₹2,000 notes,” said a Noida-based realtor: Ina secondary transaction, where the buyer is an individual, the seller is ready to take 22,000 notes but at some premium.
“For instance, if a ₹ 20 lakh payment is pending and the buyer wants to pay ₹ 10 lakh via ₹ 2,000 notes, the seller is ready to consider it ₹ 9 lakh and the balance ₹ 1 lakh is treated as premium,” said a broker.