As cash flow tapers, a hard look at realty’s foundations
Property developers are putting up a brave front on prices, but registration authorities report a sharp fall in revenue in leading real estate markets in Haryana, Uttar Pradesh, Karnataka, Telangana and Tamil Nadu in the first week after demonetization.
Some small developers in Bengaluru, a segment that makes up an estimated 12 percent of the market, have reportedly cashed in on the Centre’s decision, making sales in “old currency”, to be regularized using loans later.
The real estate sector expects a drop in land price by up to 30 percent in bigger cities and cheaper housing loans in the coming months.
In the “hot” property market of Haryana’s Gurugram, the government’s decision on removing Rs. 1,000 and Rs. 500 notes has adversely hit transactions. The number of conveyance and sale deeds dropped by over 50 per cent.
While 132 conveyance deeds were registered totally in the municipal corporation area in Gurugram tehsil and surroundings from November 1 to 8, only 48 such deeds were registered from November 9 to 15. Similarly, the number of sale deeds went down from 168 to 78.
In all, 723 documents were registered from November 1, but the number dropped to 332 over the past one week.
“There is no work after the announcement,” said Gurugram Tehsildar Meetu Dhankar.
Mahesh Kumar Chauhan, a dealer, said property rates suffered a decline of 10-15 percent — first when the BJP came to power in the State — and could fall another 15 percent now. The low registration was partly due to non-availability of cash to pay the registration fee.
Another major market, Noida in Uttar Pradesh, has fewer new property registrations. Uttar Pradesh’s Assistant Inspector-General, Stamp and Registration Department, S.K. Singh, says there is a significant fall in property registration after the big notes were scrapped.