Who Wins Who Loses In Modi's Crusade Against Black Money!

The government’s demonetisation move has the potential to purge real estate of its black money malaise, bringing the genuine buyer back into the market.

- M.G. Arun & Shweta Punj

On the evening of November 8, as Prime Minister Narendra Modi announced the government’s decision to demonetise currency denominations of Rs 500 and Rs 1,000, the strongest tremors were felt in the real estate sector. Historically unregulated and unorganised, and a haven for black money, extortion and corruption, prices in the sector have long been held artificially high. It was begging for a thorough clean-up. Days later, with Modi declaring in Goa that he will follow up by going after benami holdings, the sector is bracing for the aftershocks.

Anticipated in the next couple of months is a big, big shake-out in the real estate market, which is likely to effect a significant drop in property prices across the board. By end-January 2017, when the dust settles on the demonetisation drive, many are expecting to see the start of a revival in real estate, on the back of a correction in prices, more transparency in deals, and another round of likely rate cuts by the RBI. Some experts put the likely correction in prices anywhere between 25 and 40 per cent. The drop will be the most drastic in the Delhi-National Capital Region (NCR), where the cash component for a property transaction can be as high as 40-50 per cent.