The real estate sector in the country is far from having a pristine reputation. The sector is plagued with complaints from buyers which accuse it of being unaccountable and lack of transparency. It is an open secret that a lot of black money flows in through the real estate and comes out as legal tenders post the property purchase. This is seen mostly with transaction involving land, luxury homes and resale properties. This practice is not as rampant when it comes to new properties such as flats and villas where financial institutions are involved due to the need to take loans.
So since this sector is known to be linked to black money, it comes as no surprise that the sector would feel the brunt of the demonetization exercise undertaken by the government of India. The thought process behind the exercise is to curb the free flow of illegal money in the country’s economic channels. So overnight the government made two of the high denomination notes in circulation worthless. This made about 80% of the currency in circulation also worthless. There also many restrictions which were placed on how much a person could withdraw from banks. This throw a spanner in the works for many normal citizens.
The realty sector was already witnessing a slump. Prices were high and the industry was not seeing much traction. With demonetization things took an even bigger nose dive. Cities such as Bangalore were severely affected. There was hardly any money in circulation for basic necessities much less for luxury flats in Bangalore. With many restrictions being placed there was hardly any interest shown towards purchasing properties such as villas and luxury apartments for sale in Bangalore and many other parts of the country.
Sales of plots, resale homes and luxury properties plummeted during this time. Though real estate was put under enormous pressure in the short term, for the long term a different picture will emerge for the sector. Demonetization might help eliminate the odour of illegal activities plaguing the sector. This will be good for the image of the sector which has taken quite a bit of battering over the years.
The buyers have also benefited from the demonetization. It has put them in a better position in terms of bargaining with the builders. Be it an affordable independent home or a luxury apartments for sale in Bangalore or Chennai, the buyers who were serious about their purchase would have been in a good bargaining position especially with cash strapped developers. Another development thanks to demonetization is the lowering of interest rate on home loans. Since the banks were overflowing with money because of this effort by the government, they were able to reduce the interest rates they were charging on all kinds of loans. So though demonetization did not do the realty sector good initially, the buyers did benefit from it. If you had your eyes set on luxury flats in Bangalore demonetization has brought you one step closer to it.