Modi’s demonetisation to hit real estate

The government’s demonetisation of ₹500 and ₹1,000 currency notes will have a transitory impact on many asset classes such as real estate, jewellery, bonds, etc.
The resale market in the real estate sector may be hit the most since many deals are made in cash. However, the demand in primary real estate may not drop since most buyers have got bank loans.
“Short-term pain is inevitable when we look for any eventual long-term cure for the disease. There has, for long, been a strident demand to bring transparency in the sector … and cash dealings must be dealt with first,” said Ashwinder Raj Singh, CEO, residential services, JLL.
“The luxury and high-end segments of residential real estate will be impacted the most. Luxury real estate prices could drop by up to 30% as sellers will struggle to offload properties to generate liquidity,” he adds.
Developers are also likely to face a serious fund crunch in the short to medium term, which may further delay some of the ongoing projects.

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