Business magnates, top industrialists and eminent investors have always believed in catering to consumers. Those who have transformed lives of people through various innovations and trustworthy projects have always sailed choppy waters. The same can be said about the Indian real estate sector.
The realty segment in India saw subdued response when demonetisation was announced last year. Scrapping of Rs 1000 and old Rs 500 notes sent the real estate sector into a sudden shock.
On one hand where developers were getting cold feet post demonetisation, few builders were immune to the announcement. Builders who remained unaffected by the note ban were majorly consumer driven, whereas investor driven had to face losses.
Investor driven builders suffered a setback as a painful demonetisation dried up the demand in the realty space, which roughly accounts for 7% of India’s GDP.
Most of the transactions are cash-based and the sector is considered best investment option for people to park black money. In majority of the transactions, sale documents don’t show the actual property price.
It is the cash-rich secondary market in India where investors engage in sale and resale, which plays a crucial role in fixing prices. Majority of the builders gave preference to those who paid 60% of the amount in cash and kept them ahead of the ‘white money makers’.
But, after demonetisation, the dynamics changed. Those with black money went into a tizzy and got busy figuring out how to account it. The Government’s crackdown on benami properties curbed cash transactions and thus, the note ban ‘cleansed’ the real estate sector.
In this clean-up exercise, builders such as Tata Housing and others remained unaffected as they were consumer driven. They have always focussed on consumer first, whether he/she can pay cash or not.
Builders who did not side-line the genuine buyers survived the heat and are now reaping benefits of government’s pro-industry and pro-consumer initiatives.
“Government has introduced a slew of initiatives and the impact will be seen soon. Builders who were consumer driven were hardly affected by the note ban. Coupled with RERA and affordable housing, genuine builders are going to lead the industry,” said industry expert Ankit Mahajan.
Demonetisation along with Benami Property Act and RERA will surely make real estate more organised, transparent, credible, especially for consumers.