Modi's demonetisation move has hit the real estate market in Delhi and Mumbai, report Raghavendra Kamath and Karan Choudhury.
The resale market for luxury properties has come to a halt after the government banned high-value currency notes earlier this month.
“Demonetisation has hit both primary and secondary luxury property sales,” said Shishir Baijal, chairman and managing director, Knight Frank India. “Because of the extent of cash involved in resale, it is impacted more,” he added.
“Any sale of luxury properties takes two to three months to conclude. We have not seen any buyers backing out yet,” said Kamal Khetan, chairman and managing director of Sunteck Realty, which is developing luxury projects in Mumbai’s Bandra-Kurla Complex in a joint venture with the Ajay Piramal group.
Flats priced Rs 5 to 10 crores are considered premium in Mumbai and those above Rs 10 crore luxury. The resale business in Mumbai’s luxury property market is around Rs 500
crore a year. This includes 25 to 30 transactions for apartments priced Rs 10 to 50 crore.
Such properties are available in Altamount Road, Napean Sea Road, Worli, Prabhadevi, Bandra West, Juhu and Khar.
Suresh Patel, a property broker who operates in South Mumbai, said, “Buyers are in wait-and-watch mode. The move (demonetisation) has hit this market badly.”
Delhi’s luxury flats are priced Rs 3.5 to 4 crore and deals worth Rs 350 crore take place in a year. These flats are mainly available in Greater Kailash, Saket, Chittaranjan Park and East of Kailash. “It is a double whammy for us. Those who were buying flats and paying almost 75 per cent in cash have no money,” said Amit Khanna, a property dealer in South Delhi. “Sellers also cannot accept cash payments,” he added.
Some builders in Delhi have stopped construction because buyers are backing out of commitments.
“It will take at least six months for this segment to revive and after that the cash component in transactions will fall drastically,” said Jagdish Bhalla, who has built apartments in Greater Kailash.