India recently banned high denomination notes such as Rs 500 and Rs 1,000 to clamp down on black money hoarders in the country, and this has had an effect on the property market in India.
Use of black money was rife in the property market in India, with many buyers and seller insisting on cash being part of the transaction.
The recent ban on high value currency notes is expected to deal a body blow to this practice, with another likely side effect of the move to be a downward pressure on the interest rate structure.
With black money taken out of the equation, overseas property investors who use normal money transfers and mortgage credit are likely to benefit from lower prices for Indian real estate.
Global property consultant Cushman & Wakefield has brought out a report, in which they show that the property prices of new launches across the top eight Indian cities has seen an average decline of 14% year-on-year.
They also expect to see lower prices to continue for new builds this year as developers enhance affordability for property buyers.
MD at Cushman & Wakefield India, Anshul Jain, commented: ‘After demonetisation, the markets have witnessed a slow uptake of residential properties because of price and value mismatch. Consequently, developers are also relooking at their strategies to create better value for home buyers.’
New luxury high-end property developments have in fact halved in number since demonetisation and the loss of the black money factor, though the middle-income and value housing sectors have seen minimal decline.
In already launched projects with unsold units, heavy discounts and other funding plans are being offered so that buyers can be attracted and there can be some movement in the otherwise still projects.
Now could be the opportunity for overseas property investors to experience a level playing field in the Indian property market, and bargains should be there to take advantage of.
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