Realty gets a check, but sta­bil­ity ex­pected

Hindustan Times ST (Mumbai) - HT Navi Mumbai Live - - FRONT PAGE - Gu­lam Jee­lani and Peeyush Khan­del­wal let­ters@hin­dus­tan­times.com

The real es­tate sec­tor that has been ac­cused of hitch­ing its for­tunes to il­licit funds suf­fered a body blow af­ter the govern­ment scrapped high-value ban­knotes in a blitz against black money and cor­rup­tion.

Realty stocks ended 17.5% lower on Wed­nes­day while prop­erty prices, ac­cord­ing to con­ser­va­tive es­ti­mates, slumped across the coun­try.

Ex­perts said the fall in prices is short-term and will sta­bilise soon, bring­ing trans­parency to the sec­tor and end­ing du­bi­ous cash trans­ac­tions.

“In the long run, the move is likely to prove struc­turally pos­i­tive for the real es­tate sec­tor,” said An­shu­man Mag­a­zine of real es­tate ser­vices firm CBRE.

Union ur­ban de­vel­op­ment and hous­ing min­is­ter Venkaiah Naidu held out hope to home­buy­ers.

“The de­ci­sion will give huge relief to home­buy­ers. The in­flated price of land will come down and make hous­ing af­ford­able for a large sec­tion of so­ci­ety.”

His col­league, trans­port min­is­ter Nitin Gad­kari, said as much.

“The move will check the black money in real es­tate. Tax­pay­ers need not panic. There will be teething trou­ble but things will even out even­tu­ally.”

Ques­tion­able trans­ac­tions are said to be wide­spread in real es­tate, which the govern­ment is try­ing to clean up with a land­mark law to reg­u­late the sec­tor that con­trib­utes about 9% of In­dia’s gross do­mes­tic prod­uct.

The law is de­signed to pro­tect mil­lions of home­buy­ers fac­ing ha­rass­ment be­cause of lim­ited le­gal op­tions at times of dis­pute, as reg­u­la­tor will over­see all fu­ture trans­ac­tions and set­tle dis­putes.

Home­buy­ers would gain again from the govern­ment’s lat­est move that would do away with spec­u­la­tive pric­ing. “There was a lot of spec­u­la­tive ac­tiv­ity due to cash trans­ac­tions. But now, prices will be real and it will be ad­van­ta­geous for the buyer,” said Shveta Jain of Cushman and Wake­field, a real es­tate ser­vices com­pany.

Small-time op­er­a­tors in the realty busi­ness will bleed from the crack­down on black money.

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