The Indian Express (Delhi Edition)
Deal talks get louder in Gujarat
After registering a dip in land and housing deals post demonetisation, major markets in the state like Ahmedabad, Vadodara and Surat have made strong gains
REAL ESTATE TRANSACTION
THE “CASH-RICH” real estate sector of Gujarat — where sales hit a six-year-low after demonetisation — appeared to have bounced back by the end of December 2016, going by sheer number of property deals struck in the month. Real estate deals in Surat district recorded a three-fold growth, clocking 300 deals a day, during the 31-day period immediately after November.
Ahmedabad, the state’s largest property market, as well as Vadodara saw a 200 per cent increase in the number of transactions (or sale deeds), just a month after demonetisation crippled the sector.
Data from the Gujarat’s revenue department, accessed by The Indian Express, show that 9,296 sale-deeds were executed across Surat district in December 2016. This is about three times the 3,000-odd property registrations of November 2016. If a year-on-year comparison is made, even then the number of real estate transactions recorded for December in Surat is 17 per cent more than those clocked a year ago (a total of 7,500 sale deeds in December 2015).
Besides the number of deals, the revenue earned by the Gujarat government from Surat district for December has seen a fourfold jump. For instance, in November, the state government earned Rs 20.71 crore as stamp duty and registration fees from realestate transactions in Surat. This revenue figure rose to Rs 83.01 crore in December.
After demonetisation, The Indian Express had reported how real estate sales across Gujarat had plunged 43 percent — in terms of volume — by November-end. A number of real estate experts were predicting that demonetisation will bring more “pain” for the sector, especially for a property market such as Ahmedabad where sale of homes costing Rs 90 lakh and above usually have a cash component of 50-60 per cent. However, the sale figures for December have surprised many.
“Looking at these figures, I can say that demonetisation has not hurt the real estate sector in Gujarat, as much as it has done in other states such as Rajasthan. I do not know the reason behind it, but we have been hearing a number of stories about how real estate developers cracked a number of deals by accepting the defunct Rs 500 and Rs 1,000 currency notes after November 8. I do not know how true these stories are ,” said a senior Gujarat government official from the revenue department who did not wish to be quoted.
What is more surprising is that the growth of Surat district has even overshadowed the performance of Ahmedabad — the biggest property market of Gujarat in terms of transaction volumes. Ahmedabad, which recorded a similar 3000-odd property transactions in November 2016, rose to 6,275 transactions in December. Similarly, Vadodara doubled its performance to 2,900 transactions, within a month.
The growth in the three urban centres looks more stark when compared to real estate transactions that happened in other districts. For instance, in November 2016, the state capital Gandhinagar saw just 819 real estate deals. This increased to 984 deals in December. This multi-fold growth in select pockets of Gujarat also comes at a time when the total real estate transactions in the state during December (34,753 sale deeds) is still 26 per cent lower when compared to the same period a year ago.
When The Indian Express spoke to some of the leading real estate developers in Gujarat they admitted that the state government figures of December were “reflective of the deals that happened immediately after demonetisation was announced”. A leading Ahmedabad-based developer who is also a member of GIHED (Gujarat Institute of Housing and Estate Developers) — a city chapter of pan-india body CREDAI — says: “During the month of December, there were absolutely no buyers or inquiries. The entire real estate market had come to a standstill after demonetisation. So, the figures in government record books for the month of December are actually the deals that were immediately done by developers after November 8. I personally know of a few instances they accepted the defunct currency. Both, Surat and Ahmedabad saw a number of such deals where the defunct currency was accepted from customers.” The builders, however, refused to divulge details of these transactions.
However, developers like Jaxay Shah, managing director of Ahmedabad-based Savvy Infrastructure Pvt Ltd and presidentelect of CREDAI, say: “It seems that normalcy has returned to the market. The shock of demonetisation that was seen in November, has eased and so you are seeing the quantum of deals going up in December. It is also a time when NRIS make a buy,” Shah said.
Similar were the views expressed by builders in Surat where cash component in real-estate transactions used to about 35 per cent before demonetisation. The chairman of Surat chapter of CREDAI Velji Sheta says: “After demonetisation, the real estate market had not been affected in Surat. The major reason is bank housing loan interest rates had gone down, as a result of which, people have come ahead and started purchasing houses in Surat city. Majority of the buyers are among middle class and lower middle class segment. The important reason is that after demonetisation, buyers and sellers had found that Jantri rates (Land valuation rates) might increase, as a result of which, we have seen a rise in the number of documents registered in the month of December.”
So, has the black money or cash transactions disappeared from a property market such as Surat? A commercial real estate developer from Surat, Naresh Agrawal, says: “Earlier, the ratio of cash payments in Surat real estate market was 35 per cent. Now, after demonetisation, 15 per cent of the payment is still made in cash. If more white payment is shown in the property documents, the customer has to pay more stamp duty.”