MUMBAI: The impact of demonetization of Rs 500 and Rs 1,000 currency notes on the residential real estate segment will see a limited impact in larger cities, though some tier 2 and tier 3 cities where cash components have been a factor, even in primary sales will see a business crunch, states a JLL India report.
“The secondary or resale market will, however, certainly be impacted, given the fact that this segment does see the involvement of cash component,” it said.
The commercial real estate will see minimum impact on office/industrial leasing and transactions business, given that cash components do not play a significant role in such transactions.
The report said that in real estate investment markets, projects could get stretched as informal sources of capital may not be available. “This, in fact, spells more opportunities for institutional capital. FDI, private equity and debt players will suddenly find the market even more transparent and attractive. Moreover, banks could start funding land transactions, thereby decelerating land prices,” said JLL country head Anuj Puri.
However, retailers could see some impact on their business in the short-to-medium term due to reduced cash transactions. The luxury segment is likely to be hit because of the historically high incidence of black money acceptance in this segment. However, credit/debit cards and e-Wallets should come to the rescue. Overall, the domestic consumption story remains intact, with no threat to the overall strength and growth of the Indian retail industry.
[Source:-TOI]
