Property developers are putting up a brave front on prices, but registration authorities report a sharp fall in revenue in leading real estate markets in Haryana, Uttar Pradesh, Karnataka, Telangana and Tamil Nadu in the first week after demonetisation.
Some small developers in Bengaluru, a segment that makes up an estimated 12 per cent of the market, have reportedly cashed in on the Centre’s decision, making sales in “old currency”, to be regularised using loans later.
The real estate sector expects a drop in land price by up to 30 per cent in bigger cities and cheaper housing loans in the coming months.
Demonetisation blues
In the “hot” property market of Haryana’s Gurugram, the government’s decision on removing Rs. 1,000 and Rs. 500 notes has adversely hit transactions. The number of conveyance and sale deeds dropped by over 50 per cent.
While 132 conveyance deeds were registered totally in the municipal corporation area in Gurugram tehsil and surroundings from November 1 to 8, only 48 such deeds were registered from November 9 to 15. Similarly, the number of sale deeds went down from 168 to 78.
In all, 723 documents were registered from November 1, but the number dropped to 332 over the past one week.
“There is no work after the announcement,” said Gurugram Tehsildar Meetu Dhankar.
Mahesh Kumar Chauhan, a dealer, said property rates suffered a decline of 10-15 per cent — first when the BJP came to power in the State — and could fall another 15 per cent now. The low registration was partly due to non-availability of cash to pay the registration fee.
Another major market, Noida in Uttar Pradesh, has fewer new property registrations. Uttar Pradesh’s Assistant Inspector-General, Stamp and Registration Department, S.K. Singh, says there is a significant fall in property registration after the big notes were scrapped.
“Earlier, 500 to 600 properties used to be registered in Noida, but it is hardly 20 to 30 per day now. On Tuesday, 31 were registered,” Mr. Singh said.
Before the currency removal, over 90 per cent registrations involved cash for stamp duty. “Few people used Real Time Gross Settlement or demand draft,” he added.
Taking the long view, Tapan Sangal, group director, Lotus Greens, a developer in the national capital region, said, “The sector has been in a slumber. The decision on notes has added to the woes.”
Mumbai holds prices
Apartment prices in Mumbai have not dropped since November 8, but land prices could fall by 30 per cent. Luxury apartments could also cost 30-35 per cent less. In the long term, medium and affordable housing is expected to get cheaper, while the stock of 2,46,000 unsold apartments would keep existing prices firm for three years, an industry source says.
Bengaluru’s massive real estate sector has seen a churn. The normal volume of property registrations at 1,800 a day is now a low 200, a senior revenue official says.
Suresh Hari, secretary, CREDAI, Bengaluru, attributes the slowdown to disruption in banking services —something that would pick up. Yet, there is less confidence among smaller players, who are only fulfilling pre-committed flat orders.
One builder with projects in C.V. Raman Nagar and Marathahalli said the pre-currency-removal prices Rs. 4,800 to 5,800 per sq. ft. had been cut to Rs. 4,120 to Rs. 4,930. Bigger projects in central Bengaluru continued with unchanged rates, between Rs. 12,000 to Rs. 25,000 per sq. ft.
Fall in loan disbursal
HDFC, a major home loan institution, says nothing has changed. “The market is already slow due to court orders on buffer zones around lakes. The city has witnessed demolition of deviating properties. So loan disbursals have marginally decreased,” says S.N. Nagendra, the agency’s Regional Business Head.
“There is no doubt that there would be some price correction. A 10-20 per cent reduction is likely,” says R.P. Deshpande, Director, Institute of Home Finance.
In neighbouring Telangana, the sub-registrar office in Erragadda, Hyderabad covers the more expensive residential properties in Jubilee Hills, Banjara Hills and Srinagar Colony. On Tuesday, not a single property was registered here compared to a normal of about 15, says Sub-Registrar Basit Khan.
Registration of documents ground to a halt across Kerala, but the organised realty sector is upbeat. Around 2,000 residential units are sold annually in the State by the estimated 200 CREDAI members.
. “In Kerala, the dealings are direct buyer to seller, with no broker underwriting,” said S.N. Raghuchandran Nair, national vice-president, CREDAI.
High and dry in T.N.
The experience of M. Natesan, who is building a house in Kancheepuram, is shared by many. He reached Chennai from Kolkata two days after the demonetisation announcement. The 43-year-old central government employee in a north-eastern State managed three weeks of leave but is unable to withdraw money to buy material or pay workers’ wages. “I need nothing less than Rs. 3 lakh and cannot withdraw half that amount from my account in a month,” he laments. The currency move, coming two months after the Madras High Court banned registration of plots in unapproved layouts has hit the realty sector further.
(With Ashok Kumar, Ranjani Govind, Rahul Devulapalli, K. Manikandan, C. Jaisankar, M. Soundariya Preetha)
