Demonetization of 500 and 1000 notes are ceased to be legal tender by government thus real estate industry has faced a result of reduction in cash transactions. Investors and buyers are now very straight forward with their transactions and this will give a structural impact over a period. Due to corruption and black money transactions, investors were always secured with short term gains. Banks have so far received huge amount of cash thus liquidity will fabricate over short term gains and real estate prices will be more attractive. This way, Black money investors or buyers will have fewer opportunities for short term gains and their deceitful intent will be contract over the period.
India government has taken few challenges related to demonetization in the last few years in realty sector which will attract foreign investment into Indian real estate. Govt. has done few policy framework for real estate investment trusts, the REIT, regulations and slackened the foreign direct investment (FDI) policy. Also, there is an introduction step they have taken by the initiatives of real estate regulatory act, RERA.
Now, foreigners are more curious towards the transparency while they are investing in real estate sector. Before, foreigners had to compete with the local developers since that time level field is not played well. This move will attract foreign investors and developers into Indian real estate. There will be huge increase in institutional participation thus real estate sector will be matured enough to adopt best practices. This will be a positive message about India to the World. Experts believe that India is now at a stage of a progressive growth cycle in real estate sectors.
These acts may bring consolidation among developers and these factors will surely attract more foreign investors into Indian Real estate. Also, demonetization will attract credibility to property market and it may result in long term business with foreigners. By this move, India will be encouraged with economic growth and there will be boost in local and global businesses. Demonetization will add to the credibility of developers to the extent that there is likely to be less accounted cash transaction in realty sector.
This way, investors will feel safer with developers. If government decision maintains that the abolition of high value currency notes will clean black money from the market. Liquidity will improve.