Chennai: The move will streamline the real estate business and lead to plummeting prices of land, say developers, adding that however in Chennai prices of property may not see an impact.
“For Chennai, and particularly the residential market, there will be no impact. The cash component is not in vogue here. As far as the city property is concerned, there may be a temporary lull due to reduced transactions, but price correction may not happen”, said Ajit Chordia, of the Olympia group and past president of Confederation of Real Estate Developers’ Associations of India (Credai) Chennai.
“Agriculture land and lands outside Chennai may have more impact than city properties. In Chennai, as it is the guideline value are equal to or higher than market value, hence cash component will not play any role,” he added. Suresh Krishnan, the president of Credai, added that this move would be instrumental in organising the highly unorganised sector, as customers need not be dealing with developers with cash.
What developers extol the most is the expectation that land prices will fall. High land prices lead and lack of transparency in approvals is one major reason for skyrocketing property prices, say developers. They say that while in Chennai, which has fewer customers transacting in cash, movement of black money is limited, unlike other markets.
“There will be a minimal impact on prices, but luxury project prices may fall. The movement of black money by payment through cash is less in Chennai as people prefer paying through loans so there will be no long-term impact,” he added.
Managing director of Navin’s housing praised the Prime Minister’s move by calling it a major reform measure in cleansing the economy.
“There will be improved transparency and better circulation of money in the real estate sector. Land prices will come down which will stabilise the property prices. As far as the Chennai market is concerned, there is way more transparency here, but with a highly organised sector, the real estate market will improve and expand,” he said.
