Demonetisation affects real estate market in Mumbai and Thane

Real estate market in Mumbai and Thane has taken a severe hit since demonetization was announced on November 8. Property expert and owner of Praron Consultancy, Pranay Vakil, said transactions have come to a "standstill" in the last 50 days. "People did not have cash to give in deals where cash is component is prevalent. Others postponed buying hoping that interest rates would go down," he said. Vakil said another reason was the expectation that property prices will reduce. "There were several media reports that rates will go down. Potential buyers thought it would be prudent to delay buying property," he added. Market sources said the high value residential market has been the worst affected with poor to nil sales since last month. Pankaj Kapoor of Liases Foras, a real estate research firm, said the industry is now in a "reset mode". "I expect a price correction once interest rates are lowered," he said. "People are waiting and watching right now. Builders who were building luxury properties are shifting their focus to affordable housing in the distant suburbs," he said. Property consultant Ashok Narang of L. Lachhmandas & Co said inquiries in the residential segment have slowed down, but genuine buyers are bargaining hard with developers in the luxury segment. "It is now a buyers' market," he said. However, residential leasing has not been affected. "Developers with big brand names will sustain in this market, but at the same time they should provide incentives to buyers to improve sales," said Narang. Ramesh Nair, COO - Business & International Director, Jones Lang Lasalle, India, said the secondary market and even those in the primary segment where cash component plays a significant role has seen a dive. "We were looking for purchasing a flat in Thane but have now deferred our decision as we feel the rates could crash anytime in the near future. Any drop in prices could benefit us as we could end up saving lakhs," said Swati Sharma, a home seeker from the suburbs who has been aspiring to relocate to Thane soon.