T C Sreemol | TNN | Oct 30, 2017
Kochi: Demonetisation has hit the real estate industry in Kochi badly and there is a 26 % drop in land and flat transactions during post-demonetisation period.
Between November 1, 2015 and October 31, 2016, about 45,181 land and flats were registered and the area transacted was 1,843.43 hectare in the district. It came down to 33,025 registrations from November 1, 2016 to September 30, 2017 and the extent of area transacted during this period is 1,406.54 hectare. Registration department officials said another 2,500 to 3,500 registrations will be done in October and another 1,000 hectare will be transacted this month.
Registration officials and economists attribute the decline in the transactions to demonetisation. While environmentalists are happy about the decline in transactions since there would be a decline in the construction activities.
“Nowadays, most land transactions in Ernakulam take place in eastern part of the district, including Muvattupuzha and Kothamangalam where land is available. After demonetisation was implemented, state government made valuation certificate mandatory for buildings, which the customer prefer to buy. The valuation certification, certified by the chartered engineer in the local body, should be provided while registering. This prevented builders from selling flat at exorbitant rate. The valuation certificate is prepared by fixing rate per square feet of the building,” said Biju P K, Ernakulam district registrar.
“Both the real estate and unorganized sectors suffered badly after demonetization was implemented in November last year. Earlier, people who hoarded black money used to invest in real estate sector. They had 40-50 % black money. But with the demonetisation, they got scared to invest in real estate since tax officials started to monitor all the transactions. It is the fear of monitoring that dissuades many to invest in the real estate. Demonetisation also helped to bring down speculation in the sector. If the current situation in the sector continues and speculation comes to an end, ordinary people can buy houses at affordable prices. Now, only those who are in actual need invest in the real estate sector,” said Martin Patrick, chief economist of Centre for Public Policy Research (CPPR) in Kochi.
Land registration officials and real estate players said that unlike in the past, the buyers are now interested in small chunks of land, that’s below 5 cents. Also they are willing to move away from prime land and invest in property in places like Kothamangalam and Muvattapuzha that is comparatively greener.
An official in Njarakkal sub-registration office said people now buy small plots to construct house instead of buying large plots as they did earlier. “Only the actual buyers who want to construct a house on four to five cents of land buy the plot in the district,” he said.
The Confederation of Real Estate Developers Association of India, Kochi president Paul Raj said that demonetisation helped to stop speculation that was prevalent in real estate sector. “The speculative approach in the sector has stopped. Only the buyers who actually need a house invest in the sector now. With the implementation of Real Estate Regulatory Authority (RERA), the sector will become more transparent which will encourage customers to buy apartments,” he said.
This news was first published in The Times of India, click here to read: Kochi’s realty sector yet to recover from demonetisation effect