Business

Real estate dips 44% after currency ban - Revenue loss of Rs 22,600 cr

New Delhi, Jan 11 (The Hindu) : The real estate sector is estimated to have suffered notional revenue loss of ₹22,600 crore in the fourth quarter of 2016 as sales plunged 44 per cent as compared with the same period last year due to demonetisation, according to real estate consultancy Knight Frank India.

“The Indian government's demonetization move on November 8 brought the market to a complete standstill,” Knight Frank India said in its half yearly report on the sector. “Against this backdrop, developers refrained from announcing any new launches and buyers turned extremely cautious before committing on purchases.”

The drop in sales volume during Q4 of 2016 due to demonetization move has resulted in a massive notional revenue loss of ₹ 22,600 crore to the real estate industry across the country across top eight cities,” according to the report.

In other words if the Centre had not taken the demonetisation move, the residential segment would not have suffered such a huge revenue loss it said. State governments also have suffered notional loss of ₹1,200 crore on account of loss on stamp duty in the fourth quarter, it said.

“The effect of demonetisation on all segments of the real estate sector across all markets has been fairly brutal to say the least,” said Shishir Baijal, Chairman & Managing Director, Knight Frank India while unveiling the half yearly report.

Anuj Puri, Chairman and Country Head JLL while admitting that the real sector has been impacted severely said: “It is very difficult to quantify the revenue loss, but yes the sector has suffered on sentimental grounds. Demonetisation has a very negative impact on the sector.

Sales lowest in 6 years

Knight Frank said the fourth quarter numbers are a testament to the effect that the demonetization move has had on the real estate market of the country that was barely recovering from its earlier sloth.

Sales volume dropped by 44 per cent year-on-year in Q4 of 2016 and new projects fell by a massive 61 per cent year-on-year during the same period,"it said.

At 40,940 units, the Q4 2016 sales volume is at its lowest quarterly level since 2010. The average quarterly sales used to be 90,000 units in 2010, it added.

The new projects number was much worse at just 24,300 units in Q4 2016, which was not even one-fifth of peak quarterly levels during 2010, according to the report.

The fall in sales volume and new projects were so severe during Q4 2016 that, it brought down the entire second half 2016 numbers by 23 per cent and 46 per cent respectively compared to the second half of 2015, according to the report.

The second half of 2016 reported sales volume and new projects of 109,160 units and 68,700 units respectively. The same number for second half 2015 were 141,340 units and 126,860 units respectively across India.

Knight Frank said all cities in India witnessed a crash including Bengaluru during the fourth quarter of 2016. Mumbai with notional sales revenue loss at ₹9,100 crore bore the maximum brunt while the impact in Chennai was ₹1,100 crore and for Bengaluru it was ₹4, 800 crore. The notional revenue loss witnessed in Hyderabad and NCR Delhi was ₹800 crore and ₹3,700 crore respectively.

The impact of demonetization also brought down the overall sales in 2016 by 9 per cent to 244,680 units from 267,960 units in 2015, the report said.

Comment on this article

  • Vincent Rodrigues., Frazer Town,Bangalore

    Wed, Jan 11 2017

    Any negative growth in any sector directly effects the national economy negatively

    DisAgree Agree [4] Reply Report Abuse

  • Albert, mangalore

    Wed, Jan 11 2017

    News this week that demonetisation has resulted in home sales dipping to a six-year-low with a 44 percent fall in sales volume year-on-year in the fourth quarter of 2016 tells only part of the story.

    The fact is that despite interest rate increases that took place between 2013 and 2015 India's real estate prices rose steadily between 2011 and 2015 as RBI data shows. Please note these were years that India saw a slump in GDP growth in the wake of the global financial crisis that broke out in 2008.

    Clearly, real estate prices were fanned by round-tripping of Indian money back into the shores. What the NDA government has done is to correct some vital imbalances in the economy. But these are quiet achievements. If you are looking for a Bollywood fight scene, you will find them on prime-time news

    DisAgree Agree [3] Reply Report Abuse

  • R Bhandarkar, Mangaluru

    Wed, Jan 11 2017

    Some CREDAI members in a Press Conference here said no dips and rate at best would come down by 5 percent. Where are they now?

    DisAgree Agree [2] Reply Report Abuse

  • Richard, Shirva/Sharjah

    Wed, Jan 11 2017

    very good moove by Govt if it badly affects RealEstate..no meaning of revenue loss of 22,600cr !!...now all category are rushed for real esate business where one can earn without investment and without qualification/experience by bullying general public, even big manufacturing company diverts their business to Real Estate from manufacturing since this bullying business gives more 400% margin where manufacturing gives hardly 20% /-...so its was needed very to cut short this bullying business to give reasonable justice to general public..
    Real Estate busines grown like Poisonous mashroms for poor middleclass people....e.g in cities 1bhk rates 1CR, where common people salary avg50k that means he will be life imprisoned for the loan if one approach to buy with meagre earning...
    Please ..government should take control of this business with good Land Reforms

    DisAgree [4] Agree [9] Reply Report Abuse

  • Albert, mangalore

    Wed, Jan 11 2017

    If theres no black money, defenetly the real estate sales will go down. Good.
    Real estate prices have shot up in recent years for no reason.Its Time the prices come down to some real value, so that common people could afford it.

    DisAgree [1] Agree [16] Reply Report Abuse

  • Daniel, Mangalore

    Wed, Jan 11 2017

    feel sorry for the daily wagers, yet good as it goes down till reachable to a common man to buy house...but...is there any medicine to break the bond between relevant many politicians and real estate developers!!!!!!

    DisAgree [5] Agree [5] Reply Report Abuse

  • Kumar, Udupi

    Wed, Jan 11 2017

    Hope this will help to common people dream of purchasing house for live.

    DisAgree [7] Agree [11] Reply Report Abuse

  • prem, moodbidri

    Wed, Jan 11 2017

    Are you ready to sell your property for cheap rate? Do you deal as per Govt guidelines/estimations?

    DisAgree [3] Agree [11] Reply Report Abuse

  • kas, Mangalore

    Wed, Jan 11 2017

    Every one is trying to save stamp duty by undervaluation ...
    theory is easy but practice is difficult...

    DisAgree [1] Agree [5] Reply Report Abuse

  • NN, Mangalore

    Wed, Jan 11 2017

    Undervaluation will haunt from every angles. Eventually, one may have to sell the property for right market price required by law at which point undervalued amount will show as capital gains and taxed @30%

    DisAgree Agree Report Abuse

  • Orton, Mangalore

    Wed, Jan 11 2017

    Sea of workers are largely depend on real estate.
    Now No Note No Work

    DisAgree [6] Agree [12] Reply Report Abuse

  • Anand, karkala

    Wed, Jan 11 2017

    Who knew before Demonetization the Revenue from Real Estate is 22600 crores and more in a quarter? ...

    DisAgree [4] Agree [7] Reply Report Abuse

  • NN, Mangalore

    Wed, Jan 11 2017

    44% dip in real estate market means at least 44% of the R.E. transactions used to be in black money. There were no restrictions on using legitimate money paying by cheque during those 50 days period.

    DisAgree [1] Agree [10] Reply Report Abuse

  • Harish, Kadaba

    Wed, Jan 11 2017

    Let real estate fall, let a situation happen a common man too can dream a home

    DisAgree [7] Agree [27] Reply Report Abuse

  • Anand, karkala

    Wed, Jan 11 2017

    Wait for "MANE(HOUSE) BHAGYA"from the government.

    DisAgree [10] Agree [4] Reply Report Abuse

  • Lydia Lobo, Kadri

    Wed, Jan 11 2017

    Harish,

    A common man buys a house once in his life. But those who involved in building those houses, remain day-wage labours for lifetime whose livelihood is shortened /bread and butter snatched.

    Reason ? No, it can't be demonetisation - it got to be the government before 2014 !

    DisAgree [15] Agree [8] Reply Report Abuse

  • Zeitgeist, Mangalore

    Wed, Jan 11 2017

    Lydia Lobo,

    Its great of you vitrue signalling over how daily wage workers are affected. But what about the buyers? A decent flat is priced out from a common man/woman. yes they can buy using home loans but by the time the finish paying the installments the flat would be already depreciated in value.

    And also what about the black money involved in the real estate market? do you want it to continue so that poor workers are not affected? I think this is why previous govts did nothing to curb this and if they did it would have affected poor people. And that is why i want to thank the previous govts for their great concern towards poor people.

    DisAgree [3] Agree [10] Reply Report Abuse

  • Lydia Lobo, Kadri

    Wed, Jan 11 2017

    Zeit..

    I am too am a house buyer, not a property owner. I should have been happier by the development but those below me on income terms are 75% of Indian population. I can find a job elsewhere if I lose one job. What will they do ? How will they feed their children/educate them ? Are they to produce next generation wage-earning labourers, or shouldn't they become like me and you who are the product of thumb-impression parents attained ability to argue in words exceeding limit permitted by DW ?

    Black money tackling can't happen overnight. It should have been discussed with economists, finance experts, than announcing the night before that 'from tomorrow currency of certain value will be invalid'.

    Who created the black money ? Primarily the politicians to spend lavishly at their campaigns. Does Modi give account of how much he spent for campaigns during his CMship ? Does he explain how several BJP accounts got huge deposits before demonetisation came into effect ?

    Black money is created by me and you too, by bribing at each and every step because otherwise the work does take place. We kept quiet when MPs got 200% hike but the central govt staff have to beg/go on strike for 2 - 3% hike ! If not receiving bribes, what else can be expected of them ?

    Modi promised revamp in all fields before 2014 - all he managed is demonetisation, that too by dictatorship, not by consulting with party members, department ministers, experts or bureaucrats. Not even RBI !

    How many issues can we discuss on DW ?? Just because of this fake degree holding tea-seller and 56" chest boaster who thinks PMship is ownership of India ? Eh ?

    DisAgree [2] Agree [3] Report Abuse

  • Antonio DSilva, Kuwait

    Wed, Jan 11 2017

    Lets face it these figure are not necessarily actual face value. Real estate is grossly inflated to commensurate with the pride of so called elite.

    In October last year India's real estate baron Balwant Sahani bought a Dubai number plate costing him 9 million dollars for his Rolls Royce worth fraction of that cost.

    Should give one an idea of how inflated real estate really is.

    DisAgree [1] Agree [14] Reply Report Abuse

  • nazeer Husain, jeddah saudi Arabi

    Wed, Jan 11 2017

    MUSAAFIR HUN MITRON.NA GHAR HAI NA TIKAANA......will be the next song from modi to the public when his regime finishes five years.

    DisAgree [7] Agree [15] Reply Report Abuse

  • Allen, Mangaluru

    Wed, Jan 11 2017

    This has to happen when eminent economists are sidelined by a bunch of arrogant illiterates!

    DisAgree [7] Agree [17] Reply Report Abuse

  • Flavian, Mangaluru/Kuwait

    Wed, Jan 11 2017

    Tip of an ice-berg.
    Aage aage dekoh................?

    DisAgree [5] Agree [13] Reply Report Abuse

  • Naveen , Netakere

    Wed, Jan 11 2017

    This is just hoax media hype and there no meaning for loss on the basis of notional value. this is nothing ifs and buts, no credibility for such misleading information. For any such evaluation you should have credible, reliable data, these assumptions to be fit in the dustbin. The person who have lost several thousand crores black money and several others took time to make such report. Absolutely no subscribers for this.

    DisAgree [12] Agree [4] Reply Report Abuse

  • Jossey Saldanha, Mumbai

    Wed, Jan 11 2017

    I am worried about Final GDP ...

    DisAgree [11] Agree [19] Reply Report Abuse

  • indian, india

    Wed, Jan 11 2017

    you no need to worry. people elected govt is there.

    DisAgree [14] Agree [10] Reply Report Abuse

  • krish, Dubai

    Wed, Jan 11 2017

    r u worried about 10.22 crore for shoe for 10000 students which is 10,220 per student just for shoe and socks??????????????

    DisAgree [10] Agree [11] Reply Report Abuse

  • kas, Mangalore

    Wed, Jan 11 2017

    RTI can give the figures of PAST and not FUTURE....RTI is not working on Astrology ....That is why such figures are called BAKWAS ....These figures are released to make the public ulloo ....

    DisAgree [10] Agree [3] Reply Report Abuse

  • Lydia Lobo, Mangalore

    Wed, Jan 11 2017

    Reports on financial impact due to demonetisation are coming out on a very slow pace.

    This just the beginning.

    DisAgree [8] Agree [53] Reply Report Abuse

  • Rajesh, Udupi

    Wed, Jan 11 2017

    If the inflated prices cool down and move towards more real price, it is not negative. It must be welcome news for those who understand basic finance and these looking for housing. It is a different thing if this report is true..

    DisAgree [8] Agree [15] Reply Report Abuse

  • kas, Mangalore

    Wed, Jan 11 2017

    All bullshit figures ....

    DisAgree [48] Agree [9] Reply Report Abuse

  • PAM Suvarna, Karla

    Wed, Jan 11 2017

    One can get accurate figure by applying under RTI.

    DisAgree [9] Agree [34] Reply Report Abuse

  • ABDUL RAFIQ, UCHILA

    Wed, Jan 11 2017

    @PAM Suvarna, RTI??? Some RTI activists requested REVERSE Bank for some datas but they refused to provide. RTI, Reserve Bank all other institutions became invalid under Modi raaj. Only one man dictatorship will workout till 2019.

    DisAgree [6] Agree [19] Reply Report Abuse

  • Gangaram, Moodbidri

    Wed, Jan 11 2017

    Not only that RTI refused to give details of Modi BA degree from Delhi unniversity also!!!

    DisAgree [5] Agree [16] Report Abuse

  • PAM Suvarna, Karla

    Wed, Jan 11 2017

    Abdul Raffiq,
    If one denied to get information under RTI he can directly file complaint before Commissioner of information in each district and redress his problem.
    Secondly your dictator but our respectful PM will continue in his position many more terms not only till 2019 beyond this.

    DisAgree [13] Agree [4] Report Abuse

  • Sampath, Mlore/ Blore

    Wed, Jan 11 2017

    Yes you are right... Even the figures given by Jootley are all bull shit.

    DisAgree [6] Agree [18] Reply Report Abuse

  • Jay, managalore

    Wed, Jan 11 2017

    Mr. Kas,

    Ok fine,
    then plz tell me the right figure!!!!

    DisAgree [8] Agree [11] Reply Report Abuse

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