Real estate will get a big boom because people will realise that investments into real estate is probably the most safest in terms of what you invest.
In a chat with ET Now, Niranjan Hiranandani, Managing Director, Hiranandani Group, talks about the importance of black money crackdown by Modi government and says that we have had too much of this periphery talk of black money and it was unending. Edited excerpt
Have you recovered from the déjà vu moment because for real estate sector, lot will change? It is more than a nightmare.
Well you must understand one thing that disruption is going to be a part of the world. It is happening in the US. It is happening in India, it is a welcome change as far as India is concerned. We have had too much of this periphery talk of black money and it was unending, It was necessary call of the day.
Going to be disappointment to a lot of people but it will take another three months and all these things will fall into place. But three months is going to be very disruptive not only about the real estate, there are so many things where the economy is running on the cash moneys as far as that is concerned, real estate will get a big boom because people will realise that investments into real estate is probably the most safest in terms of what you invest on and cash is not what something should be hoarding or doing. But the economy does not work on investment positions but actually cash flow and that is a little worrisome in the next three months.
What disruption would mean for an already slumped out real estate market?
The RERA Bill now coming into place where all these transactions are going to be put on record. I think it a movement already in that direction which we have seen in the last one year. I do see there will sectors of the real estate which would be in difficulty, maybe not in the main urban areas and stuff like that but in peripheral areas or city II levels where a large amount of cash money transactions are still continuing to take place. There will be a correction over there.
All these things will fall into place in two-three months. So, it is a good thing and a lot of corruption is there in the economy still at the operating level and this because of the status of the cash which is now going to be not looked upon in a positive manner. I think it is a good thing but yes it is going to be disruptive. This is what I feel. But I do not think there is a problem in terms of real estate but over a period of time.
Re-sale prices in secondary market are going to be get impacted at all?
Of course, it will. In the short run there is going to be lot of problems. Ultimately, housing demands are going to increase completely and, in fact, over a period of time this a very-very good thing which has happened. I am welcoming this particular step.
The only problem is — how do you handle this disruption? How do you handle in this phase where people are going to be in difficulties and it is about the housing markets that I am worrying about, I am worrying about the other people, the agriculture sector, people in the farms, people at the intermediary level which have been used to the cash market.
Yes I know the prime minister has opened all these saving accounts and other things at the farmers level, but I think that operation there where my labour contractors are paying labour wages to their actual persons who are at the site are now being paid cash on the site.
I think those are the little things and problems where you are asking every labourer to open an account in order to receive the moneys. I think those are issues which really will have a lot of difficulty because people want cash at that level because they want to spend cash at that point of time.
Those changes have not taken place. So I have 5000 or 7000 labourers being paid every weekend by my contractors and sub-contractors. Are those people all going to go to the banks every week to draw it or to ATMs to be able to draw the cash, I do not know. It has not happened till now. Hopefully that will also happen. So I am more worried about those people rather than builders. I do not see problem at that end taking place for a longer period of time.