'Large cash transactions still present in resale realty market'
It has been three years since demonetisation which was implemented with the aim to curb and eradicate black money. But according to a report released on Wednesday, significant usage of unaccounted cash is still prevalent in the secondarly real estate market.
The report prepared by Anarock Property Consultants said that up to 30 per cent of the total transaction value in the secondary or resale residential maket in India can still be paid in cash.
However, the primary sales market in tier-I cities offer the least scope for unaccounted wealth in property deals, it said.
"Demonetization in November 2016 sent Indian residential real estate -- till then a preferred laundromat for unaccounted wealth -- into an almost terminal tailspin. Even three years after DeMo, the battle is only half-won," said Anuj Puri, Chairman Aof Anarock Property Consultants.
"The secondary or resale residential real estate market still accommodates black money; at least 30 per cent of the total cost of resale property can still be paid in cash. While more and more buyers and sellers prefer official payment routes as a matter of principle, many still use the resale property market to launder untaxed cash," he added.
As per the report, while the trend in the Mumbai Metropolitan Region (MMR) and the National Capital Region (NCR), which are historically notorious for black money in real estate, has tamed considerably in primary sales, their resale property markets still see cash components.
As much as 20-25 per cent of the total resale property cost can still be "adjusted" with black money, it said, adding that in Bengaluru, Pune and Hyderabad, the prevalence of transparent payment routes, even on the resale market, is much higher.
"Unlike the primary sales market, the resale market still lacks strict regulations, making it easier for buyers and sellers to use cash components.
Also, the primary sales market involves developers with a reputation to protect, while a resale property transaction involves two individuals. The pricing of resale properties also lacks transparency," the report said.
In the case of direct sales by developers, there are readily-available pricing benchmarks, while in the secondary market, a seller can inflate the price of a property based on location, added features and so on without stating on the books.IANS