New Delhi: Even three years after DeMo – India’s surgical strike against black money – up to 30% of the total transaction value on the secondary (resale) residential market across India can still be paid in cash. The primary sales market in Tier 1 cities offers the least scope for unaccounted wealth in property deals, according to ANAROCK property consultants.
“The primary sales market in tier 1 cities offers limited scope for black money because of the smaller gap between the state-notified circle rates and the market value quoted by developer. In fact, in some markets in NCR, the circle rates are higher than the market value of properties,” said Anuj Puri, Chairman – ANAROCK Property Consultants.
While the trend in MMR and NCR – cities 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% of the total resale property cost can still be ‘adjusted’ with black money. In cities like Bangalore, 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 – a resale property transaction involves two individuals. The pricing of resale properties also lacks transparency.
In the case of direct sales by developers, there are readily-available pricing benchmarks. In the secondary sales market, a seller can inflate the price of a property based on location, added features, etc. without stating so on the books.