Social Media User Akshat Shrivastava expressed concern that most properties in India have become unattractive for investment due to the prevalence of black money. He suggested that if black money were to be eradicated from the system, the real estate market would likely crash.
India’s Real Estate (Image Source: iStockphoto)
In a viral post, a social media user Akshat Shrivastava took to X (formerly Twitter) to share insights on India’s real estate market, suggesting that it is heavily reliant on black money transactions. He pointed out that sellers often prefer to transact in cash to avoid the high capital gains tax of 20 per cent on long-term gains. Similarly, buyers opt for cash transactions due to the burden of hefty stamp duties. This phenomenon has created a significant disparity between rental and purchase prices in India, unlike many other global markets.
Using data from CNBC, Shrivastava illustrated the stark contrast in the rent-to-buy spread between Indian cities like Mumbai and international counterparts like Kuala Lumpur and Hanoi. He emphasised that businesses, which rent properties, can offset expenses like Goods and Services Tax (GST), making white transactions more favorable for them.
He wrote on X, “India’s Real Estate is built on Black Money. The sellers want to sell in “black” because of the high capital gains structure (20% on Long-term capital gains). And, buyer wants to pay in “black” because of the high stamp duties. As a result, there is a massive divergence between the “rent” & “buy” spread in India, unlike most geographies-
Median rent for a 1-bedroom: $481
Buying price per square meter: $3,882
Median rent for a 1-bedroom: $735
Buying price per square meter: $3,903
Median rent for a 1-bedroom: $688
Buying price per square meter: $2,280.”
Shrivastava expressed concern that most properties in India have become unattractive for investment due to the prevalence of black money. He suggested that if black money were to be eradicated from the system, the real estate market would likely crash.
In light of these insights, Shrivastava offered three pieces of advice to potential real estate investors. Firstly, he recommended purchasing properties at sensible prices. Secondly, he advised investing in locations where the gap between selling and buying prices is minimal. Lastly, he encouraged individuals to educate themselves about investing to make informed decisions.
(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of TN Network.)