AMBERNATH, India—Saturdays are typically busy at the sales office of Patel’s Planet, one of the many new apartment developments in the suburbs surrounding Mumbai where India’s fledgling middle class has been flocking in recent years.
But last Saturday, it was virtually deserted.
Prateek Patel, the cousin of the developer, complained that he hasn’t sold an apartment since early November, when Indian Prime Minister Narendra Modi shocked the country by announcing an unprecedented currency overhaul.
Mr. Modi’s move took aim at the heart of India’s black-market economy by taking out of circulation existing 500- and 1,000-rupee bills in an effort to reduce corruption, counterfeiting and tax fraud.
Much of the country’s real-estate transactions, particularly land and home sales, have been conducted on a largely cash basis to avoid taxes. With many buyers now on the sidelines, sales have evaporated and huge price discounts are expected when the market gets its bearings back.
