Buying a piece of property (either home or office) in Gurgaon will now cost you more as the city administration has revised circle rates upwards after a gap of four years. The revised rates will be effective from February 12 and be in force until March 31, 2018, according to soures. The rates will be revised again in the new financial year, as per the market conditions.
Developers say that this gives an indication that all is well with the Gurgaon property market, which has slowly but surely started looking up post the RERA, GST and demonetization.
“There is no doubt that the real estate sector is reviving fast post RERA and the GST rate cut, combined with the government’s focus on affordable housing. The revision in circle rates is symptom that property transactions are increasing and the government is thinking to increase its revenue since it will affect further sale, purchase and registry prices,” says Ashudeep Batra, ED, Exotica Housing.
According to developers, revision in circle rates is a regular exercise of the local administration. “Last time, after demonetization, the circle rate was lowered by 15% in Gurgaon, but this time it has been increased considering reviving demand in different sectors. This hike is maximum in commercial and retail. Residential will not get affected much due to this because allocation of different localities has been done in different slabs,” says Suresh Garg, CMD, Nirala World and Secretary, CREDAI Western UP.
Talking about the rationale for revision in circle rates, Surabhi Arora, Senior Associate Director-Research, Colliers International India, says, “Rationally, circle rates are adjusted to reduce the gap between the ‘prevailing market rate’ at which transactions are happening and the government-prescribed minimum value for registration of properties. Circle rate is the minimum rate at which the sale or transfer of a plot, built-up house, apartment or a commercial property can be registered. These rates form the basis of stamp duty and registration charge calculation for a property. An increase in per sq ft basis will eventually increase the stamp duty paid to the state government.”
Arora, however, doesn’t foresee any major impact of increase in circle rates on transaction volumes as currently the market is end-user driven. “However, the further categorization of localities is a welcoming step towards making the circle rate system more rationalize. Location categories formulated generally cover large areas. Thus, they do not account for the substantial variance in prices within each of the area categories,” she says.
Impact on other property markets
Some developers, however, say that although this revision in rates seems to be a good step to give some relaxation to developers, but the city administration should have skipped the revision in rates this financial year and done it after March 31st since any hike will impact the home buyers ultimately, who will start looking for some viable options in the NCR and the markets like Noida, Greater Noida and Ghaziabad will gain as property is already cheap in these areas.
“In the current scenario when the government is putting all effort to bring down property rates and developers are controlling cost to make housing affordable for all, such hikes will not support property purchase,” says Garg.
Batra also feels that keeping the market sentiments in mind, this revision could have been postponed for some time because property rates will go up in Gurgaon and people may look for other locations like Noida and Greater Noida. “Circle rates are already high in Gurgaon and the government should consider bringing it down to attract more home buyers to purchase their dream home,” he says.