How Reduction In Circle Rates Impact Gurgaon’s Property Prices
The Haryana government has recently announced a reduction in the circle rates of properties. This can actually impact the property market in the state and fluctuation in the property market conditions.
Over the past one year, there have been many changes happening such as the demonetisation, introduction of Real Estate Regulations Act, replacement of service tax with GST and the Benami Transactions Act which made the real estate business to experience many twists and turns. The property rates in many cities have fluctuated significantly to affect business adversely. Usually when the circle rates are known to get revised upward, the opposite has just happened in Gurgaon. The state has experienced a cut in the rates.
To give a boosting to the sluggish real estate market, the Haryana government has revised the circle rates this time. This is the second time that the circle rates in Gurgaon have been reduced since 2016. When circle rates are reduced, the other charges related to that such as stamp duty and registration will also get significantly reduced. Such changes will definitely attract people towards ready-to-move-in properties and affordable housing segments according to Amarjit Bakshi, managing director, Central Park.
As Gurgaon is one of the most vibrant areas, the real estate business will definitely pick up soon due to these changes.
Why circle rates have come down in Gurgaon
According to Baksh, the government’s decision to match circle rates to market rates is to strike a balance between both so that, there would develop a healthy market condition. The negative impact that the market experienced in the past due to the wide disparity between the two will be diffused considerably. In future, the revenue loss for developers will be automatically come down.
This process of streamlining the circle rates in tune with the market rates shows how prudent the government is acting, maintains Amit Chawla, associate director, valuation and advisory, at Colliers International India. "A change in circle rates that reflect market realty is always positively accepted. This provides the transacting parties with a direction and benchmark, to base their negotiations,"Chawla explains.
Current circle rates in Gurgaon
According to reports, the circle rates in most of the HUDA sectors in Gurugram, have been pulled down from Rs 50,000 to Rs 42,500 (a reduction of 15 per cent) per square yard. In areas like Sohna and the city’s outskirts, the circle rates are higher than the market rates. For instance, the market price of land in Sohna is Rs 50,000 per acre, while the circle rate is Rs 90,000 per acre.
Impact of circle rate on realty business
Normally, circle rates are decided based on the property prices that prevailed in the recent past. Thus, it is the market force that forms the basis for circle rates. However, property prices in Gurgaon seem to be higher than those in the other cities. The reduction in circle rates will only reduce stamp duty and registration charges. This reduction is very minimal compared to overall cost of the property. Though reduction in circle rates will boost the business, there are also other factors such as developers’ credibility, adherence to timeline etc that will impact the realty business more than anything else.
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