Property prices in Gurgaon set to go down on likely 5% cut in circle rates

GURGAON: The long spell of slowdown in the real estate market has prompted the Gurgaon district administration to propose a reduction the circle rates of properties across all segments by 5%, for the financial year 2017-18. If accepted, property prices in Gurgaon are set for a downward correction for the second year in a row. Last year, circle rates were reduced by 10-15% in different parts of the district.

Before that, Gurgaon circle rates had remained unchanged for two consecutive years, 2014-15 and 2015-16, due to the real estate slump. “Gurgaon circle rates haven’t increased in the last four years. This will be the second consecutive year when rates will be reduced, which says a lot about the condition of Gurgaon’s property market,” said Pradeep Mishra, a real estate expert.

Terming the revision as a reflection of prevailing market sentiment, district revenue officer (DRO) Hariom Atri said, “We’ve sent a proposal for revision of circle rates in Gurgaon and are waiting for approval.” He added the proposal was made considering various issues, including the bad shape the sector is in, and that in some areas, circle rates are higher than the market rates.

The circle rate is the minimum value at which sale or transfer of plots, built-up houses, apartments or commercial property can take place. It is the price at which the buyer pays stamp duty to the government while getting a property registered. “A 5% reduction in circle rates will create multiple benefits for consumers and developers, such as relief from high capital gains tax, stamp duty and registration charges,” said Ravish Kapoor, director, Elan Group.

Welcoming the move, president of National Real Estate Developers Council (NAREDCO), Praveen Jain, said, “It will help revive the market. Though circle rates were reduced last year, there still exists a difference between market rate and circle rate in some parts. Due to this, developers face difficulty in selling property, while buyers are shy of buying new property.”

Jain said the government is also facing a dip in revenue from stamp duty due to fall in number of registries. “In areas like Sohna and the city outskirts, circle rate is higher than market rate. For example, market price of land in Sohna is Rs 50,000 per acre, while circle rate is Rs 90,000 per acre,” said Jain, adding the government should standardise circle rates.


Source : ET Realty