Gurugram’s district administration’s decision to increase circle rates for the financial year 2021-2022 from April 8 is likely to have a cascading impact on property prices in the micro market, experts said.
They also said that this is expected to put a break on the buying momentum for the mid segment projects and independent floors.
“The NCR market including Gurugram has only recently started showing signs of a recovery. While other residential markets across the country like Mumbai had given stamp duty reductions earlier to inject momentum, the current announcement could be counter-intuitive. However, given that the municipal body needs development funds, there wasn’t much else the government could have done. It is likely that the buying momentum may be impacted for the mid segment projects and independent floors,” said Samantak Das, Chief Economist and Head of Research & REIS, JLL.
The Gurugram administration has gone ahead with a slightly higher increase in the tony areas of Gurugram.
The circle rate at upmarket Aralias, Magnolias and Camellias has been hiked by 25%, from Rs 20,000 per sq ft to Rs 25,000 per sq ft. The circle rate at Carlton Estate has also been increased by around 87%, from Rs 8,000 per sq ft to Rs 15,000 per sq ft.
The circle rates for Laburnum, Unitech World Spa, Parsvnath Exotica, The Verandas, Palm Springs, Vipul Belmonte, Central Park among others have been hiked from Rs 8,000 per sq ft to Rs 9,000 per sq ft.
As for builder floors, the rates have been hiked from Rs 5,500 sq ft to Rs 6,500 per sq ft.
Real estate developers said that the increase in circle rates is likely to impact sales.
“We have to look at states that are trying to help the buyers save money in these challenging times. We have examples where states have reduced stamp duty, and Gurugram has gone ahead with an increase in circle rates. We request the administration to deliberate on ways to help the real estate sector. The demand in the city is high, and we have been witnessing a good number of sales, this will automatically mean good revenue. However, increased circle rates will force buyers to go into the shell, which will effect revival of the real estate sector,” said Achal Raina, COO, Raheja Developers.
Instead of increasing the circle rates by 90%, the administration should have stayed only with its decision of November 2020 of imposing additional tax liability where the differential between market price and circle rate is up to 20%, said Sanjeev Arora, director, 360 Realtors.
The current decision will dent the real estate market, which is in the revival mode after the COVID situation. In all our dealings with the buyers, we have concluded that they are looking for respite. The rates in Gurugram are already high, and we hope that the administration realises it, he added.