Gurgaon, more popularly known as the millennium city, has been one of the most prominent regions in NCR’s realty sector. The kind of growth that it had witnessed during the last one decade kept the buyers active. Booming infrastructure and rapid price appreciation kept the investors busy. Although, this case study took a backfire, and for the last couple of years the demand for property has become stagnant and prices hitting a new record low. But the kind of appreciation it had once witnessed, the drop in prices was still not enough to lure the customers back into the market. In a move, that now brings a ray of hope for the revival of Gurgaon’s realty market, the state government has approved the circle rate cut for 2016-17 by as much as 15 percent with few areas to get 10 percent deduction as well.
“A drop in circle rates is directly proportional to decrease in property prices, and as property prices fall, the demand for the property plays an inverse relation. Falling property prices help in attracting end users more than investors, and it is crucial for Gurgaon’s realty sector to revive. The infrastructure is very sound and now with prices lowered, we’ll witness the comeback of buyers”, avers Kushagr Ansal, Director, Ansal Housing.
Realty sector in Gurgaon has been going through a lull phase, and it is also for the first time that circle rates have been reduced in the corporate hub. For the last two financial years, the rates were not reduced that resulted in negative buyers’ sentiments and even the developers’ fraternity was pushing the government to offer a rate reduction this time. “When the circle rates were higher, it was denting the market sentiments as even the taxes were to be paid on the basis of the circle rates. Even during resale, buyers suffered the high capital gains tax, as circle rates were beyond the market rates. As a result, no fresh buyers were visible and even resale was becoming out of question. With this move, practical pricing will return to Gurgaon that will help in pulling back the lost momentum”, explains Rakesh Yadav, Chairman, Antriksh India.
The state government has provided the highest relaxation in private colonies, HUDA sectors and other residential colonies falling under the older city. For instance, rate of residential property registrations from Sectors 58 to 113 will get reduced from 3,000 per sq. ft. to 2,550 per sq. ft. Commercial properties in the same regions will get registered at 85,000 per sq. ft. from 1,00,000 per sq. ft., earlier. For the HUDA sectors, the floor rate has also been reduced from 4,500 per sq. ft. to 3,850 per sq. ft. The city also has eight group housing societies where the rate has been reduced from 3,800 per sq. ft. to 3,250 per sq. ft., whereas for commercial, the rate has come down to 7,450 per sq. ft. from 8,800 per sq. ft. This rate cut is also to be implemented for industrial sectors. Once the rate cut gets implemented, circle rates of chief residential regions like DLF Phase 2, 4 and 5 will drop to 61,200 per sq. yd. from 72,000 per sq. yd. earlier. Likewise, at DLF Phase 1 and Sushant Lok, rates will get reduced to 65,450 per sq. yd. from 77,000 per sq. yd. “As the rate cut effect gets operational, buyers’ sentiments will improve significantly. The overall cost is likely to come down as these rates are also the basis of tax calculations which indirectly pinch a customers’ pocket. Earlier, buyers were forced to pay additional stamp duty and capital gains tax on the differential values as well, that resulted the buyers to shell out extra amount. This move will thus, eradicate the extra payment that buyers were making which in turn will allow them save money and invest elsewhere on property buying”, elucidates Deepak Kapoor, President CREDAI-Western U.P. & Director, Gulshan Homz.
Commenting upon how well the Gurgaon realty market might shape up, post this decision, Vikas Sahani, CMD of Property Guru concludes, “Several thousand units are lying vacant in Gurgaon with no takers at all. The demand for property had come to a standstill as prices till last few years were roaring. With this move, prices will get reduced and become realistic, thus allowing the properties to cost much less to the buyers. The effect on demand will be prominent till the next quarter as we’ll also have festive season around the corner. End users as well as investors will become active again that will help in picking up Gurgaon’s realty prospects for future.”