Revised circle rates to upset buyers, developers
Around 7 to 25 percent hike in circle rates has been proposed in Noida, Greater Noida and Ghaziabad, which would mostly affect the buyers and real estate developers.
The new rates are set to come into force from August 1, 2013 in all three places and the hike will be in all categories of residential, commercial, institutional and industrial properties. The rates would be increased in the range of 7-15% for residential properties, 12-25% for industrial properties and 18-32% for commercial properties.
After hike, the circle rate of Greater Noida West (Noida Extension) will be Rs 28,000 per sq metre, while the existing rate is Rs 22,500 per sq metre. The new rates will first undergo certain changes including creation of ‘V code’ for valuation of properties in the new areas, sectors, and villages, with extra charges (5% each) on facilities like gymnasiums, lifts, security, clubhouses, swimming pools, etc, and after that, they will be implemented.
Slight amendment has been made in the current UP Stamp Valuation Rules, 1957, for the financial year 2013-2014 on the circle rates, particularly in Gautam Budh Nagar (Noida-Greater Noida) and Ghaziabad districts. The reason for levying additional 5% charge on every facility is to achieve a revenue target of Rs 1,535 crore in Gautam Budh Nagar.
The effective revision of circle rates since 2005 in Noida-Greater Noida regions is by nearly 40%, except for a lull during recession in 2008-2009.
The property prices in Noida, Greater Noida and Ghaziabad are likely to get costlier following the implementation of new circle rates. The concerned authorities of these regions have already increased their allotment rates.
In Noida region, while the allotment rates for group housing, residential and institutional properties have been increased by up to 15%, the rates of commercial and industrial plots have been increased by 30% and 11.25% respectively. In Greater Noida, the development authority has hiked allotment rates for land across all categories uniformly, by 8.53%, except for industrial land. The Yamuna Expressway Industrial Development Authority has hiked allotment rates by up to 15%. Considering the development of the region, the allotment rates on industrial land in Greater Noida have not been revised this time.
Real estate experts alleged that ultimately this hike in circle rates will increase the burden on buyers part as they will now have to spend more money in the form of stamp duty charges. However, increasing allotment and circle rates is a good way to develop the region as the fund inflow for the local authorities would increase which can be spent on improving infrastructure.
The affordable housing segment of Noida is likely to be disturbed with this proposed hike. The developers are expected to complete projects within the said time and then a friendly environment is required to start new projects, but these recurring revisions would not keep up the interest in buyers or developers.
The proposed increase in circle rates in Gautam Budh Nagar district is close to 25%. In case of residential properties, the rates are likely to be increased by 10-15%, while commercial rates will be same as that of authority’s rate. The rates have not been increased for industrial properties.
According to a policy, the district administration makes moderate revision to the rates in rural areas where the population is low, compared to regions wherein more land deals are executed and prices keep rising.
Once the new circle rates are implemented, it is expected that the prices of residential, commercial, industrial, group housing, builder’s area, etc, in Greater Noida West (Noida Extension), Yamuna Expressway and UPSIDC would increase by an average of 15%. The circle rates in Greater Noida’ s Alpha, Gamma and Beta residential sector would also be revised to Rs 24,000 per sq m from the current Rs 22,500 per sq m.
The residential sector would be witnessing the maximum hike in rates due to the huge number of transactions happening in the sector in places like Noida Extension, Noida-Greater Noida Expressway, Raj Nagar Extension, Crossings Republik, etc.
The developed sectors are proposed to see higher rates than the developing ones. For instance, the existing circle rate in developed sectors of Noida like Sectors 11, 12, 22, 42, 43, 45, 70 to 78, 104, 107, 110, 119, 120, 121, 128 to 133 is Rs 35,000 per sq m. The circle rates in Sectors 14A, 15A, and 44 are in the range of Rs 68,000 to Rs 70,000 per sq m. While in the rural areas such as Bahlolpur, Chotpur, Haibatpur, Naya Bans, Chhalera Bangur and Hajipur, the circle rates are in the range of Rs 7,000 to Rs 15,000 per sq m. And in all these sectors and villages, the circle rates will be hiked by 7% to 15%.
In Ghaziabad district, around 20% to 25% rise in circle rates has been proposed. The Ghaziabad district administration has planned to keep the circle rates of residential properties same as that of commercial properties.
The circle rates of both commercial as well as residential properties will be the same in areas like Nehru Nagar, Chaudhary Mode, Ashok Nagar, Kavi Nagar, RDC Complex and Raj Nagar’ s areas like Sectors 1, 2, 5, 9, 10, 11, 12, and 15. Once the new rates get implemented, Kaushambi would be among the most expensive residential sectors in trans-Hindon area of Ghaziabad.
The authority has adopted a new arrangement for the revision of circle rates, as per which, the rates will be recovered sector wise while earlier they were recovered separately based on areas. The loss faced by the government through the current stamp duty has prompted the need for revised circle rates.
Market watchers believe that the move would bring in transparency to the sector. However, this move may affect the project costs as the developers are struggling to deal with regulations, approvals and runaway cost of construction materials among others.
Increasing circle rates is a common policy of most of the states although many progressive states have also come forward to decrease stamp duty charges too. But the authorities of Noida, Greater Noida and Ghaziabad are not ready to cut the stamp duty charges. Despite developers’ struggle to absorb price spikes in order to hand over projects to end users at an affordable price range, the rise in circle rates in almost every quarter is bound to affect the real estate prices.
