About 20% cut in circle rate draws buyers of luxury property in South Delhi

NEW DELHI: Inquiries for independent floors and bungalows in posh areas of South Delhi have increased substantially after the 20 per cent reduction in circle rate by the Delhi government, according to brokerage firms of luxury properties.

Sotheby’s International Realty says that the move will accelerate sales in several high-end areas where transactions were on pause and many prospective buyers were sitting on the fence.

Markets like Maharani Bagh, Panchsheel Park and New Friends Colony, where there were hardly any transactions in the past few years have suddenly become active.

“There is certainly an increase in the number of enquiries as this small window given by the government gives an opportunity to fence sitters. Luxury buyers take time in finalising the property but a six month window is just sufficient to complete the entire process,” said Amit Goyal, CEO, India Sotheby’s International Realty.

The recent 20% cut in circle rates in residential, commercial and industrial properties in Delhi has revved up the market as the value of properties is now much closer to the current market prices, according to brokerage firms.

“Also, since there has not been much increase in the property prices in the last few years, this reduction should bring more buyers into the markets and spur overall Delhi real estate,” Goyal added.

The circle rate moderation also translates to a 1% reduction in stamp duty and that’s a relief for buyers.

In some areas both buyers and sellers had to bear tax on the differential and that was discouraging transactions.

“In some markets of South Delhi, there were hardly any transactions in the last few years and the circle rate was more than the market rate. We have already started seeing the impact of government’s decision as queries have increased and in coming months we are going to see a lot of transactions,” said Shashank Vashishtha, Executive Director, India, eXp Realty, a subsidiary of eXp World Holdings, an cloud-based real estate brokerage firm.

Delhi-NCR was already witnessing upward movement in the luxury segment and this move has accelerated the process further.

According to Anarock property consultant, the share of luxury housing in NCR in overall sale has gone up by 1% in 2020.

Of the total housing sales of 23,220 units that NCR saw last year, luxury housing comprised over 4% share – increasing marginally over 2019, when it was 3% (of 46,910 units).

However some believe the move will increase the cash component in the real estate transactions.

“At the time the government is promoting digital transactions, the move will increase the demand for cash where there is not much difference in circle rate and market rate. The luxury segment in Delhi moves at its own pace and it will continue that way,” said Yovesh Suri of global consultancy firm IQI India.