Gurugram: Circle rate hike makes property dearer in many key micro markets

Property rates in the city are set to go up, especially in areas along Golf Course Road, Golf Course Extension Road, Southern Peripheral Road (SPR) and in sectors along Dwarka Expressway, after the implementation of new circle rates, which were revised by the district administration at the start of the year.

According to the new circle rates, which came into effect from January 1, the average hike ranges from 10% to 25% depending upon the area.

Collector or circle rate is the minimum price at which a property is registered with the revenue department when being transferred. The stamp duty levied on such properties is a major revenue earner for the government.

An analysis of the new circle rates shows that hike has been effected primarily for properties that have witnessed higher sales, and where there is a difference in the market and circle rates (market rates in these areas are higher). Market rate is the rate at which a property transaction takes place and its price is determined by market forces, while circle rates are fixed yearly or twice a year by the district administration.

The Gurugram administration said that in most areas there was a marginal increase in property rates, and they took care to ensure that affordable housing is not affected by the hike.

District administration officials said circle rates of privately developed colonies have been revised in Gurugram and Wazirabad tehsil by 5-10%, Manesar tehsil by 10-15%, Farrukhnagar tehsil by 30-50%, and Badshahpur tehsil by 25%. In the case of group housing colonies, the price has been increased from 5% to 66% in some cases depending on the revenue registration data, said officials.

Yash Garg, deputy commissioner, Gurugram, said that the objective was to rationalise the circle rates in tune with prevailing market rates as the difference had become too high and, in several cases, rates had not been revised in the last two years.

According to authorities, the circle rates for Golf Course Road have been revised for The Verandas, Palm Springs, The Summit, La Lagune, Sun City, Central Park, and other similar projects from ₹1,500 per square foot (PSF) to ₹2,500 PSF. Local property dealers said these projects have seen the maximum sale and purchase over the last two years.

The circle rate of properties in the Ambience Group has witnessed a hike of ₹500 PSF, while prime properties on Golf Course Road (including DLF Aralias, Magnolias, and Camellias) have not witnessed any hike in circle rate. Several mid-level but older projects such as Laburnum, Unitech World Spa, Park Place, Belaire have also not seen any change in rates. The rates are changed based on revenue data and number of registrations in the last six months, authorities said, and these projects have not seen much traction in this period.

Compared to group housing projects, the circle rates of plots in private licensed colonies saw a much higher hike, primarily due to a higher demand of plots and floors among buyers, said real estate dealers.

The circle rate for plots in Sushant Lok 1 and DLF phase 1 has been revised from ₹77,000 to ₹85,000 per square yard (PSY), for DLF phase 2,4 and South City 1 from ₹72,000 PSY to ₹85,000 PSY, for DLF phase 3 from ₹66,000 PSY to ₹72,000 PSY, and for DLF phase 5 from ₹72,000 PSY to ₹90,000 PSY.

The circle rate of plots in sectors 58 to 64 has been increased from ₹3,000 PSY to ₹36,000 PSY. The circle rate in developing sectors (104, 105, 106, 109, 110, 110A, 11 112, 113, 114, 115) has been increased from ₹25,500 to ₹30,000. In municipal areas, circle rates have been revised by an average rate of 8-10%, said officials.

In colonies located from Railway Crossing to Daulatabad, the rate has been revised from ₹21,000 PSY to ₹23,000 PSY. From Civil Lines to Jail Road, the rate has been revised from ₹52,000 PSY to ₹58,080 PSY, they added.

The deputy commissioner said that the hike has been put in place in areas where there was a sharp difference in market and circle rates. “We have taken inputs from different stakeholders, and based on the revenue registration data, the circle rate has been increased in some areas. We have ensured that affordable housing and housing meant for similar categories are not affected by the revision,” he said.

The hike in circle rates has, however, not gone down well with the developers and property dealers, who said that given the Covid-19 pandemic, and lack of business in previous years, the government should have waited for the market to revive.

Pradeep Aggarwal, chairman, Signature Group, a city-based developer, said that this hike will increase the burden of stamp duty on the end-user by 25%. “This will further burden buyers financially and hit sales. This hike will have a cascading impact on the prices of properties. Higher acquisition costs caused by the higher circle rates will dampen sentiments. An objective market assessment of property prices in Gurugram is the need of the hour. The approach to determine circle rates needs to be reconsidered in order to capture the market rates more accurately,” he said.

Property experts said that government must take into account the fact that circle rates in neighbouring Delhi and adjoining states have been reduced, and any hike in Gurugram might see buyers rushing to these places.

Vinod Behl, a city-based real estate expert, observed that the authorities’ prime focus is to maximise revenue and the hike in circle rates is a step in that direction as funds for development are shrinking.

“Any increase in circle rates results in an increase in the transaction cost by way of increase in stamp duty and registration charges. In the wake of the pandemic, states such as Maharashtra and Karnataka, last year, cut stamp duty to push home sales. At a time when the Union budget is around the corner and the real estate sector is demanding relief in the form of reduction in stamp duty and GST on properties under construction, putting any extra burden on property buyers is questionable,” he said.

Santosh Agarwal, chief financial officer, Alpha Corp, a real estate company, also said that any decision to raise circle rates now undermines the recovery process and has a detrimental influence on the real estate sector. A higher circle rate correlates to a higher registration cost, which translates to a higher acquisition cost and thus has an impact on the property’s transaction worthiness.