Realtors concerned over likely increase in circle rates
The realtors feel that the authorities should look into the situation and reverse the increase
When the real estate market is still recovering from the pandemic's setback, the Noida administration might increase the circle rates from August 1. Another jolt for real estate was when three authorities -- Noida, Greater Noida and Yamuna Expressway -- increased the land allotment rates in the region, with YEIDA increasing the rate to 5% across all categories.
The realtors feel that the authorities should look into the situation and reverse the increase, warning that it could have a cascading effect on the city's sales. Manoj Gaur, CMD, Gaurs Group and Vice President - North, CREDAI National , says, “When the real estate sector was gradually getting back on track after the first wave of the pandemic, the second wave arrived and dented the progress. We are just beginning to take steps to get back on track, but the recent move to increase circle rates in Noida will once again hamper the sector’s growth in the region. With more than 100 ancillary industries dependent on the sector, which is one of the largest contributors to India's GDP, the real estate sector needs hand holding at the moment. An increase in the circle rate at this critical moment will prove detrimental. Infact, we should look at measure like reducing stamp duty and further sweetening home loan rates so as to boost the sector in the region.”
“Rather than considering raising the circle rates, the administration should maintain the current levels. Buyers are seeking relief, and an increase would be detrimental to the market. The developer community is currently utilising all available tools to assist buyers in realising their dream of owning a real estate asset, but it requires government aid,” says, Harvinder Singh Sikka, MD, Sikka Group.
Realtors feel that likelihood of an increase in circle rates in the region cannot be justified. For quite some time, the developer community has been advocating a drop in circle rates to reestablish market trust. Vijay Verma, CEO, Sunworld Group, says, “We must look at states that are seeking to assist buyers in saving money in these difficult circumstances. States have decreased stamp duty in the past, and officials in this region are considering raising the circle rates. We recommend that the administration should think of ways to support the city's real estate sector. The city's real estate demand is high, and we've seen decent sales, indicating that there will be revenue pouring in. Increased circle rates, on the other hand, will push buyers into the shell, reducing the revival's chances.”
On the increased land allotment rates in the region, Deepak Kapoor, Director, Gulshan Group says, “Developers will be forced to increase prices due to the present increase in the land allocation rate, which is already under pressure due to growing raw material costs. Though sales have improved since the second wave, the sector still needs to regain pre-COVID levels, and the authority's increase will hurt the market.”
According to realtors, the increase in land allotment rates will influence all real estate categories, including plotted developments; it may also impact demand for land parcels, which are seeing good sales after people's revived interest in owning their own homes. Given the current state of the real estate market, this is not the appropriate decision to make. “The COVID-19 challenges are already putting pressure on developers, and an increase in the land allotment rate will exacerbate the problem. Increases in the land rate will be accompanied by increases in transfer fees, paid at 5% on the land rate. As a result, demand in the next quarters may decline. In the greatest interests of everyone, we would ask the authority to reconsider its judgment,” says, Ashok Gupta, CMD, Ajnara India Ltd.