The Haryana government’s decision to reduce the circle or collector rates by 15% is being seen as a move that will boost the sentiment of the market. While this reduction is unlikely to bring a substantial change in market conditions but realtors, dealers and even buyers feel that bringing circle rates in tune with reduced markets rates will give a better leverage to strike deals.
Circle rates are the minimum rates at which real estate transaction can takes place for a plot, apartment or builder floor. And this is for the first time in the last 10 years that rates have been reduced.
After the reduction, the circle rate in plotted area of DLF phase 1 which was Rs77,000 per square yard (PSY) has come down to Rs65,450 (PSY), rate in DLF phase II,III, IV, Nirvana, and South City-1 has come down to Rs 61200 PSY, the rate in DLF phase III would see a reduction of almost Rs 10,000 at reduced rate of Rs 56100 per square yard.
Rates for Group Housing in Sector 1 to 57 (Licensed) has come down from Rs5,000 per square feet to Rs4,250. In case of luxury apartments such as Aralias, Laburnum, Ambience lsland, Unitech World Spa, Parsvanath Exotica, and The Verandas has rate has come down from Rs7000 to Rs5,950.
Parveen Jain, chairman NAREDCO, said that this was positive development, and it could boost the real estate sentiment in the city. “The realty sector needs more such steps to ensure that market recovers,” said Jain.
There is also a feeling in the industry that this correction was inevitable due to 25%-30% fall in real estate prices in the last 2 to 3 years that ensured that market rates reached the level of circle rates, which is not an ideal condition. “A number of buyers who had postponed the buying decision as market rate almost equal to or less than circle rate will now execute the deals”, said Kamaljeet Singh, vice president, Bestech, a developer in Gurgaon.
However, given the delay in delivery of projects in which customers have already paid the registration fee to developers which did not take into account the 15% cut could also lead to disputes. “Many buyers will want refund of money. Also circle rate is one of the factors that goes into sale process and it is unlikely that market is going to get a boost by this move”, said Sonia Sharma, another consultant.