As the slump in the real estate market continues unabated, the Gurgaon administration has for the second year proposed reduction in the circle rates by 5 per cent across all segments. Last year, Gurgaon had, for the first time in its history, seen a whopping cut of 15 per cent in the government rates.
Even in fiscal 2014-’15, and 2015-’16, there was no change in the circle rates as there was little demand for real estate in the market. As per this year’s proposal mooted by the district administration, the rates would be revised by five percent to streamline the property prices and to ensure that there are more transactions.
District Revenue officer, Hariom Atri said that a proposal for revision in circle rates has been sent to Chandigarh and a decision the is expected soon.
Government officials also admit that the lack of hike in circle rates in the last couple of years had only exacerbated the woes dogging the real estate industry. An official from the department of town and country planning said that the failure of developers to deliver projects, delays, and incomplete projects was the reason that the entire industry had seen a prolonged slump.
The real estate industry has welcomed the proposal as it will rationalize the market rates with the circle rates. In many areas, there is no parity between the two and this has had a damaging impact on realty business.
Kamaljit Singh, senior vice president, Bestech welcomed the move to reduce circle rates and said that in many areas, market rates were less than government rates. “In many rural areas of Gurgaon the market rate of land is lesser than the circle rate. This needs correction to boost the demand in the market,” Singh said.
National Real Estate Developers Council (NAREDCO), a body of real estate developers, also described the move as positive but said that 5 per cent cut was less and it should have been far more. “Properties are not selling due to high circle rates. Transactions are less and this also causing a revenue loss to the government,” Praveen Jain, president, NAREDCO,said.
Jain said that his company owns a piece of land in Sohna, which has a market rate of ₹60 to ₹70 lakh per acre but the circle rate approved by government is ₹93 lakh. “This has hit the realty market hard,” he said.
Government officials also said that with reduction in circle rates, lesser amount needs to be paid for acquisition of land required for infrastructure and other purposes.