Noida and Greater Noida to Increase Circle Rates

By Dr Suvrokamal Dutta

It has come into the notice of The India Street that after Delhi, Gurgaon and Ghaziabad the district administration of Noida and Greater Noida would soon increase their circle rates.

If experts are to be believed, the new circle rates have been proposed to bridge the gap between the prevailing real estate prices and existing circle rates in the sectors.

When The India Street asked district administration in this regard they said: “We expect to get some objections in the initial few weeks. After getting the objections, we will revise the new circle rates. We hope to announce the new circle rates in the third week of August”.

According to sources, circle rates for residential land will witness steeper hike than those for the residential colonies. It is worthwhile pointing that Sectors-44, 18, 26, 27, 58, 62 and Sectors- Alpha, Beta, Gamma, Omicron, Zeta in Greater Noida are likely to witness 10 to 50 percent increase in the existing circle rates.

On the other hand, the new circle rate of industrial area is likely to be hiked on a slab based system. Initial signs are that it may be hiked from Rs 7200 per sq m to the Rs 10,000 per sq m. While institutional circle rate is 25 percent of authority’s fixed price, the revised rate for residential plots is likely to be hiked from Rs 10,500 per sq m to Rs 33,000 per sq m in Greater Noida.

Point to be noted here is that earlier in developed sectors the hike was 33 to 100 percent, which provide advantage to secure the property rights. The current rate of stamp duty is 8 percent of fixed circle rate. The new circle rate is revised on the basis of total number of registration of documentation in last few years.

It is worth mentioning in this regard that the Noida authority has already revised the property rates in recent times and Noida’s property price has hiked up to 55 to 60 percent. Furthermore, after the authority made residential plots costlier by up to 76 percent in all sectors, it is prompting homeowners to either hike rentals or weigh the tempting option of selling the houses in upscale sectors for big profit.

Suggested Reading:

Greater Noida emerging as a top destination for commercial and residential activities

Lowering of Real Estate Prices in the Suburbs Likely

Speculators exiting the market

By Dr Suvrokamal Dutta

Excess supply coupled with rising interest rates would lead to lowering of realty price in the suburbs. It is worth mentioning in this regard that plenty of the projects, which were launched in 2005 and 2006, are likely to be finished in the next six months in Gurgaon and Noida.

The pivotal factor here is that as interest rates have shot up to around 12 percent per annum, the holding cost of these apartments after taking the possession would be very uneconomical. Because of this, these investors would like to sell and exit from the project. On the other hand, if investor holds the project for one more year, he will have to pay an interest cost of around 12 percent.

In case if investor liquidate the investment and deposits the money in a bank, he will get a return of around 10 percent. In theory, as the appreciation in the property prices in the coming years is not in the sight, holding the property for one year, is likely to cost him around 20 percent.

In my opinion, to cut loss, such investors would like to sell the property in the market. This is likely to increase the supply of real estate in the market. It has come into the notice of The India Street that the activity levels in mid-range projects in Gurgaon, Noida and Ghaziabad have diminished. If experts are to be believed, speculators have almost exited from the market. In addition, end users are also not very interested to purchase a house at this point of time because of rise in the prices and interest rates.

Taking this into consideration, one can safely say that the increased supply in the secondary market from the projects that are getting finished will push the prices downward. “The high end market has also seen some downward pressure. NCR suburbs including corridors such as the Sector Road and Expressway in Gurgaon and Noida have been very active in the last year or so,” pointed out Kadambari Murli of Sunshine consultant.

There is no doubt in my mind that increased demand based on changing demographics, rise in disposable incomes and aspirations of the upper middle class has given a much-needed confidence to developers such as DLF and Unitech to come up with new high-end projects.