Residents
who own property
in Gurgaon may breathe a sigh of relief as they are not facing problems
which those who live in Delhi and Noida are. To be succinct the problem
plaguing much of the NCR has to do with circle rates which are often higher
than the market rates in parts of the NCR excluding Gurgaon. The problem of
market inefficiencies is glaringly visible here as while over the past three
years the price of property in parts of the capital has been falling, the
minimum price of a property as per the circle rate in specific regions has been
increased by the government by well over 200 percent. However, builders in Gurgaon need not have any worries as the real
estate in Gurgaon does not face any such scourge. Gurgaon property for sale is priced well above the
circle rates in the city and hence households who are keenly interested in
buying a home here are assured of no sudden surprises from the tax man after
they purchase a home.
A circle
rate, simply put, is the minimum rate at which a property may be bought. As it
is to be expected, circle rates vary depending upon the locality, for instance, an exclusive property in a
locality such as Greater Kailash comes with a higher circle rate than does a
property in the far less exclusive Paschim Vihar. The angst of homebuyer’s keen
to own property in parts of Delhi and Noida is that circle rates today are far
above the market rates for homes. This is an additional burden for homebuyers
as they may need to pay a sum of money over and above what they had planned to
pay. While developers in Noida face such challenges which make the selling
of property more difficult, builders in Gurgaon may smile with relief
and remain smug as such gross market distortions are unknown in Gurgaon. Someone
who wishes to purchase luxury apartments in Gurgaon need not be concerned with
the circle rate of the land where the property is being built, such trends if
they are allowed to continue may increase the demand for homes in residential
projects in Gurgaon at the expense of nearby regions such as Noida and even
New Delhi.
One factor
which immediately comes to mind when trying to grapple with the phenomenon of
circle rates is why such rates exist? Possibly the two primary reasons are,
encouraging greater transparency in
real estate transactions and increasing the
inflow of money to local authorities from stamp duty which must be paid when a property is bought. While
the use of black money in real estate transactions in India is common, it seems that local authorities
believe that black money may play a larger role in real estate transactions
than is known to many. A high circle rate at a time when the price of property
in much of the country has fallen by nearly twenty percent seems to indicate skepticism
among local authorities regarding the true market value of properties in parts
of NCR. While affordable housing in Gurgaon has a certain component which is paid using undisclosed sums, the amount pales
in comparison to the black money component of deals in New Delhi since owning property in the capital is still
regarded as more exclusive than a home in affordable housing projects in
Gurgaon. If the local authorities who have hiked circle rates are right with
regards to the need for higher circle rates then it may mean that property in
Gurgaon is significantly cheaper than property in other parts of the NCR,
particularly New Delhi. It may mean that the black money component of real
estate deals in Delhi makes up a far larger chunk of the money paid for a home
than does black money used to purchase homes in Gurgaon, only time shall tell. It's possible local authorities in Gurgaon too
may raise circle rates if or when they suspect they are losing revenue due to
unaccounted cash used in real estate transactions.
