Rise in Delhi circle rate dampens festive spirit

The decision to raise circle rates by 20% in Delhi is likely to push the demand in Noida, Greater Noida and Indirapuram

The Delhi government's recent decision to increase circle rates by 20 per cent is likely to affect the property market in the national capital as transactions are expected to come down.

When a buyer registers his property, the price cannot be less that of the circle rate.

Experts say the decision will also push demand to the national capital region (NCR), especially Noida, Greater Noida and Indirapuram. “Since there are very few new project launches in Delhi, demand will be seen more on the NCR side, adversely impacting the chances of a revival in the Delhi real estate market,” said a Delhi-based broker.

According to data by the National Housing Bank, real estate prices in Delhi have dipped only 1.5 per cent in the past year. However, unofficially, many say prices are down 10-15 per cent in key markets, while in some areas in Delhi, prices have remained stable. Anshuman Magazine, chairman and managing director of CBRE South Asia, said: “The move of increasing circle rates by 20 per cent across the board will have an impact on home-buying decisions in the capital. With the housing market already going through a slowdown, this announcement coming just before the festive season is likely to further dampen the investor sentiment.” Also, in some markets such as Friends Colony, Chittaranjan Park and Maharani Bagh, the circle rates are now higher than the current market rates.

“There is discrepancy in circle rates; one needs to take into account the market rates before deciding. The realty market is going through a slowdown phase and at such a time, increasing circle rates is not a good idea,” said another broker. Realtors have been banking on the festival season for a revival in the sector. Besides, sentiments improved after the new government came into power at the Centre, signalling more sales for developers.

The new circle rates came into effect from Tuesday. For instance, in category-A colonies such as Greater Kailash, Defence Colony, Gulmohar Park, Golf Links, the circle rate has increased to Rs 7.74 lakh a sq m from Rs 6.45 lakh a sq m earlier. In category-B such as Andrews Ganj, Kalkaji, Munirka Vihar and Nehru Enclave, circle rates have risen to Rs 2.45 lakh a sq m from Rs 2.04 lakh a sq m.