[Update] Increased Circle Rates Will Not Apply To Flats In Noida

Update as on August 1, 2016

In a relief for the Noida home buyers who either got possession of their flats recently or are going to get it soon, the Noida administration has left flats out of the purview of the increased circle rates which have become effective in the city from August 1, 2016.

Noida circle rates in the residential category have been increased by 14 per cent, while there has been no change for commercial and institutional categories, and properties in rural areas. While the new rates are also applicable in the Yamuna Expressway region, Greater Noida is not part of this plan.

***

Update as on July 25, 2016

Climbing down from its initial plan for a hike in circle rates across all localities of Noida, the district administration on July 25 indicated that the proposed hike might be effected only in the premium areas of the city, so that the middle-class buyers in the city are not affected.

The climbdown apparently came after protests from members of the Noida Extension homebuyers' association, who called off their demonstration against the new circle rates after getting the assurance that they would not be affected.

***

Update as on July 21, 2016

Going against home buyers' and developers' expectations, the Uttar Pradesh government has decided to go ahead with a hike in stamp duty charges in Noida – from five per cent to seven per cent that it had earlier proposed. Besides, a plan to increase circles rates has also been proposed. In the residential category, the circle rate increase could be as high as 14 per cent, according to media reports.

***

Tale Of Two Cities: Gurgaon & Noida Fight Realty Slump In Different Ways

(July 1, 2016)

Despite the fact they are both part of the national capital region (NCR), Gurgaon and Noida have inherent differences in so far as real estate in concerned. The former is part of Haryana, a state that has registered tremendous growth in the past decade, despite its many constraints, the latter is part of Uttar Pradesh, a state that is still working to be able to live up to its true potential. As part of a more prosperous state, privately built Gurgaon charms the upper middle-class home buyers; property in Noida, on the other hand, is preferred by those looking for affordable housing.

So, when the two cities try to battle a slowdown that has plagued their respective real estate markets in the past couple of years, their strategies are entirely different.

According to PropTiger DataLabs report for the month of May (Monthly Realty Watch – North & East India June'16), major localities across Gurgaon witnessed nil or negative growth, while localities in Noida saw a price dip in the range of two to four per cent year-on-year (YoY). New launches, too, have taken a major hit when compared to other regions of the country.

Now, how are Gurgaon and Noida fighting slowdown?

Gurgaon, a city that has thrived in the hands of private players, is seeing more and more government support in its battle against the real estate slump. The city administration recently announced a 15 per cent reduction in circle rates to bring sky-high property prices down. Property in Gurgaon, the Millennium City, is among the most expensive in India and that led to home buyers in the city staying away from the real estate market. The city administration has also brought more and more services online to make home buying and related processes easier.

Authorities in Noida, on the other hand, have been different. Developers body Credai has written to state Chief Minister Akhilesh Yadav to roll back a June 9 decision by the Noida Authority to hike circle rates by 15 per cent. The body has argued that such a move will divert property transactions to the neighbouring states of Haryana and Uttarakhand, which have lowered circle rates. Credai letter says: "The circle rates in these areas are much more than the prevailing market rates and any increase at this stage may collapse the real estate market, as the flats would become unaffordable to the buyers." It is yet to be seen how the state government responds to the Credai request.

The Uttar Pradesh government had earlier this year announced a hike of two percentage points in stamp duty charges in Noida — from five per cent to seven per cent. However, the move to implement the hike was deferred until July 31 following protests by home buyers. The media recently reported there was no decision to implement the hike anytime soon.

These may look like little differences in the ways to handle things but the underlying facts tell you that the two markets are inherently different. Taking cues from public demands, Gurgaon is altering itself, but authorities in Noida need coaxing and urging before they arrive at a decision.

For regular updates on real estate, click here