The Gautam Budh Nagar administration has recently proposed a hike in circle rates in Noida by around 40 percent in addition to a surcharge of 5-12.5 percent on properties close to metro stations and expressways. While the hike has been proposed after two years, experts believe that the move might impede the residential growth in the city as the market is already in shambles post the COVID-19 second wave.

The residential market of Noida that took a hit post the Coronavirus outbreak might further suffer a jolt as the Gautam Budh Nagar Administration has lately proposed a hike in circle rates by around 40 percent. The decision would increase the property prices in many sectors of Noida, including Sector 14A, 15A, 19, 44, 47, 57 and 93A and B, among others. The administration has also proposed an additional surcharge for properties near the metro stations and expressways. For instance, properties close to metro corridors would attract a surcharge of five percent, sectors on both sides of the expressway would attract a surcharge of 7.5 percent, and properties near both the metro corridor and expressway would have a surcharge of 12.5 percent. The collector rates in Greater Noida have also been proposed to be hiked to Rs 35,000 per sq ft from Rs 28,000 per sq ft. 

 Revised circle rates in Noida

Category A sectors

Category B sectors

Sectors

Existing circle rate

Proposed circle rate

Sectors

Existing circle rate

Proposed circle rate

14, 14A, 15A, 17, 30, 35, 36, 39, 44, 50, 51 and 52.

Rs 1,03,500 per sq meter 

Rs 1,94, 250 per  sq meter

15,19,20,21,23,25-29,31,23,34,37,40,41,47,48,49 ,53,55,56,61,62,82,92,93,93A,93B, 96,97, 98, 99, 100,105,108 and 122.

Rs 52, 500 per sq meter

Rs 72,000 per sq meter

 

Circle rate hike to impair the housing demand in NCR

“The increase in circle rate will dampen the home buying sentiment in Noida and Greater Noida region. The NCR market is already struggling with inventory overhang and low sales. A hike in circle rate at this stage will push the fence-sitters away from the housing market and delay the real estate recovery in the region.”

Shravan Govil, CEO, Omaxe Heritage 

Developers have been going all out to restore the residential market after the second wave of COVID-19. A steep hike in raw material costs has already moved property prices upwards. Any further rise in home values would only push buyers away from the market and might lengthen the recovery process.

Suresh Garg, CMD, Nirala World 

Industry stalwarts believe that the proposed hike would mutilate the housing demand in Noida, Greater Noida and Yamuna Expressway region. The homebuyer community that was already jostling with the economic impact of the COVID-19 and looking for cost-effective residential options might flinch as not only do they have to shell additional amount to close the deal but also pay a higher stamp duty, which is already seven percent of the property value in Uttar Pradesh.

According to Hariom Dixit, Director, Gayatri Aura, “The decision to increase the circle rates in Noida and an additional surcharge of up to 12.5 percent is a massive blow on the residential market. The demand for constructed properties has already been low post the COVID-19 outbreak as majority of the buyers were inclined towards residential plots due to lower acquisition cost. However, post this announcement the demand for residential plots along Noida Expressway and Yamuna Expressway might also suffer a setback as homebuyers would not be willing to pay more in the current scenario given the financial challenges.”

Pushpendra Kumar, Property Agent, Realty Bytes, Noida, avers, “The second wave of COVID-19 hit the housing sector like a Tsunami, bringing the market to a standstill. Amid this, a hike in circle rates is the most unsolicited move as it would prove detrimental to the housing sentiment. Instead of softening the property prices or introducing some price waiver schemes, the administration has increased the home values, which would not only keep buyers at bay but would also reduce the revenue for the State.”

“Increasing the circle rates in the current scenario would be impractical due to the impact of the second wave of COVID-19 on the real estate sector. Due to the increase in circle rates, the buyers may not invest in any property in the short term and hold off their buying decisions, which will affect the realty market as a whole. Precisely, any decision to raise the circle rate undermines the recovery process and has a negative bearing on the real estate sector. A higher circle rate correlates to a higher registration cost which translates to a higher acquisition cost and affects property transactions.”

Santosh Agarwal, CFO and Executive Director, Alpha Corp 

 

Overall, Delhi NCR has been one of the most sought-after housing destinations in India. The green shoots of recovery displayed in Q4 2020 post the re-entry of investors exhibited the market’s resilience. However, the series of circle rate revisions in the past few months might besiege the residential revival in the metropolitan. For instance, the hike in circle rates by up to 88 percent in Gurgaon for the ongoing fiscal year, w.e.f April 8, 2021, and the 20 percent rebate on ready reckoner rates offered by the Delhi government coming to an end from September 2021 indicate at a problematic situation that the sector might face in the upcoming quarters.