Delhi government extends 20% reduction in circle rates till December 31

The Delhi government has extended 20% lower circle rates till December 31, a move which is expected to boost housing sales ahead of the festive season.
A Delhi government official said the council of ministers considered the cabinet note of principal secretary (revenue) and extended the reduced circle rate, which was earlier announced from March till September 30.

According to property developers and brokerage firms, the impact of the decision to lower the circle rates was seen in south Delhi, with many regions witnessing record sales, and the extension will provide a fillip to the market to record more transactions.

“We appreciate the government's decision, as it will help the real estate sector and sellers who are looking to dispose of property,” said Amit Goyal, CEO, India Sotheby's International Realty. “Many old people, who couldn’t sell the house due to higher circle rate, will be able to do so. We also request the government to rationalise the circle rate and change the categorisation of colonies as well.”

Areas such as Maharani Bagh, Panchsheel Park and New Friends Colony, where there were hardly any transactions in the past few years, suddenly started recording transactions after the circle rate was lowered.

The circle rate moderation also translates to a 1% reduction in stamp duty, providing further relief to buyers.

In some areas, both buyers and sellers had to bear the tax on the differential, a step that was discouraging transactions.

“This will continue the positive sentiment in the residential segment. High-value properties in south Delhi have always been in demand but in some regions, due to the high difference between the circle rate and market rate, transactions were stuck,” said Mudassir Zaidi, executive director–north at Knight Frank India.

Developers said that with customers also focusing on wellness and convenience, there is a shift towards properties that have large outdoor spaces and that are preferably part of an integrated township.

South Delhi and Lutyens’ Bungalow Zone registered the highest number of property registrations in three years through a Covid-19-ravaged 2020-21, with uber-rich investors buying assets in areas where demand usually outruns supply.

“With festive season starting, the move by the Delhi government will bring cheer to the real estate sector. Due to the second wave of Covid-19, the revenue office was closed for over a month and the sector was demanding extension for reduction in circle rate,” said Pradeep Prajapati, head of luxury residential services at IQI India.

Demand for ultra-luxury properties in neighbourhoods such as Vasant Kunj, Vasant Vihar, Golf Links, Sunder Nagar and Shanti Niketan was high, with 1,991 deals registered in 2020-21.

By contrast, 1,780 transactions were recorded the previous year, data gathered by statistics aggregator Zapkey.com showed.

With the second wave negatively impacting economic recovery, real estate experts believe the sector needs continued support from the government.

The sector has witnessed the positive impact of slashed stamp duty charges in Maharashtra on the property markets of Mumbai and Pune, which suggests that the state government’s decisions have a direct impact on the sector.