Gurgaon proposes 15% cut in circle rate

The Gurgaon administration has proposed to slash circle rates of properties by 15% this year to help revive a slumbering real estate market that is in the grip of a prolonged downturn.

If the Haryana government approves the proposal, it will be the first time in recent history that Gurgaon, a premium real estate market, will see the circle rate graph slip downward. In the previous two financial years - 2014-15 and 2015-16 - circle rates in the city were kept unchanged but failed to lift buyer sentiment.

Though it’s not the only factor responsible for the realty industry’s current problems, a senior government official said the proposal to cut circle rates is a course correction, in consonance with the prevailing ground realities, and is expected to help recharge the market.

“It (the proposal) reflects the reality,” said divisional commissioner D Suresh, who has sent the proposal to Chandigarh for approval. Suresh said in some areas, existing circle rates are higher than current market rates of land and need to be rationalized. Circle rate is the minimum value at which sale or transfer of a plot, a built-up house, an apartment or a commercial property take place. Buyers also pay stamp duty according to the circle rate.

Gurgaon deputy commissioner TL Satyaprakash, who led the committee that proposed the reduction, said there was a dip in flat registries, leading to loss of revenue for the government. “Market rates have come done in certain areas but circle rates are still high, so we have to rationalize the rates,” said Satyaprakash.

One of the changes suggested by the administration is a graded circle rate for commercial properties between Ambience Mall and Sector 39, which is currently uniform. “We want different circle rates for different areas on this stretch, the highest rates for commercial properties near Ambience Mall and Galleria Market but different ones in the remaining areas,” said Satyaprakash.

Developers were confident that investor sentiment would significantly improve with the rate reduction. “The circle rate cut will reduce overall cost as these rates are the basis for tax calculations,” said Pankaj Bansal, director of M3M Group.

Manoj Goyal, director of Homestead, said, “This is good move as property prices have dropped over the past couple of years, creating a gap between the transaction value and circle rates. Buyers are forced to pay additional stamp duty and capital gains tax on the differential value as well. This results in an extra payout.”

Huda, which is having trouble finding buyers for its land parcels because of the high circle rates, is also expected to gain from the move. “In March, we had put on auction 96 commercial properties in Gurgaon, Dharuhera and Rewari. But we managed to sell only 10 properties,” said a senior Huda official.

Source: www.RealtyFact.com

Demand for office space continue to grow in 2016

According to a recent report by CBRE, demand for corporate real estate space in the top seven cities of the country saw a high annual take up of 38 million sq ft for 2016, the highest till date; this translates to an annual rise of 18 percent. This positive demand is indicative of an overall improved economic sentiment among domestic and international corporates. According to the findings of CBRE's latest report, India Office Market View for Q4 2015, absorption Grade-A office space across key cities in India witnessed a quarterly growth of approximately 26 percent during the October-December period-translating to more than 12 million sqft of leased office space.

The annual office demand was led by Bangalore with 32 percent share of the total absorption across leading cities during the year, followed by the Delhi National Capital Region (NCR) with 23 percent share. Suburban and peripheral office districts of major cities attracted steady occupier demand in Q4 2015. Prominent micro-markets included Gurgaon in Delhi NCR; Powai, Vikhroli, Kanjurmarg and ThaneNavi Mumbai in Mumbai; the Outer Ring Road (ORR) in Bangalore; the IT Corridor in Hyderabad; the Old Mahabalipuram Road stretch along Perungudi in Chennai; Viman Nagar in Pune; and Salt Lake Sector V in Kolkata.

Commenting on the findings of the report, Anshuman Magazine, chairman and managing director of CBRE, South Asia Pvt Ltd said, "India is an established outsourcing destination for various multinationals, who continue to outsource their operations to major cities in India; a key reason for a sustained spurt in office transaction activity. This coupled with a steady macro-economic climate and an overall positive market sentiment during the year, encouraged corporate office occupier demand in 2015."

IT/ITeS firms across the seven leading cities garnered a share of more than 56 percent of the entire transaction activity reported during the year. Other sectors such as banking financial services, engineering manufacturing, e-Commerce and research consulting also saw significant traction, collectively contributing about 29 percent to the total transacted space in the year.

Meanwhile, fresh supply of office space development rose to a five year high of around 45 percent during the year over the previous year. These development completions were led by Bangalore, followed by Delhi-NCR, Hyderabad and Mumbai. The fourth quarter, in particular, saw new supply addition of more than 11 million sq. ft. Most of the supply in Q4 2015 came up in Gurgaon and Noida in Delhi-NCR; ORR and Sarjapur Road in Ban galore; IT and Extended IT Corridors in Hyderabad; Baner and Hinjewadi in Pune; and Andheri (East) in Mumbai.

"Corporate occupier demand for office space is expected to continue to grow in the forthcoming months. Expansion and consolidation strategies of corporate firms will continue to be in Greenfield projects and pre-committed space in under construction projects. Occupiers will evaluate their office space requirements on the basis of infrastructure development and cost effective investment-grade office space," says Ram Chandnani, MD transactions services, CBRE South Asia Pvt Ltd.

Rental values remained largely stable across most micro-markets of leading cities during the quarter. Demand for newly completed properties, however, led to rental growth in select peripheral micro-markets. A marginal rental appreciation of around 1-5% q-o-q was reported at ORR in Bangalore; DLF Cybercity in Gurgaon; Guindy, Vadapalani and Mayor Ramnathan Chettiar Nagar in Chennai; and the IT and Extended IT Corridors in Hyderabad. Rentals were stable for the most part in the Central Business Districts of most leading cities, barring Bangalore and Pune.

Source: PropertyatNeoDevelopers.Wordpress.Com

Task force to meet and identify gaps in city's infrastructure

Source: Hindustan Times Gurgaon, Dated Dec 03, 2015, Page 6