The draft rates may see an average rise of 10% and may even go up to 200% in some areas
Bengaluru, get ready for this year’s property revision which is most likely going to see an average rise of 10% and may even go up to 200% in some areas.
The stamps and registration department that has already completed its yearly exercise is set to notify the draft rates this week. However, the revision may not augur well for the residential market that is seeing a downtrend in sale of housing complexes.
This year’s guidance value revision is based on a different combination. An average of the registered property values in each sub registrar’s office is taken to arrive at a percentage for new rates. Last year’s revision happened in October and the new rates came into effect from November.
The year has been good for commercial market, primarily due to huge expansions, whereas the residential sector has seen a slump with nearly 30% fall in demand. One of the reasons being worldwide economic fluctuations which is holding back investors from major financial commitments.
The stamps and registration department’s exercise this time to come up with new property prices is based on the transactions inked over the last one year. The department’s central valuation committee took the average of such transaction rates, collated and concluded the revision. While the average revision is 10%, in some areas, it has even touched 200%.
How it worked
A list of last year’s property registrations was collected from all the 42 sub registrar’s offices in Bengaluru urban district, the registered values were added up and an average price was drawn. This is to find out the trending property rate in the area. For instance, in south Bengaluru on Kanakapura Road, if the guidance value of a flat comes up to `50 lakh and the registered value is `60 lakh, then `10 lakh is the difference which is 20%. Likewise an average of all transactions is drawn up and if the difference between book value and registered value was found to be less than 10%, the hike in property rates has been put at 10%.
“In some areas, the hike is upto 200% as there was a huge difference between the government rates and registered rates. These days, lot of people insist that the transactions have to be completely white and register the property at the actual transaction price. To the last penny, the stamp duty is paid. With this, we could understand the prevailing market rates and arrive at the revised figures,” explained an official source who was a part of the revision.
The revision of guidance value of property may hit the realty industry, which is currently low. The revision may further cause depression. Market pundits though differ in their views about the revision and the current realty market.
According to Shrinivas Rao, CEO, Asia Pacific, Vestian Global Services, Bengaluru’s commercial market has been extremely good this year and if the figure is any indicating, from January to July this year, nearly 9.5 million sqft space have been sold.
On the other hand, the residential sphere is looking down with a huge inventory of unsold flats. Traditionally, the city’s commercial spaces absorption is around 15 million a year and in more than seven months, it has crossed
“There is a slowdown in residential segment and the guidance value revision will further decrease the demand. Even the best sellers, those between `50 lakh and `1 crore, are not selling upto the mark and there are 25,000-35,000 unsold flats. The city can absorb upto 40,000 flats every year and there is already a year’s overhang now. The reasons could be worldwide economic fluctuations, crash in the stock market crashed, China slowdown,” Rao pointed out. But according to Silverline Realty, a leading property consultant, the market is stable and there is neither boom nor crisis. Company’s CMD Farooq Mahmood says many residential projects are getting launched and no developer takes the risk without a market research. “I would say the market is okay and it is positive. A-class builders are selling. There may be a slump in the sale of properties with land and title issues. Though two months of Aashaada had resulted in slackness, the market is bouncing back now,” said Mahmood.
Courtesy:Bangalore Mirror Sep 8, 2015(Bangalore).