Developers frown on guidance value hike progress
Developers and real estate agents say that the city corporation’s proposed property loan guidance value increases are so vertical that it could numb the already subdued real estate market. Some property analysts say it could also push up land prices in certain areas.
The corporation is planning to raise guidance values by 20%-30% within the city and 100%-150% in the suburbs. The stamp duty and registration fee is calculated on the guidance value, and an increase in these values means buyers will have to pay more for registering their properties.
Farook Mahmood, MD of real estate brokerage firm Silverline Realty, says the revision is a bad idea especially when sales have slowed noticeably. “After the interest rate increases, BBMP’s idea is the last nail in the coffin. The real estate market is yet to recover from the crash. And market values are nowhere what they were in 2007. This is a double whammy.”
J C Sharma, MD of Sobha Developers, said the guidance value should be moderate in a high interest scenario. “Buyers are facing a tough time servicing their home loans. Any drastic increase will have an adverse impact on sales.”
The guidance value tends to be about 60% of the market value. BBMP officials say the correction is long overdue. The last revision was in 2007, and the state government says it has lost revenues due to under valuation of properties.
The current guidance value for apartments (with mosaic/ceramic flooring) in Kudlu near Electronics City is Rs 1,110 per sqft. But the prevailing market rate is almost three times as much at Rs 3,000 per sqft. If this suburban area’s guidance value is raised by 100% or more, as the corporation is likely to, it would go up to over Rs 2,220 per sqft, still less than the market value.
In Sarjapur (Anekal taluk), the guidance value is only Rs 880 sqft, in some others it’s as low as Rs 560 when the market value is almost four times as much.
Naresh Dandapat, regional director-South in property consultancy Knight Frank India, says that as the guidance value goes up, the landowner will jack up the price of his property. This he says could happen especially in areas like Thanisandra, Jakkur and Rachenahalli where the value is about Rs 560 per sqft, while the market value is Rs 2,400 per sqft.
Sample survey
BBMP plans to raise guidance value by 20%-30% within city and 100%-150% in suburbs
* Current guidance value for apartments in Kudlu: Rs 1,110/sqft
* Market value there is Rs 3,000/sqft
* If guidance value is raised by 100% here, price will be over Rs 2,220/sqft
* But it will be still less than market value
Developers: Steep increase in guidance value bad idea
BBMP: Last revision was in 2007, correction long overdue
Source: [TOI]
Processing your request, Please wait....
