Cash-Rich Mkt Pauses As Govt Cracks Whip
The steep rise in the benchmark prices of realty across Gujarat has shocked land sharks, who had expected to make a killing by riding Gujarat’s growth story even as developers started looking at the fine print to find out whether a tsunami would follow the tremors.
The jantri, as the government’s ready reckoner of property prices is called in Gujarat, has marked a jump of up to 400 per cent with effect from April 1. One week into the hikes and developers still don’t know what has hit them, as moves were afloat to challenge the new order legally. The government, of course, had anticipated this resistance and had filed a caveat before the Gujarat high court before issuing the order.
While real estate watchers expected the markets to take a pause before stabilising or dipping, the government expected the market to stabilise in the next few months and yield higher returns to the exchequer from stamp duty and registration fee. Last year, Gujarat’s collection was Rs 3600 crore, up from around Rs 2500 crore in 2009-10. The hikes are an attempt to increase transparency levels in property deals in Gujarat, which had seen a huge influx of black money in recent years. Market watchers said many of these deals, where farmers had been paid a huge percentage in cash, would run into trouble if these had not been registered yet. In cases where the deals had been sealed and the property transferred, developers would see their black money turn white, provided there are buyers for developed property at these high rates.
Representations have been made before the Gujarat government in the past by national players and developers’ organizations that there were too many loopholes in land acquisition, one of them being extremely low jantri rates. Government sources said they were not worried about the immediate downside in the realty market as long as the system gets cleaned up.
“The situation would be ideal for big players to get into the market and sell flats to the salaried class who do not have black money,” said Nirav Kothari of leading consultancy firm Jones Lang LaSalle. Deals peaked in March ahead of new jantri Early Estimates Show 40% Rise In Number Of Deals And Stamp Duty Collected Last Month Rajiv Shah
Gandhinagar:The word that the Gujarat government was likely to announce a higher jantri rate starting April 1 had spread among real estate dealers is evident from the number of deals and the amount of stamp duty collected during March 2011.
In February 2011, nearly 80,000 real estate deals took place, resulting in a stamp duty collection of Rs 316 crore.
“Early estimates suggest a rise in both real estate deals and the amount collected by about 40 per cent in March alone,” a top state government official told TOI, adding, “The stamp duty collection in March was Rs 440 crore, for which about 1.12 lakh real estate deals took place.”
Four cities – Ahmedabad, Vadodara, Rajkot and Surat – and their peripheries alone accounted for 50 per cent of all the deals and the amount collected.
Jantri, on which government charges six per cent stamp duty, is the official assessment of market rate of real estate. The collection for 2010-11 was Rs 3,605 crore as against Rs 2,480 crore in 2009-10. There was real estate buoyancy during the whole of 2010-11, with monthly collection hovering around Rs 300 crore until February 2011. Average monthly collection was Rs 200 crore in the previous year. “But a sharper rise in collection in March 2011 suggests dealers knew what was coming,” the official said.
Basing on these figures, a senior bureaucrat said, “Much of the hue and cry that real estate would slip into recession due to the new jantri rates is just an eye wash. Expectations were high that new jantri rates would be announced any time. Hence, most of the dealers decided to dispose of their properties during the entire 2010-11, but more so in March 2011. There was a similar expectation of new jantri rates being announced a year earlier, in March 2010, which led to a similar rise in real estate deals.”