Need any proof of how buoyant the real estate scene in Chennai is, here it is. Within five months since the guideline values government notified rates for registration of property in Chennai were revised across Tamil Nadu, as the market rates have overtaken them by 10-45%.
As today the guideline value is used by the state government to estimate the actual value of the property in Chennai for levying stamp duty. As the guideline value was revised late after a gap of five long years so that they would be indicative of prevailing market rates.
The growing demand for housing in city has resulted a steady climb in the prices of residential property in Chennai and the suburbs over the last six months. In most areas the guideline value is below the market price and the difference in ranges from 10% to 45%.
As the guideline value of land on the Arch Bishop Mathias Road is 18000 per sq ft on the contrary the prevailing market value for the street is around 33000 per sq ft. Today the guideline value for RH Salai is 19000 per sq ft while the market rates are close to 25000/- sq ft. Guideline values are on the lower side even in central business districts.
The guideline value on Khader Nawaz Khan Road is a premium shopping hub, is only 9500 per sq ft as Haddows Road is similarly low.
As stated by the panelist the prices in most parts of Chennai have increased by close to 20% in last six months which is going to be the residential price index bought out by National Housing Bank. Figures shows that Chennai is one of the fastest growing real estate markets among all metropolitan region, but the boom is not reflecting the new guideline values to finalize five months ago.
Guideline value were revised after a span of five long years. In the meantime the price within the Chennai has increased 2 to 4 fold while the jump was about 5 to 6 times in the suburbs.
The property consultants also point out that many buyers and sellers are keen on registering the property at the market price. When the property is registered in a price higher than the guideline value that becomes the benchmark for the locality. Over period of time, the gap between the guideline and market rates will reduce.
The guideline value in Chennai are higher than market values in the suburbs as it is reverse and that is a matter of concern. Disparity is partly owing to the slow growth of real estate prices in the suburban areas. Here the property is available at lower rates and people have to pay a higher stamp duty and registration fees there as they are calculated based on guideline values which are higher than market prices.
There’s a selection of established developers who feel that in some areas the guideline value revision has been far too steep. Such upward revisions, where the middle income people find it difficult to buy property in Chennai and many of them are moving to suburban location. Even the guideline value is low the builders kept apartment prices high. As how far this argument will cut ice is a matter of debate...?