Bengaluru’s property market is on the brink of a substantial transformation, with property prices expected to rise in the coming month. The Karnataka state government is actively considering an upward adjustment to the “guidance value” for properties, as disclosed by Karnataka’s Revenue Minister, Krishna Byre Gowda, on September 19.
The guidance value is like a minimum price set by the government for selling houses. It depends on where the house is and what kind of house it is. The Karnataka Revenue Minister says that this price should be changed every year. But in Bengaluru, which is famous as India’s Silicon Valley, this price hasn’t changed for five years. That’s a long time, especially when other places are updating this price every year.
According to the law, the Registration department is supposed to update the guidance value every year. This situation has some negative consequences. It can lead to illegal transactions involving black money. When the guidance value stays the same for a long time, it indirectly makes it easier for people to use illegal money for property deals. To fix this issue, the new guidance value will come into effect starting from October 1, as stated by Gowda in recent discussions.
The minister explained how they are changing the guidance value. In places where the market price and the guidance value are almost the same, they increased the guidance value by 10 percent. But in areas where the market price is much higher, like 200 times higher than the guidance value, they raised the new rate by a bigger amount, specifically by 20 to 25 percent. This adjustment is being made to better match the real property prices in different areas.
In Bengaluru’s Electronic City area, the market price is a whopping 500 times higher than the guidance value set by the government. For instance, the guidance value for land along the National Highway is between 5 to 10 lakh rupees, but the actual market price goes beyond a staggering ₹10 crore. In such extreme cases, the new guidance value has been significantly increased, precisely by 50 percent, to better reflect the real property values.
Furthermore, the authorities have taken a thoughtful step. If they find that the guidance value is actually higher than the market rate in some places, they have been instructed to lower the guidance value accordingly. This approach aims to ensure that the guidance value accurately aligns with the market realities in different areas, promoting fairness and transparency in property transactions.
The minister mentioned that they will increase the guidance value differently for each area, ranging from 0 to 50 percent, depending on the specific circumstances of that region. This approach allows for a more customized adjustment based on the real estate conditions in each place.
A recent report by Anarock Research in April 2023 highlights that rental prices have been on the rise in many big cities, and Bengaluru is at the forefront of this trend. In the residential rental market, values have gone up by nearly 25 percent, with four prime areas in Bengaluru experiencing the most significant increases. Specifically, in the January-March quarter, Bengaluru’s Thanisandra Main Road and Marathahalli Outer Ring Road saw remarkable year-on-year growth, each witnessing a surge of 24 percent in rental rates. This data underscores the dynamic changes happening in Bengaluru’s real estate sector.