News: CREDAI-NCR members plan to stop construction works due to hike in raw material price-23-03-2022
In a statement, CREDAI-NCR said the cost of raw materials has gone up by a weighted average of about 30 to 40 per cent recently while the cost of few items has increased by more than 100 per cent in the last 2 years.
NEW DELHI: Realtors' body CREDAINCR on Tuesday said its developer members are planning to stop construction works due to a significant rise in cost of raw materials like cement and steel. The construction cost has gone up by about Rs 500 per square feet and this could lead to an increase in housing prices, it pointed out. In a statement, CREDAI-NCR said the cost of raw materials has gone up by a weighted average of about 30 to 40 per cent recently while the cost of few items has increased by more than 100 per cent in the last 2 years. "The sudden and rapid rise in costs has eaten into the thin margins of realty projects and rendered them unviable," it said. CREDAI-NCR said the developers are considering to stop purchasing raw materials, fearing these elevated costs will ultimately result in projects getting stalled.The costs of key raw materials such as steel, cement used in construction have gone up amidst global supply chain disruptions. "For steel particularly, the situation is so bad that suppliers are not willing to take orders even at elevated prices," Pankaj Bajaj, President of CREDAI-NCR, said. According to the industry body, the recent impact of construction cost is about Rs 500 per sq ft or more which will reflect in increased prices for home buyers for fresh sales. "Steel suppliers are even cancelling contracted supplies citing force majeure and the war in Ukraine. However, builders, while free to increase prices of unsold inventory, are stuck where they have pre-sold the inventory. "Perhaps this situation should be recognised as force majeure and prices allowed to be escalated even for sold inventory. Otherwise, we are looking at the next wave of stalled and unviable projects," Bajaj added. In the last two years, CREDAI (Confederation of Real Estate Developers' Associations of India) said, cement prices have increased to Rs 360 per bag from Rs 270 per bag.
