With both cement and steel producers hiking product prices, property prices are set for a big leap, as the cost of construction is likely to go up by 20%.
Niranjan Hiranandani, managing director, Hiranandani Constructions, told FE ,” There will be a significant rise in the cost of construction, by about 20%, due to the rise in cement and steel prices. Selling prices of properties are expected to shoot up substantially.” Hiranandani added that in the past three months, the cost of construction has already shot up by about 10%. According to analysts, steel prices in the domestic market have gone up by 30% in the last six months and 20% in the last three. Cement companies have hiked prices by Rs 3-4 across the country.
According to Seshagiri Rao, director ? finance, JSW Steel, steel producers have been compelled to hike prices owing to rising input costs. He said that companies will put across their suggestions to mitigate prices to the government at a meeting on Thursday. ?Steel companies should be incentivised to set up new capacities. To set up new capacities, that are capital intensive, international investors should have more confidence in the Indian market. For that there should be an open economy and less interference from the market,? he told FE .
Tough stance from producers of inputs has left no option for builders. Mufatraj Munot, chairman, Kalpataru Properties said, “There will be a substantial rise in the cost of construction by about 20%.” Abhishek Lodha, director, Lodha Group said, “Construction cost has grown 15%. This impact will vary from one area to another.” Vimal Shah, MD Akruti City said they will also have to join the bandwagon.
Pawan Burde, senior research analyst, metals & mining, Angel Broking said that the price of steel has gone up globally by $200 a tonne for the benchmark HR in the last three months. ?This is owing to the rise in the cost of inputs like iron ore and metcoke. Iron ore prices were up 65% this year, while metcoke prices also went up. Overall, the cost push was to the tune of $200 to $250 a tonne,? he said. However, despite this, the increase in prices have not been as much as the increase in the input costs, he added.