The real estate industry body also sought the government's immediate intervention in regulating prices of key raw materials, pointing out that a continuous upsurge will raise project costs and have a cascading effect on homebuyers.
Credai on Friday said it has written to Prime Minister Narendra Modi alleging that steel and cement manufacturers are indulging in cartelisation.
The real estate industry body also sought the government’s immediate intervention in regulating prices of key raw materials, pointing out that a continuous upsurge will raise project costs and have a cascading effect on homebuyers.
“With a continuous and sudden upsurge due to cartelisation in the prices of steel, cement and other raw materials, real estate developers are experiencing an inevitable increase in construction cost and are faced with a situation that will create a delay in delivery, stalling of projects in some cases, thereby impacting the homebuyers at large. Builders are facing an uphill task of further convincing the customers of this additional burden,” Credai said.
Cement prices have increased by more than 23% and steel prices by over 45% since the beginning of this year. In January 2020, cement price (a 50 kg bag) was around Rs 349 and has increased to Rs 420-430 per bag in December. At the beginning of this year, the per tonne rate of steel was `40,000 and has rocketed to Rs 58,000 in December 2020, the association claimed.
Credai chairman Jaxay Shah pointed out that the sector has been working on wafer-thin margins and is battling unsold inventory on one hand and unfinished projects due to lack of funds on the other. With demand stagnant, developers have not increased prices and are selling projects at affordable rates.
“Indian real estate plays an important role in strengthening the economy. Besides employing more than 40 million workers, the sector also is a key partner in many central government schemes such as affordable housing and housing for all by 2022, and supports more than 250 ancillary industries. But the sector feels ignored because of lack of support from the government on various issues. There is an urgent need to control the spiralling cement, steel and other raw material prices and I urge the government to take necessary steps at the earliest,” Shah added.
Credai president Satish Magar said any increase in raw material cost would lead to a rise in construction costs and also the overall project cost. As a result, many developers will be forced to halt construction work, thereby impacting the delivery of the projects and so on. This would have a cascading effect on the homebuyers.