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Real Estate Face Price Hike Heat

Bhubaneswar: The real estate sector, which has already been hit by the coronavirus pandemic, is being pushed into a crisis due to the steep hike in the cost of sand, cement and steel, and transportation costs etc.

Discussing on the issue, Kantilal Patel, President, CREDAI Bhubaneswar Foundation said, real estate is one of the major sectors which was badly hit by the Covid Pandemic and subsequent lockdown which resulted to labour migration, shortage of raw material, and affected the selling of the units.

Now post-pandemic when the industry is trying to normalize its operation, the rise in the price of the materials like steel, cement, sand etc putting a big hurdle, he said.

The price of steel, was between Rs 43,000 and Rs 48,000 in 2020, now ranges between Rs 58,000 and Rs 65,000, a tonne. The rates for cement, which ranged from Rs 200 to Rs 250 for a 50kg bag, now costs between Rs 300 and Rs 350, Mr.Patel pointed out.

Similarly, the cost of all other materials apart from cement & steel used in construction such as tiles, electrical materials, fabrication materials, painting materials, plumbing & sanitary materials have also increased and an additional burden of about Rs 800 to Rs1000 per sq ft was being borne by the builders and this was resulting in a steep increase in the final cost of the flat and causing burden on the consumers.

The cost of construction has increased by 40 – 50 per cent in Odisha. The builders have worried as they would have to bear the extra cost amounting to nearly Rs 8 lakh to Rs10 lakh per unit if the cost escalation were to be borne by them in view of the RERA rules, the President said.

Similarly, General Secretary of CREDAI Bhubaneswar Foundation, Umesh Patnaik, said the price hike and shortage of labour and delays in the issue of various clearances due COVID pandemic situation, leading to delays in the completion of housing projects and resulting in cost escalation.

In recent times the transportation price has also hiked due to increase of fuel prices. The increase in petrol/diesel prices has a major effect on material prices as there is an increase in transportation cost, Mr.Patnaik said.

As the builders have already entered into an agreement with the buyers under the Real Estate (Regulation and Development) Act (RERA), they are clueless as to what to do. For new projects, the increase in prices can be passed on to the buyers but it may not be possible for already existing agreements under the RERA.

The industry is now facing blow with the steep rise in cost of construction. So, the government should take proactive steps to resolve the issue at the earliest, the real estate leaders urged.