High cement, steel prices weighing down real estate

An abnormal hike in the prices of cement and steel is not only causing undue burden on middle-class homebuyers but is also putting pressure on builders, according to the Confederation of Real Estate Developers’ Association of India’s (CREDAI)Visakhapatnam chapter.

“Cement manufacturers have formed a cartel to hike the price of cement by ₹100 to ₹150 a bag, thereby resulting in an escalation in the cost of apartments by ₹100 to ₹150 per sft. Similarly, an abnormal hike in the cost of steel, by ₹30,000 a tonne, is leading to a further increase in the sft. cost by an additional ₹100, CREDAI Visakhapatnam chairman Peela Koteswara Rao and president B. Srinivasa Rao told reporters here on Thursday.

The shortage of sand and manipulation by the sand mafia was further adding to the sft. cost, they alleged. Inadequate supply of sand, particularly in Visakhapatnam city, has become a perennial problem for builders, leading to hampering of construction activity and rendering hundreds of workers jobless. While commending the YSR Congress Party government for introducing a new sand policy and online booking to eliminate sand mafia, they alleged that builders were not getting the supplies to meet the requirements of their project.

The State government had fixed the price at ₹375 a tonne at the sand reaches and around ₹800 for supply at the construction site. Improper implementation of the policy at the grassroots level was resulting in undue delays in supply and forcing builders to procure stocks from neighbouring Odisha at ₹1,700 to ₹2,000 a tonne.

Manufactured sand (M-sand), an alternative to river sand, which was available to builders at ₹700 a tonne, was also in short supply due to technical issues. Mr. Koteswara Rao explained that the cost of almost all commodities had increased due to the COVID-19 pandemic. But the builders were being forced to bear the hike in costs as there was no ‘cost escalation’ clause in the agreement.

Honorary secretary V. Dharmender also spoke.

CREDAI leaders appealed to the State government and the authorities concerned to look into the issues and initiate steps to control the prices of steel, cement and ensure adequate supply of sand at rates fixed by the government.