Real Estate Business To Get Affected Due To Rising Price Of Raw Materials

Finished goods prices depend upon the cost of raw materials used in manufacturing them. Similarly, the prices of property depend upon the prices of steel, cement, labour, etc.
The wavering prices of cement and steel are likely to break all the future plans of real estate businessmen, when they are expecting a revival from the last year’s lapse.

The prices of cement are dynamic and deviating regularly, which will have an adverse effect on the cost of real estate projects. As per statement passed by chairman of CREDAI (Confederation of Real Estate Developers’ Association of India), the post budget announcements was a hope for us to get a hike in an affordable segment, but the rise in construction raw material prices will ruin our presumptions.

As per industry participants, in city’s market a cement bag of 50 kg is available at the prices of Rs.230 Rs.260. Steel is priced between Rs.33,500 and Rs.36,000 for a ton. The rise in cement prices has inflated the budget of the project resulting in narrowing the margins of developers.

The prices of cement and steel rise almost every year after monsoon as construction activities speed up, but due to fall in  it was not increased just after monsoon this year.real estate market,

Now, with the increase in infrastructure and residential projects, the prices of cement will see a rise.

Also, the government has increased the budget for infrastructure projects i.e. highways, railways. As these projects are the largest consumers of cement, the real estate developers and cement dealers are expecting a hike in cement prices in future months.

The government’s supportive policies in the budget give a positive sign to real estate developers in terms of improving property demand in the next fiscal year especially from the service class. We are optimistic for the recovery in the sector as new projects will be initiated by March, said Vijay Gandhi CREDAI Indore chapter president.