Property developers across Tamil Nadu have indicated that they will be increasing the prices by at least 10% in the coming weeks as cost of construction had gone up.
Three top developers in Chennai, on condition of anonymity, said there was a huge cartel amidst raw material suppliers, especially cement, which was impacting the business. “We are left with no other option than passing it on to the consumer,” said one of them. Most developers said that the State government had little role to play in this and that the Centre should intervene in the matter.
Padam Dugar, president of Dugar Housing and president of Chennai chapter of Confederation of Real Estate Developers’ Associations of India (Credai), said that all developers would increase property prices in the coming weeks. “The cost will go up by 10%,” he said and added that the projects would get delayed because of rise in prices.
R. Kumar, founder, chairman and managing director of Navin’s Housing, said: “We have increased the prices.” He pointed out that developers were being considerate as everyone was out of the COVID-19 pandemic. Now, they had no option but to increase the cost. At present, Navin’s has five properties in Chennai for sale and one under construction.
Rajendra Joshi, Executive Director, Sales and Marketing, Alliance Group and Urbanrise, said: “Real estate and apartment prices are likely to be affected depending on the stage of construction and market dynamics. However, an approximate 10% increase can be expected by most players to offset price elevations.” The Ukraine-Russia war had led to a shortage in the raw material for the cement and steel industry, witnessing a visible surge in the prices in both sectors. However, these prices are continually sky-rocketing irrespective of the costs of input material.
According to a recent report by ColliersIndia, over the last one year, the average cost of construction had risen 10-12%, owing to higher input cost and supply side constraints.
This surge in cost comes at a time when developers had been under pressure due to higher debt and liquidity concerns over the last few years.
The cost of key materials such as cement and steel had risen over 20%. These constitute a predominant share in the cost of construction. So far, developers had been cautious about increasing prices as the market was recovering from the impact of COVID-19. However, developers had started feeling the pinch of the rising cost and started reviewing their pricing strategy.
