The real estate sector has faced many challenges in the past few years. Recently the sudden hike in the prices of raw materials, steel, and cement has delayed many real estate projects, leasing to a stall in the construction activity. The real estate developers are not inclined to buy raw materials at such high costs, and the construction activities have been stopped to let the market prices return to their reasonable rates.
CREDAI, the representative body of Indian realty players, pointed out that the costs of raw materials have seen a tremendous increase for the last two years, steel prices have gone up by 121%, and cement costs have risen by nearly 38% in the previous two years.
Highlighting the issue, Manoj Gaur, CMD, Gaurs Group & Vice President, CREDAI National, “The rise in the prices of raw materials is worrisome. The pandemic has already halted several projects since the last 2 years, and now the prices are beyond the affordability of the developers. The steel prices have gone up by more than 100%, and other raw materials have witnessed an increase by 30-40% in the input costs. We will not be able to deliver projects within deadlines and this will ruin the customer-developer relationship.”
He added, “Several projects in Delhi/NCR will become unviable because of the hike in prices. Some contingency measures are needed to help developers navigate through the crisis.”
Expressing the concern over the economic crisis in the real estate industry, Deepak Kapoor, Director, Gulshan Homz, “The prices of raw materials have been shooting high over the last two to three months. The situation has worsened due to the war implications, forcing developers to stall work at construction sites. It will also impact the NCR real estate market and lead to an incessant delay in delivering projects. But we are doing our best to neutralize the situation by balancing the costs of raw materials, and the operations at our construction sites are still going on in full swing.”
The real estate industry was hit hard by the Covid-19 pandemic, pushing the projects to a standstill. The ramifications of the Ukraine-Russia war have exacerbated the situation and acted as a double blow to the real estate sector.
Yash Miglani, MD, Migsun Group, said, “The real estate projects will see a consequent halt due to the phenomenal rise in input costs and the hike in prices of raw materials. The rapidly growing prices of raw materials have choked the thin margins of real estate projects, which will have unfavorable long-term effects.
The halt of the construction activity has also put many construction workers out of work. The hike in raw materials prices has discouraged the real estate players and forced them to stop construction activity at sites.
Elaborating on the same, Uddhav Poddar, Managing Director, Bhumika Group, said, “Developers are finding it difficult to continue construction because the raw material prices have hit the roof. The steel manufacturers and other supplies are not cancelling contracts, and hence we are forced to rework on the deadlines as the market remains heated right now.”
Owing to the cumulative rise in the prices of raw materials, Mr.Vikas Garg, DMD, MRG World, said, the realty players have put a halt to the purchase of raw materials in the on-going crisis. The real estate projects will see an unprecedented delay in their deliveries, because of the prevailing circumstances.”
Ajendra Singh, VP-Sales & Marketing,Spectrum Metro said, “There are tough days ahead, because the hike in prices of raw materialS have put the real estate projects under construction on a backburner. Real Estate Developers will be hugely impacted by this as the Covid-19 pandemic has already pressured the real estate markets.”
The real estate industry has come out of a substantial economic setback during the Covid-19 times. The increased costs of raw materials have further risen complications. It has abruptly struck the recovery phase. But, the end of the international conflict will bring normalcy to the real estate market.