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Bumps in the way of realty

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Rising raw material costs, sand scarcity and a shortage of manpower seem to be problems that never go away. BIJU GOVIND says the construction sector is awaiting solutions from the government.

Standing in the way: A building under construction in Kozhikode. Cost-escalation midway through construction poses a burden for builder and client. — Photo: S. Ramesh Kurup
Standing in the way: A building under construction in Kozhikode. Cost-escalation midway through construction poses a burden for builder and client. — Photo: S. Ramesh Kurup

The construction sector in the State is passing through a critical phase, notwithstanding the steady growth in the real estate business. The rising prices of construction materials, shortage of manpower and new building rules perturb the sector.

The prices of cement have skyrocketed in the past few months. A 50-kg bag costs Rs.300-320, depending on the brand. A year ago, the prices were increased by Rs.15-20 a bag throughout the country. Even when the prices were less than Rs.200 in other southern States, buyers in Kerala had to shell out Rs.240 or more.

One reason for this is that the cement companies in the State are unable to meet the demand. The price increase is basically a seasonal adjustment. The markets usually move from off-season to seasonal demand when the skies clear.

“It is for the government to take steps to bring down the prices when cement companies increase the rates periodically,” says Nityanand Kamath, president, Confederation of Real Estate Developers' Association of India, Kozhikode chapter.

Contractors in Kozhikode plan to import cement from neighbouring countries, such as Pakistan, if the government fails to come to the rescue of the sector.

The prices will be less even after factoring in the transport charges, Mr. Kamath says.

Another worrying issue is the shortage of sand. Property developers and people building their own homes increasingly use M-sand (manufactured sand) for construction as river sand has become scarce. M-sand, a mixture of quarry powder, is extensively utilised for brick-building and concreting, but not for plastering, P.S. Abdul Gafoor, a Kozhikode-based engineer, says.

He says five tonnes of M-sand costs Rs.6,000, with prices varying for grades. It is difficult to obtain sand from government-licensed water frontages, though it comes at half the cost and is of good quality, he says.

Long procedure

Initially, the builder has to get a certificate from the local body, get a token from the Akshaya centre, obtain a cash slip from the block or taluk office, pay the amount at any State Bank of Travancore counter and submit the receipt at the block office and finally wait in line on the riverbank.

The cost of Rs.3,000 for five tonnes includes the transport cost. The same quantity sand is sold at Rs.10,000-12,000 in the grey market.

Building a 2,000-sq.ft house needs at least 125 tonnes of sand.

But one can get approval from the government only for buying 60 tonnes at a time. Even this much is distributed in instalments from the water frontages, Mr. Gafoor says.

Government restrictions on quarry units also hinder the contractors from easily getting M-sand. Many construction companies owning granite units distribute the material to others only what is remaining after their use, says K. Ganeshan, a contractor.

Many opt for the new readymade cement-sand mixture manufactured by companies for plastering. A 50-kg bag costs Rs.155-165. (The ratio of cement to sand needed for plastering is 1:6. The ratio of cement to metal to sand is 1:2:4). This will reduce labour expenditure which comes to more than 30 per cent for constructing a house.

Steel prices have increased moderately in the State to Rs.36-38 a kg. Usually, fluctuations in the international market lead to the variations.

The prices of bricks and laterite stones have gone up owing to a shortage of clay. A laterite stone comes at Rs.21-23 and a brick Rs.6-7.

The shortage of skilled labour is another problem. Builders of flats and commercial complexes rely on migrant labourers from Orissa, Bihar and West Bengal. But individual home builders are sometimes unsuccessful in getting construction workers and skilled carpenters and plumbers.

The construction field is one of the largest sectors in the State contributing a significant sum to the exchequer. It is poised to make a big leap in the coming years. But a catalyst is needed from the government, Mr. Kamath says.

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