Raw material price impact: construction activities remain dull in Coimbatore

For the construction sector in Coimbatore, while drop in prices of steel has given marginal relief, the market is yet to gain momentum.

Prices of steel ranged between ₹80,000 and ₹85,000 a tonne in the beginning of this month and has reduced to ₹75,000 to ₹85,000 a tonne now. Price of cement for a 50 kg bag hovers between ₹370 and ₹440 now, registering a drop of ₹10 in the last two weeks.

Paneerselvam, chairman of Builders’ Association of India, Coimbatore chapter, said prices of hardware and PVC products remain high and cost of raw materials such as blue metal remain stable.

There is a 5 % drop in the prices of main raw materials. Till last month, customers were apprehensive of going ahead with construction works as there was the possibility of further hike of raw material prices. Now, there are indications of stabilisation of prices. Though construction activities are continuing, they are expected to gain momentum only in the next few months, depending on the raw material price trend, he said.

According to Gugan Ilango, president of Confederation of Real Estate Developers Associations of India (CREDAI), Coimbatore, while prices of steel have seen a significant decline, the prices of other materials remain the same. There is no shortage in availability. But, the high prices are affecting the cost of construction. The average cost of construction, including the approval costs and for good specifications, is ₹2,200 to ₹2,500 per sq.ft, he said.

The impact is felt more by customers and promoters working on low and medium-budget houses (priced less than ₹75 lakhs each).

The developer should take into consideration the possible cost escalation and for customers, higher prices become unaffordable. The promoters are not going ahead with cost escalation clauses in the agreements with customers because they do not know how much and how often the prices of raw materials will go up.

The government should constitute a regulatory authority to check frequent or steel hike in raw material prices, he said.

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Printable version | Jul 17, 2022 12:51:15 pm |