High cement price hits real estate sector

Fluctuating price of building materials, particularly cement, has prevented real estate sector players here from scaling up their activities, say industry sources.

“In general, materials like cement and steel have been getting costlier. Despite there being so many cement manufacturers in the region, the cost is prohibitive. It is ironic that cement from other States is available at a lower cost,” R.S. Ravi, proprietor, Aditya Constructions and president of the Tiruchi chapter of Confederation of Real Estate Developers’ Associations of India (CREDAI), told The Hindu.

Mr. Ravi added that the association, which has membership of 55 real estate companies in the city, had made a representation about the impact of rising cement costs to its national-level body, in the hope of finding a solution to the problem.

“Cement is also an important ingredient in ancillary products such as fly-ash bricks, paver blocks, rainwater-harvesting structures and so on. Even ready-mix concrete units need a constant supply of cement,” said Mr. Ravi.

The price rise had led to a reconfiguration of building costs, pushing them up by at least 15% in the past few months, said Mr. Ravi. “A simple fly-ash brick today costs ₹8.20 per unit, from just ₹7 earlier. If you add the cost of other materials like PVC pipes, steel and so on, constructing a house can be very expensive these days,” he said.

Many industry players felt that public awareness about cheaper options in the cement market is lacking.

“The Tamil Nadu government’s ‘Valimai’ brand of cement that was launched in November 2021 is much more economical at ₹330 per bag. The reach of the brand has to be strengthened,” said I. Napoleon, chairman, Tiruchi chapter of Builders’ Association of India (BAI).

Besides cement, prices of materials like steel, pipes and other essentials had skyrocketed even during the time of pandemic lockdown. The Russia-Ukraine war has aggravated the situation, he added.

“The people’s mindset determines which brand of cement does better in the market,” said Jayant Kumar M. Mehta, a committee member of BAI-Tiruchi. “We may sell an apartment for a certain rate, but the costs builders incur on labour and construction materials are much higher. Only when material prices are standardised, can the real estate sector and the economy grow,” he added.

Of late, land prices in suburban Tiruchi have risen due to the new development projects proposed by the government.

After the announcement of the Integrated Bus Terminus and wholesale vegetable market, value of housing plots in Panjappur and Olaiyur suburbs have reportedly gone up substantially in a matter of months.

“High construction costs will slow down the expansion of the city unless the government steps in,” said Mr. Mehta. “We need lots of layouts and big roads to grow. Both private and public agencies can be involved in the development. We are looking out for properties in the suburbs, but buying them at the inflated prices is not safe, in case projects do not take off as expected.”

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Printable version | Jun 29, 2022 2:34:19 pm | https://www.thehindu.com/news/cities/Tiruchirapalli/high-cement-price-hits-real-estate-sector/article65360651.ece