Andhra Pradesh

Rising cost of cement, steel push up construction cost up by 40%

Representational image.   | Photo Credit: Biswaranjan Rout

The cost of construction has increased by 35-40% due to steep rise in prices of raw materials such as cement, steel and sand in Andhra Pradesh. The builders have crossed their fingers as they would have to shoulder ₹5 lakh to ₹10 lakh per unit if the cost escalation were to be borne by them in view of the RERA rules.

According to information, the steel cost has increased from ₹46,000 to ₹48,000 per tonne to ₹69,000 to ₹72,000 per tonne. The “sand is not available at a price not less than” ₹1,100 per tonne. Similarly, the cost of cement too shot up. The cement used to cost ₹280 to ₹300 per bag depending upon the quality and brand. Now, it costs ₹400 to ₹450 per bag. The costs of other fixtures such as electricity, plumbing and tiles have also increased. As a result, the cost per square foot (sft) has gone up to ₹4,500 to ₹5,500. It was about ₹3,500 per sft a few months ago, sources in the construction industry say.

When contacted, the Confederation of Real Estate Developers Associations of India (CREDAI) Convenor (Public Relations and Media Affairs Committee) R.V. Swamy says that the cost of construction of a unit has gone up by about 40%. Earlier, a flat used to cost ₹40 lakh depending upon the factors such as square feet, area etc. Now, the builder has to sell a flat at ₹45 lakh to ₹50 lakh if the rise in prices of raw materials were to be taken into account, he explains.

As the builders have already entered into an agreement with the buyers under the Real Estate (Regulation and Development) Act (RERA), they are clueless as to what to do. For new projects, the increase in prices can be passed on to the buyers but it may not be possible for already existing agreements under the RERA. The construction sector was already hit by the pandemic and related restrictions. The industry is now facing blow with the steep rise in cost of materials. The government has to take proactive steps to resolve the issue, he says.

As per the industry sources, there are about 8,000 to 10,000 ongoing projects across the State. In Vijayawada and Visakhapatnam, about 1,200 to 1,400 projects each are under progress. Remaining are in cities and towns such as Guntur, Tirupati, Kurnool, Rajahmundry, Kakinada etc. The flats space fall in the categories of 800ft, 1,000ft, 2,000ft and 3,000ft. In all, 2,500 to 3,000 builders have crossed their fingers.


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Printable version | Jan 29, 2022 7:52:02 PM | https://www.thehindu.com/news/national/andhra-pradesh/rising-cost-of-cement-steel-push-up-construction-cost-up-by-40/article37498266.ece

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