Udupi
Rising fuel prices, increase in coal price and increased cost of raw materials has been a cause of concern for one of the backbone sectors of coastal Karnataka, the building and real estate sector. It has been largely under pressure due to rising prices.
Building construction is a process. It involves various steps and would require sufficient time for completion which is usually in the range 2 to 4 years depending on the project size. The builders are not entitled to increase the price of the flats even if the prices of raw material increases. They have to abide by the prices fixed during the booking.
This has also put many builders in trouble as they are now forced to pay the additional costs from their own pockets. This has become another major concern for the industry.
Hike in prices of steel, aluminum, fuel
In the last three years, the prices of steel, aluminum, fuel and other raw materials have seen a drastic increase. The price of steel has increased from Rs 53 per kg in 2020 to Rs 100 per kg now. The rise in the prices of coal, a raw material for most of the metal contents used in the construction industry, has also created much worries in the real estate sector. Metal prices have seen a drastic increase which includes electrical wires etc. The price of cement has increased from Rs 250 per bag in 2020 to Rs 450 per bag now. The price of electrical wires saw a soaring increase of 100% in the last two years.
The present hike in the cost of raw materials could additionally increase the construction cost per by about Rs 1,000 sq ft. Industry experts opine that prices of apartments are likely to go up by 25% if the current trends continue. This will surely impact the new house buyers. The industry is looking for new innovative and booster schemes from the government’s end.
Demand for ready-to-move-in flats soars
The pandemic has changed many things in the construction industry. Earlier, people used to book the ongoing projects. This was helpful even for the builders and the bookings helped in fast completion of the projects. But after the onset of the pandemic, the tables have turned. Now people are more interested in buying ready-to-move-in apartments. This has become another challenge for the industry. The market has no investors today and there is a drastic increase in the end user buyers.
“After the pandemic, many things have changed in the real estate industry. Our market base has shifted from the Gulf countries to cities like Bengaluru. Any buyer who comes to see the apartment first checks the speed of the internet and other connectivity options. ‘Roti-Kapda-Makan-Internet’ has become the new essentials these days. It is a survival of the fittest situation now,” says Sudhir Shetty, treasurer CREDAI Udupi.
