Your Nest to cost more by Rs 400 per square feet this year!

Chennai:

The New Year may not be good for home buyers as real estate developers are planning to increase the cost of flats by about 10 per cent due to rise in sand, cement and steel prices.

Suresh Krishn, president of Confederation of Real Estate Developer’s Association of India (CREDAI), told reporters that the real estate sector has suffered a setback with the implementation of GST and now with the rising cost of raw materials the developers have no go but to pass on the price rise to customers.

This would mean a 1,000 square feet 3 Bedroom Hall Kitchen flat would cost additional Rs 5 lakh.

He said the overall cost of construction per square feet has increased by Rs 400. Of this, sand alone costs Rs 200 additional per square feet.

Sand was priced at rs 35 per cubic feet six months ago and now it is Rs 135, a whopping increase of Rs 100. As a result the per square feet construction cost involving sand has risen by Rs 200.

Similarly, cement which was earlier priced Rs 270 per bag is now priced at Rs 330 per bag as a result the cost of construction using cement has increased by Rs 30.

Even the price of steel has gone up from 34,000 per ton to Rs 47,000 per ton. This has pushed the additional cost of construction by Rs 60 per square feet. “Currently, the construction cost of stilt plus four floors of building is Rs 2,800 per square feet. Thsi will go up by another Rs 400,” said S Sridharan, vice-president of CREDAI Chennai chapter.

Krishn said that the inventory of unsold flats has come down drastically in the last two years as there were no new launches during the period.

“We expect in the next six months, the demand will be more than the supply,” Krishn predicted. He said that the developers have been asking the state government to allow import of sand so that it can put an end to rising cost of sand prices. But till now no decision has been taken yet, he said. He also said that the cost of m-sand has more than doubled as such it is also not viable.

He said that the real estate sector has been hit as the Goods Service Tax has been implemented on cost of land. This has affected the the builders as those wanting to build in upmarket localities will have to pay huge cost while those building in Tambaram, where the cost of land is low, has to pay lower GST.

“We have taken up the issue with Finance Minister Arun Jaitley and are hopeful for a positive solution,” he said.

Factfile:

Sand:

Before six month rate: Rs 35 per cubic feet

Current rate: Rs 135 per cubic feet

Increase: Rs 100

Impact on construction cost: Rs 200 per square feet

Cement:

Before six month rate: Rs 270 per bag

Current rate: Rs 330 per bag

Increase: Rs 60

Impact on construction cost: Rs 30 per square feet

Impact on construction cost: Rs 200 per square feet

Steel:

Before six month rate: Rs 34,000 per tonne

Current rate: Rs 47,000 per tonne

Increase: Rs 13,000

Impact on construction cost: Rs 60 per square feet

Ceramic tiles, electricals and other costs: Rs 110 per square feet

Total Rise in Cost of Construction: Rs 400