Hyderabad: Even though the post-pandemic world has seen a surge in demand for residential properties, the real estate sector is also witnessing a steep rise in raw material prices due to the pandemic and the Russia-Ukraine war. Reports suggest that the increase has been due to increase in raw material prices (…)
Published date – June 4, 2022, 12:45 am
Hyderabad: Even though the post-pandemic world has seen a surge in demand for residential properties, the real estate sector is also witnessing a steep rise in raw material prices due to the pandemic and the Russia-Ukraine war.
Reports suggest that housing prices have increased in all major cities including Hyderabad due to increase in raw material prices.
The housing price-tracker report jointly conducted by CREDAI, Colliers and Liaises Foras shows that average residential prices in India rose by 4 per cent year-on-year during the first quarter of 2022 after a long recession, indicating that residential The market has declined. On the road to recovery.
The post-pandemic world has seen a steep rise in prices of raw materials such as steel, cement, copper and aluminum and the Ukraine war has further exacerbated the issue. Some of the factors contributing to rising raw material costs include increased demand from infrastructure projects, shortage of local coal, rising power generation costs and increased demand to meet growth.
An expert says the industry is also facing logistics problems due to shortage of containers and an almost 80 per cent increase in prices. According to JLL, Colliers and industry reports, between March 2021 and March 2022, Brent crude oil has increased by 70 percent, aluminum by 44 percent, copper by 40 percent, steel by 30 percent and cement by 30 percent. 22 percent despite rising fuel prices.
Naveen Maypala, MD, Urban Living Space, said construction costs have increased by about 35 per cent since 2021 and labor costs have increased by about 25 per cent. “The rise in raw material prices has put real estate developers in trouble, forcing them to increase property rates. “Fluctuations in the market price of these raw materials are expected to create higher project risks for all stakeholders such as suppliers, contractors and customers involved in the construction of a real estate project,” he said.
Manish Upadhyay, chief business officer, 99acres.com, said rising raw material costs due to the Ukraine-Russia conflict have kept the builder fraternity worried, while home buyers are looking to buy new homes and resale markets despite the lockdown in January 2022. Was seen closing deals.
Maypala emphasized that as material input costs are increasing, the impact is expected to be at least 10 percent to 15 percent of price increase per year.
Hyderabad market
The housing price-tracker report suggested that Hyderabad recorded a substantial 9 per cent year-on-year rise in prices in the first quarter of 2022. The average price in the city in the first quarter of 2022 was Rs 9,132 per square foot. , which was second only to the Mumbai Metropolitan Region (MMR).
“Due to the supply and demand gap, prices are lower as many cement factories are close to the city, which can help reduce transportation costs. But, this market will become difficult if prices cross the affordability threshold of end customers,” says Maypala.