Price spiral brings construction activity to a grinding halt in Vizianagaram

Builders shelve projects as they become unviable

Construction activity has come to a near halt in and around the fort city thanks to the steep rise in the prices of steel and cement in the last one month. Many builders have announced a ‘construction holiday’ which has thrown nearly 30,000 workers out of job.

According to builders, a bag of cement which was priced around ₹250 in 2020, went up to ₹350 in 2021 and is now priced at ₹425. Steel price rose from ₹45,000 per tonne to ₹55,000 in 2021 but has now shot up to ₹86,000. Escalation in coal prices and transport charges have significantly contributed to the steel price hike.

A 10% hike in prices is expected normally every year but doubling of the steel price has caused consternation among builders. Prices of bricks, tiles and electric and plumbing material have also spurted by up to 30% in the last one and a half years.

Consequently, the construction cost per square foot has gone up from around ₹3,000 till 2020 to ₹3500-3800 now. It means, a 1000 sft apartment costs ₹35 lakh, excluding other charges like parking, corpus fund for maintenance of apartment and registration charges.

Normally, 200 to 300 new apartments are built every year in this area but now almost all the activity has been stopped. Many builders have shelved their new project plans with little hope of making even a nominal profit in the current scenario.

The Confederation of Real Estate Developers’ Associations of India-AP Chapter State general secretary K. Subhash Chanda Bose urges the State government to hold a meeting with raw material suppliers to reduce the prices. “An artificial scarcity is being created by a cartel of manufacturers leading to unprecedented escalation of rates putting heavy burden on the construction industry,” he says. “We request the government not to enhance the market values of land as it will increase registration charges laying additional burden on property buyers. We also urged the government to slash stamp duty to 5% of property value from the existing 7.5. These measures alone can help the common man realise his dream of owning a house,” he adds.

About 1,000 builders, who are members of the 20 chapters of CREDAI-AP, will meet very soon to discuss the issues being faced by the construction sector. “A slump in construction industry will lead to loss of employment to many people directly and indirectly. Lives over 5 lakh people will be affected if the same situation continues to prevail for some more time,” says Mr. Bose.