Price Hike Leaves Builders Agitated

Builders in the Vijayawada-Guntur region are raising a hue and cry over increasing cost of construction.

Published: 03rd July 2014 07:53 AM  |   Last Updated: 04th July 2014 10:11 AM   |  A+A-


VIJAYAWADA: Builders in the Vijayawada-Guntur region are raising a hue and cry over increasing cost of construction. With a huge increase in the input costs on cement, sand, steel, metal and labour, builders are in a fix. While almost all costs have increased alarmingly, the steep hike in cement price has dealt a fresh blow to the builders in the region. A standard bag of cement which cost about `190-`200 a month ago, has been increased to Rs 300.

Confederation of Real Estates Development Association of India (CREDAI) Andhra Pradesh vice president A Siva Reddy expressed concern over cement companies raising the prices by almost 50 per cent. As construction activity is set to pick up after a slump, cement manufacturers may want to cash in on this situation but it will deal a severe blow to builders. Besides, the manufactures are also creating an artificial scarcity. Builders are also worried about the rise in other input costs like sand, labour, steel, mortar, sanitaryware and wood.

For instance, sand prices have registered a fourfold increase when compared to the prices two years ago. Labour costs have doubled and the price of steel has also increased gradually. “A trolley of sand used to cost about Rs 2,000 two years ago. But it costs about Rs 6,000-Rs 7,500 now, thanks to inconsistent policies of the government. The daily wages of unskilled labourers have gone up to Rs 500 from Rs 300-400 two years ago. Though steel prices have increased gradually, the increase has been to an extent of 25 per cent when compared to what it was a year-and-a half ago. While it cost about Rs 40,000 to Rs 42,000 a tonne a year-and-a-half ago, now it costs anywhere from Rs 50,000 and Rs 55000. In such a situation, a builder can survive only if he cuts down his profit margin or transfers the burden onto the customer,” explains Gadde Rajling Greater Vijayawada Builders Association president.

While cement forms about 15-20 per cent of construction cost, labour accounts for 25 per cent, sand for about 15 per cent and steel for 10 per cent. Even sanitaryware, wood and electrical material are all shooting. In this backdrop, any major increase in inputs like cement, sand and labour only gives jitters to builders.  “Builders in Vijayawada and Guntur region are already facing tough times due to huge land costs. But with the region attaining significance post bifurcation, more projects are coming up in anticipated demand for  increase in constructions,” RV Swamy, a Vijayawada-based builder said.

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