Construction costs hit the roof in Andhra Pradesh
VIJAYAWADA: Though the construction activity has picked up pace for the past couple of months across the State with decline in Covid cases, builders are in a fix due to the increasing cost of raw materials. It is estimated that house construction cost has increased by 20-25% with the increase in cost of sand, cement, steel and labour, compared to the last 1-1.5 years. The increasing cost of fuel and coal crisis across the country are said to be one of the reasons.
In a recently released CAG report on State’s finances, it was observed that in the first five months of the current fiscal, the revenue from the registrations was Rs 2,747.10 crore, despite no hike in the registration fees. For the corresponding period last fiscal, it was Rs 1,399.35 crore.
The figures indicate that registrations have started increasing and the real estate sector is limping back to normalcy. Though there has been an increase in the footfall at real estate developers’ offices making inquiries to strike a good deal for owning a house or a flat, the increase in the cost of housing owing to increase in the cost of raw materials is dampening the spirit of the buyers.
For Rama Rao of Pendurthi in Visakhapatnam, it has been a double whammy since he commenced construction of his dream house three years ago. He took a home loan before commencing his dream venture. Initially, he faced problems with sand scarcity and when the situation looked to be normalising, the Covid pandemic rendered him helpless and clueless. Owing to the lockdown, he could not continue construction and thereafter, there was labour shortage.
Now, he restarted construction of his house, but is in a fix as the construction cost has increased with prices of raw material going through the roof. “The loan amount is no longer there to finish the project and now I am burdened with interest. I am clueless as to where to get money for completing the project,” he rued.
Kishore Kumar, a kirana merchant in Venkataramana Colony of Kurnool city, has a similar tale to tell. He and his wife, a government employee, have planned to have their own house — a 2BHK flat — and had even secured a home loan. However, now they are in a bind, as the cost of the flat (under construction) has gone up by 15 per cent. “We are in a dilemma,” he said.
P Rajasekhar Rao, Vice President CREDAI AP, said, “The abnormal rise in the construction material costs has forced many builders to temporarily halt their constructions mid way while some builders continue to do the works at a slow pace.” The price rise will definitely hinder the progress of all the construction and allied businesses that are limping back to normalcy post the Covid-19 pandemic, he added.
Tirupati Chamber of Commerce president Manjunath said on average 15 to 20 thousand tonnes of steel and 70 to 80 thousand tonnes of cement is used in the district for construction, “Earlier this month the price of premium Vizag grade quality steel has shot up to Rs 73,000 from Rs 64,000. And cement bag price has increased from Rs 410 to Rs 470 per bag.” Yandamuri Prakash Rao, special class contractor in Kakinada observed that the high cost of building material is putting the contractors in a dilemma. “What can we do, we are helpless,” he said.
CREDAI Vijayawada general secretary Ramesh Ankeenudu said the cost of construction has increased by Rs 500 to Rs 600 per square feet, due to increase in the cost of raw material. “Be it sand, cement, brick or steel, everything has become costlier, which is a cause of concern,” he said and hoped the policy-makers take stock of the situation to control the price spiral of raw material. “The labour cost in construction activity has increased by 10 per cent. A tonne of steel has gone up from Rs 45,000 to Rs 50,000 per tonne to over Rs 65,000 per tonne.
A bag of cement, which used to be Rs 250 to Rs 260 has increased to Rs 370 and sand which used to be Rs 3,000 per load increased to Rs 10,000. The costs of other fixtures like electricity, plumbing and tiles have also increased, while the cost of a brick increased to Rs 6.90 from Rs 5.70,” a builder in Vijayawada explained. He said even after an increase in the price, supply of raw material is less than demand as several projects are under construction. Both State and Central governments are being urged to take note of the situation and bail the sector out of trouble.
(With inputs from G Janardhan Rao, K Madhu Sudhakar, Sri Krishna Kummara and S Trimurthulu)