TIRUCHY: Real estate developers across Tamil Nadu are bracing for a sharp rise in construction costs, with some already increasing property prices by up to 5%, as rates of key materials such as cement, steel, PVC pipes, electrical wires and tiles continue to climb amid global supply disruptions linked to ongoing tensions in West Asia.
Industry sources said cement prices, which were retailing at Rs 320 to Rs 340 per bag, have risen steeply to Rs 370–Rs 400 in recent weeks. The spike is largely attributed to rising input costs, particularly petroleum coke (pet coke), a crucial fuel used in cement kilns, whose prices have surged due to volatility in global energy markets.
Developers say the increase has already begun to reflect in new projects, while older projects remain insulated due to regulatory constraints. “As per RERA norms, we cannot pass on the increased input costs to ongoing projects. However, these cost escalations have already been factored into newly launched projects,” said Mothish Kumar, a member of the governing body of the Chennai chapter of CREDAI.
Adding to the pressure is a shortage of polypropylene (PP), a key raw material used in manufacturing cement bags. A Sathanandam, proprietor of a cement dealership in Tiruchy, said packaging costs have nearly doubled, with the price of cement bags rising from Rs 6–Rs 7 earlier to Rs 11–Rs 12 now. He said wholesale cement prices have crossed Rs 300–Rs 330 per bag. “The shortage is linked to supply disruptions in the Gulf region. Manufacturers are receiving lower-than-contracted supplies of polypropylene, even as raw material prices have risen in recent months,” he said.
Steel prices have also witnessed a significant jump. Abdul Jaleel, proprietor of a steel firm in Tiruchy, said premium steel has increased from around Rs 70,000 per tonne to nearly Rs 80,000 per tonne, while secondary market prices have risen from approximately Rs 50,000 to Rs 60,000 per tonne. “The ongoing conflict has worsened supply bottlenecks, pushing up costs further,” he said.
Developers warn that the cumulative impact of rising input costs could push overall construction expenses up by 5% to 10% in the coming months. Apart from cement and steel, the cost of electrical materials, particularly PVC-based products, has been steadily increasing, along with tiles and other finishing materials.
T Yogesh, secretary of CREDAI Madurai, said some developers have already increased project prices by up to 5% to offset rising input costs. “With cement manufacturers announcing price hikes from April and input costs continuing to rise, the overall cost of construction could increase by 5% to 10%. The increase is likely to be gradual, especially with anticipated fuel price hikes,” he said.
Echoing similar concerns, K Sivakumar, vice-chairman of the Builder Association of India (Madurai), said steel prices have increased by about Rs 10 per kilogram, while electrical and plumbing materials have gone up by Rs 30–Rs 40 across key categories.
“The cost of construction for standard residential projects, currently ranging between Rs 2,500 and Rs 2,750 per sq ft, could rise to Rs 3,000–Rs 3,500 per sq ft if the trend persists. This may force builders to either increase project costs or make compromises in engineering aspects,” he said, adding that the ongoing West Asia war is a major factor behind the disruption.
The impact is already being felt by consumers. S Joe Naveen Raj, a resident of Madurai who is currently constructing a house, said rising prices have strained his budget. “Contractors have already increased estimates, and I am struggling to manage within the loan amount I had planned. I may have to revise my budget or scale down certain aspects of construction,” he said.
With multiple inputs becoming costlier simultaneously, developers warn that sustained price escalation could dampen demand and affect both ongoing and upcoming real estate projects across Tamil Nadu.