The cost of key materials like cement and steel have risen over 20% yearly as of March 2022. These constitute a predominant share in the total cost of construction. So far, developers have been cautious about increasing prices as the market was recovering from the aftermath of Covid-19.

 

Over the last one year, developers’ average cost of construction has risen by 12%, owing to higher input cost due to supply-side constraints, according to a recent report by Colliers. This surge in cost comes at a time when developers have been under pressure due to higher debt and liquidity concerns over the last few years.

 

The cost of key materials like cement and steel have risen over 20% yearly as of March 2022. These constitute a predominant share in the total cost of construction. So far, developers have been cautious about increasing prices as the market was recovering from the aftermath of Covid-19. However, developers have now started feeling the pinch of rising cost and started reviewing their pricing strategy.

 

“With rising material cost, developers are compelled to increase prices as construction materials account for major share in the total cost of construction.” With wholesale price inflation (WPI) and material cost, both seeing a double-digit rise, the cost of construction will rise by a further 9% to 12%”.

 

Residential projects in the affordable and mid-income segments carry relatively lower margins and are price sensitive. Hence, major increase in input cost will be passed on to end-users.

 

“Prices of cement and steel have increased sharply over the last two years. Steel price has increased over 100%, whereas cement price has gone up by more than 30% in the last two years. Similarly, be it cost of aluminium materials, electric wire, paints, stone all are up by more than 50% during the same period. This has led to a sharp increase in per square feet construction cost.”

 

Source: realty.economictimes.indiatimes.com