Cascading effect of fuel prices, foreclosure impacts construction industry
Despite a marginal drop in fuel prices, industry insiders say there has been a continued rise in fuel prices that has had a huge impact on the construction industry. As the transportation of construction materials is affected, builders and contractors find it difficult to complete their projects at the prices they incur.
Diesel prices over the past year have increased dramatically although they have only recently been reduced. This has already resulted in a 30% increase in logistics costs for freight carriers. Owners of freight carriers are also facing challenges due to rising wages, driver allowances, and rising fuel prices.
âCovid-induced closures have created huge labor issues. Due to the closures, people have migrated to their villages and are reluctant to return. This has created a labor shortage of at least 25 percent. It affected packing, loading, unloading and driving. The situation is getting worse by the day since last year, âsaid one building contractor.
The rise in prices strongly affected construction costs. Previously the construction cost was Rs.1.75 lakh per square foot and has now increased to Rs.50 lakh per square foot. Sand prices have dropped from 60,000 rupees to 1 lakh per load. Sometimes good quality sand is sold for Rs 1.25 lakh per load.
Brick prices have gone from Rs 5,500 to Rs 7,500 per load. Marble, ceramic tile and granite rates also doubled. Cement blocks which used to cost around Rs.38 per block are now sold for Rs.50. âWe were struggling to weather the blow of the pandemic and now the price hike has hit us hard,â said Rajesh R, structural engineer.
The increases in the cost of building materials are too severe to absorb more without impacting buyers
Anuj Puri, ANAROCK Group
Truck owners say the price of fuel is higher than the year before. Nagaraj, a truck owner, said: âDespite the drop in fuel prices, we are suffering losses. We do not have the ability to revise the rates based on changes. However, the small fuel cut is not reflected in the overall cost of construction which has increased significantly.
Builders in a fix
Many builders have sounded the alarm about the rising cost of inputs. Suresh Hari, President of CREDAI, said that due to various regulations in the interest of end users, increasing prices becomes a challenge for developers. The government should seek to alleviate escalating construction costs due to rising input costs through further tax breaks, he said.
Anuj Puri, Chairman of ANAROCK Group, said, âWith the current inflationary trends of rising costs of inputs like cement, steel, etc., it was obvious that sooner or later developers would have to raise their prices. The increases in the cost of building materials are too severe to be absorbed further without impacting buyers. Inflation has impacted our lives on every level, and building construction is certainly no exception.
Saransh Trehan, managing director of Trehan Developers, said construction costs have already risen 10 to 20 percent from last year due to the increase in the cost of raw materials as well as labor costs. of work. âDevelopers have no leeway to absorb this increase in the cost of raw materials, developers will reluctantly have to compensate for the increase in costs by increasing the price to some extent. ”
Anubhav Jain, CEO of SilverGlades Group, added that the costs of raw materials like cement and steel have risen significantly in recent months. âSince most developers are operating on very thin margins under current market conditions, there is tremendous pricing pressure. We are evaluating the cost of our inputs, if so, we will also have to increase the price, âhe said.