In a press release by Jaxay Shah, Chairman of CREDAI said that CREDAI has written to the Prime Minister and all concerned ministries and urged them to take note of cartelization by cement and steel manufacturers.
Coimbatore: CREDAI - Confederation of Real Estate Developers Association of India has said that continuous upsurge in raw material prices will increase the project cost and will have a cascading effect on homebuyers.
In a press release by Jaxay Shah, Chairman of CREDAI said that CREDAI has written to the Prime Minister and all concerned ministries and urged them to take note of cartelization by cement and steel manufacturers.
CREDAI has also requested the government for an immediate intervention in regulating the prices of construction raw materials amidst the ongoing pandemic as Indian real estate is one of the worst-hit sectors during Covid-19 pandemic.
In it's press release CREDAI has also mentioned about the continuous upsurge due to cartelization in the prices of steel, cement and other raw materials and its impact on the real estate developers. It also said that construction developers will experience a higher construction cost and will be soon put in a situation where there will be a delay in delivery of products which will impact the finishing of works. CREDAI also said that due to this home buyers will be affected at large.
CREDAI on it's press note said that hike in the prices of cement and steel have been a serious concern and many industry leaders and ministers have expressed their concern on many public platforms too. The press release also quoted Minister of State for Road Transport and Highways,V K Singh's warning to cement companies against cartelization at an industry event in September 2020 and Minister for MSMEs and Road Transport and Highway Nitin Gadkari's advice to steel and cement manufacturers against their irrational upsurge in prices.
Also the press note mentioned that the real estate sector has been working on wafer thin margins and is battling unsold inventory on one hand and unfinished projects due to lack of funds on the other. It also said that with s stagnant demand, developers have not increased the prices and are selling projects at affordable rates.
CREDAI requested the PM to interfere in this issue as Indian real estate sector plays an important role in strengthening the economy. Besides employing more than 40 Million workers the sector also is a key partner in many Central Government schemes like Affordable Housing, Housing for all by 2022 and supports more than 250 ancillary industries.
Jaxay Shah, Chairman, CREDAI said that the sector feels ignored because of lack of support from the government on various issues. He also said that there is an urgent need to control the spiraling cement, steel & other raw material prices and that he urges the government to take necessary steps at the earliest.
He also said that cement prices have increased by more than 23% and the steel prices have increased by more than 45% since the beginning of this year. In January 2020, cement price (50 kg bag) was around Rs 349 per bag and has now increased to Rs 420 – 430 per bag in December 2020. He also said that the steel manufacturers too have been taking undue advantage of the increase in demand for steel and have been increasing the prices every month. At the beginning of this year, the per tonne rate of steel was Rs 40, 000 and has now rocketed to Rs 58,000 in December 2020.
Satish Nagar President, CREDAI in response to the price hike said that cartelisation of cement and steel by manufacturers not only affects the real estate sector but has been affecting other sectors. He also said that the real estate sector is like any other sector too has come out of near zero business in the first 2 quarters and was hopeful of revival during the festive season.
He also said that high raw material costs makes the projects financially unviable and are causing distress amongst developers. He further humbly requested the government to do the necessary and arrest the price hike of cement, steel. He also said that any increase in raw material cost will lead to increase in the construction costs and overall project cost which will result in many developers halting construction work which will impact the delivery of the projects. He also said that this price hike will have a cascading effect on the homebuyers also.
CREDAI mentioned that this abrupt increase in the prices is highly unethical and amounts to unfair and restrictive trade practices. In the letter it was mentioned that the Real estate sector had already been facing headwinds owing to stalled construction due to Covid-19 for most part of the year. And the continuous and unchecked surge in the basic raw materials has created a deadlock and added to the uncertainties amongst the developer fraternity.