Rising steel, cement prices hit construction

Rising steel, cement prices hit construction
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First Published: Wed, Jul 16 2008. 11 46 PM IST
Updated: Wed, Jul 16 2008. 11 46 PM IST
New Delhi: With the cost of basic construction raw material like and steel rising over the past few months, many independent house constructors and real estate developers are feeling the heat. Their construction costs have risen by between 40-60% upsetting their budgets substantially. Most people and developers have already paid a fixed price for the land when they begin construction. It is the cost of construction that is variable. According to Parsavnath COO DP Dhaka construction costs can account for up to 60% of the cost of building homes. He says that his company has been badly hit by the recent price rise. ”When we began construction for existing projects around two-three years ago, we had allocated a certain amount for our construction expenses, but now we find the same going up by over 40-50%. This is affecting our margins very seriously.”
Most of the cost increase can be attributed to increase in building basics like steel and cement. Cement prices that stood at Rs150 per bag in 2006 are now between Rs 220-260. Similarly, steel prices that were between Rs 22-28 to in 2006 now stand between Rs 45-50 per kg. This is a steep increase of almost 80%. In the case of steel, the past three to four months have been especially bad. From around Rs 35 per kg in March, steel prices have risen to around Rs 47 per kg in July.
Says, C.P. Sharma, an independent contractor and construction incharge, “In early 2001, the cost of building a house would on average be Rs500 sq ft for construction. Today, even Rs1200 per sq ft is not enough.” This is a rise of over 230%. Sharma adds that the price of other building material like stone aggregates are equally to blame. They have risen between 30-35% over the past few months.
The recent spurt in cement and steel prices have had architect and interior designer Poonam Amla’s clients asking her for low cost solution for finishing their house’s construction. In one of her projects in a posh North Delhi locality, her clients have asked her to find alternative materials that cost less. “Building a house has become 40-60% more expensive. So we are trying to find solutions that make construction cheaper and at the same time retain the design integrity,” she says.
Amla adds that since one cannot meddle with the integrity of the basic structure and has to use best possible material despite the price, most of the reduction can only be done in the finishing material. For instance, in the North Delhi house she is constructing, she is now using a combination flooring of wooden laminate and Italian marble. “Wooden laminate 70-80% less than the cost of marble. While the design is making it look good, I am able to save costs for my client,” she says.
However, with the price of steel set to increase even further as indicated by the Union Minster of steel Ram Vilas Paswan and steel manufacturers like TISCO and SAIL, building that dream home is only set to get more expensive.
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First Published: Wed, Jul 16 2008. 11 46 PM IST