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How developers and contractors can respond to rising cement costs

Wednesday 27th Jul 2022    143
How developers and contractors can respond to rising cement costs
 

Since June 2019, cement prices have been rising. Between then and now, cement has recorded a price increase of about 26.5 percent, according to Colliers.

Rising costs for pet coke, coal and fuel, as well as freight rates have all contributed to a rise in cement prices, said Indranil Basu, Managing Director, Project Management, South India at Colliers. He sees this trend continuing with an inevitable impact on product pricing across nearly all real estate asset classes.

"On ongoing projects, almost all developers have little choice but to take the price, which shrinks margins," Basu notes. "However, for new and future projects, higher raw material prices lead to higher project costs and therefore product costs, leaving developers no choice but to pass the increase on to the consumer."

Cement price increases over the past few months have pushed total project costs up by at least 3-5 percent, said Harshvardhan Tibrewala, director of Roha Realty. He believes most developers have absorbed this increase in project costs internally. "From now on, we will not pass on any of this increase to buyers," he confirms.

Contractors are also not unaffected by the price increase.

 
 
 
 

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