Puravankara Limited, which has already made a 3-5% price increase in the third quarter of the previous financial year, said it would continue to consider “periodic” upward price revisions due to an increase from 8 to 15% of the prices. raw material and labor costs since February.
“We are aware of these fluctuating market dynamics,” said Ashish R Puravankara, Managing Director of Puravankara. “With this in mind, we plan to implement periodic price increases incrementally across all of our brands,” he added.
Puravankara’s engineering teams, according to the company, have worked hard to try to offset costs by optimizing the use of raw materials and reducing construction waste. However, several reports suggest that developers at all levels may not escape the plague of escalating costs.
According to a study by the Confederation of Real Estate Developers Associations of India (CREDAI), almost 78% of the 1,850 developers surveyed predicted that they expected price increases of around 10%, to offset a projected 20% increase in costs across the board. In fact, nearly 46% of those developers said they also expected a delay in project timelines.
However, most A-level developers don’t anticipate project delays to be a concern at this time. “Our delivery times have not been severely impacted,” said Dhaval Ajmera, Director, Ajmera Realty & Infra. “We expect a slight delay of around two to three months, but that’s not a major impact – we haven’t stopped construction.”
However, even in Ajmera, a price increase is inevitable as the company has revised its prices upwards by 5-10%, to compensate for a cost increase of 10-15%. “Most of the pressure we are facing is felt in our affordable and mid-range housing portfolio in Bangalore, Pune and Mumbai,” adds Ajmera.
Other developers agree that the impact of rising construction costs is felt primarily in Tier 2 and Tier 3 cities. sale per square foot is unprecedented,” observes the CREDAI survey. Developers say they have no choice but to pass on the rising costs to the end consumer.
“Over the past year, we have been able to absorb rising construction costs to guide industry growth post-pandemic,” said Harsh Vardhan Patodia, President of CREDAI. “However, with thin margins, this will eventually have to be passed on to buyers, which may not bode well for the industry’s growth momentum,” he said.
CREDAI has in the recent past made a series of recommendations to the government to mitigate rising input costs, including GST input credits and stamp duty rebates.