India Real Estate Monitor » Construction Cost

Realty Sector Wants Cost Of Finance to Be Lowered

maxin — Thu, 14 Feb 2013 11:50:02 +0000

Realty sector hopes that upcoming budget by the Finance Minister will cut down the costs of finance for the construction boosting realty sector.

As Finance minister is likely to announce the new Budget on February 28, realty players demanded that the cost of finance should be lowered for the construction sector. If the cost of finance is lowered, realty sector will be boosted.

Real estate sector looks forward hopefully at the finance minister’s upcoming budget which will be submitted on February 28. Finance minister has already hinted that the upcoming budget will be real estate-friendly as it may include certain provisions that boost the realty sector.

Developers and other real estate agents have demanded that the cost of finance for construction should be lowered so as to assure that the builders remain capable of providing more affordable homes. Once the cost of finance for construction is lowered the cost of housing units will come down.

Another important demand of the developers is rapid clearance. Once the clearance takes place in quicker time the builders will be able to provide homes at lower rates than ever.

Builders have opined that the delay in clearance is one of the main factors that raises the prices of housing units. Often the builders remain unable to complete the projects in time only because of the delayed approvals. The time taken for getting the clearances is very long that the property prices shoot up by the time.

All this affect the home buyers because they are loaded with the additional cost incurred for attaining clearance. On the other hand the builders suggested single-window clearance to speed up the construction sector.

Mr. Lalit Kumar Jain suggested that tax exemption should be granted for amount invested for constructing smaller homes with less than 60 sq. m of carpet area. Confederation of Real Estate Developers’ Associations of India’s chief also demanded special Provision of special housing zones similar to the Special economic zones.

Inflation Affecting Real Estate Prices

Thu, 07 Aug 2008 07:22:32 +0000

With inflation touching 12.98%, realtors here are finding it difficult to hold their price line and plan to increase rates for residential units by Rs 100-500 per sq ft later this month.
According to Confederation of Real Estate Developer’s Associations of India (Credai) Bengal, there has been a 25% increase in the construction cost of residential buildings over the last one year, almost double the increase during last year over 2006.
“Construction cost has increased from Rs 1,265 per sq ft in 2006 to Rs 1,811 per sq ft in July 2008, or by 43%,” said Pradeep Sureka, president of Credai Bengal. The city has added almost 10 million sqft of real estate space in last one year.
While steel prices have gone up by 107% in the last two years to Rs 45,500 per tone, cement has become dearer by 39% at Rs 4,900 per tone. “Even cost of bricks has doubled in the last two years to Rs 4.40 per piece,” Sureka said.
In April this year, Prime Minister Manmohan Singh had asked steel companies not to increase prices and the big steel makers had responded by holding the price line for three months.
“If the steel companies start increasing prices after August, prices could go up by Rs 500 per sq ft,” said S. Rungta, VP of Credai.
According to Credai estimates, direct and indirect taxes add nearly 27% to the cost of a six-lakh sq ft residential project with 30-40-metre high buildings. For a property selling at Rs 2,600 per sq ft, a buyer has to shell out Rs 211 as stamp duty and registration charges. Indirect taxes have already added around Rs 483 per sq ft.
Realtors said their sales have come down by more than 30% in the first quarter of 2008-09. Many of them will be gauging the customer mood at a property fair scheduled to open on August 11.
“We have requested Credai members to hold prices till Home Front-2008,” said Sushil Mohta, executive body member of Credai India, referring to the annual event.
However, banks said housing spends in West Bengal pick up after the second quarter, after people have done their festival spending.
According to SK Goel, chairman and managing director of Kolkata-based Uco Bank, the demand for housing in Kolkata and West Bengal starts picking up after the festive season.

DLF To Develop Eight Malls This FY

Wed, 02 Jul 2008 10:44:13 +0000

Country’s largest real estate developer DLF Ltd will develop eight shopping malls under leasing format in the metros this financial year.

DLF Retail only leases out space in its properties. Company would also open four shopping malls in current year, of which three would be in Delhi NCR and one in Chandigarh.

Chandigarh mall will be smaller one, while the three malls in the Capital will have three-to-four lakh square feet leasable area per mall.

Leaving the price of the land, the construction cost is around Rs 3,000-4,000 per square feet.

DLF is focusing primarily is on the metro cities like Bangalore, Chennai, Hyderabad and Delhi. DLF will also look at smaller cities in future. DLF is in discussion with many big retailers, but nothing has been finalized yet. DLF Retail currently has five operational malls.

Realty Majors Adopt New Technologies for Affordable Housing.

Tue, 15 Apr 2008 12:45:49 +0000

To make their project affordable, real estate developers are applying new techniques everyday. For example, tunnel form technique, table form technique, fly ash technique and so on.

For instance, Red Fort Capital has developed ‘Fly ash based Cellular Lightweight Concrete, a technology that can help to save up to 10% in the construction cost for high rise structures while using eco-friendly materials. It also helps in faster construction, promoting sustainability and a healthy environment for the occupants.

Mr. G B Singh, director and founding partner, Red Fort Capital, said that it will result in cost reduction up to 15%. There is a tremendous shortage of ‘affordable housing’ in this country. Such steps could greatly benefit the real estate sector.

The use of recycled fly ash, a waste byproduct of coal combustion, is one available route in construction. Other materials that can be effectively used to construct cheap, yet durable houses include hollow concrete blocks, interlocking bricks, stabilized mud-based blocks, rubble filler blocks, concrete door and window frames and funicular (rope-like) shells.

However, despite benefits, the use of such technologies is still not a popular route among developers in India. It may cause inferior structures. Potential buyers will think about the safety, durability and resale value.