The Hindu : Andhra Pradesh / Hyderabad News : Construction industry sore over steel price hike

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Wednesday, Mar 19, 2008
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Andhra Pradesh

Andhra Pradesh - Hyderabad

Construction industry sore over steel price hike

Flats will become dearer for the middle class
Cement prices could touch Rs.300-mark this summer!

HYDERABAD: Those planning to acquire a property in the city and suburbs will have to rummage their wallets for more while the builders blame the sharp and unprecedented rise in construction material costs for this.

If cement was the cause for worry last summer, it is the steel this time around.

Since construction works roll out in full swing during the season and a large number of transactions take place during this period, the industry is not mincing words in expressing its displeasure over the rise in steel prices.

The hike in steel costs will end up being passed on to the property buyers and in absence of measures to roll back the price, builders say property buyers might end up having to pay Rs.120 to Rs.130 more per every square feet. Already, the real estate boom has pushed the per sft pricing to Rs.3,000 to Rs.3,500 mark and this could further go up.

The Greater Hyderabad Builders Federation, an umbrella organisation for 12 associations representing around 1,500 small and medium builders, express apprehensions that a flat would become that much more dearer for the middle class with a price tag of around Rs.4,000 if measures are not taken to bring down the steel prices.

“The prices have gone up from Rs.38,000 to Rs.50,000 per tonne in just five months and we are approaching the Government for steps to contain the rise,” says federation president C. Prabhakar Rao.

According to him, an artificial scarcity of the material has been created and in instances, around Rs.60,000 was also being charged for a tonne. Builders point out that an average of 3.5 kg to 4 kg of steel goes into every square feet of constructed space including in the form of bolts, grills, frames and handles, and the hiked prices could mean a rise of Rs.80 to Rs.100 per sft in the overall budget.

The hikes have ended up affecting the small and medium builders the most, the federation points out.

“The big and corporate developers book well in advance with manufacturers which is not a possibility or a practice for others. The smaller builders go to dealers as and when they need steel and thus have to pay the price of the day,” explains Mr. Rao.

More could be in the offing as the construction industry remains apprehensive over cement amidst fears that its prices could rise further to touch the Rs.300-mark this summer!

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