Cost of construction to rise, say builders

SURAT: Builders say that the increase in prices of construction material will reflect in the cost of real estate from April, 2011. Tarun Rawal, president of Surat Builders' Association and vice-president of CREDAI, Gujarat, said, "Normal construction cost of a low-rise building was pegged at Rs 800. Now, with the new rates of almost all material, this will go up to Rs1,000 or Rs 1,100 in some cases."
In addition to material, transportation cost has shot up to 100 per cent and an increase in wages by 20-25 per cent in a year will also make houses costlier.
In effect, for a normal middle class household that wants to buy a 2 BHK flat of 1,200 sq. feet in a good area, this increase will be 10 per cent of the total budget.
"If the construction cost a flat of 1,000 sq feet was Rs 7 lakh, for new constructions it will be Rs 10 lakh,'' said Rawal. "For high-end buyers, this increase by Rs 300 per sq ft may not be very big but for the middle class, this increase will eat away all the benefits of conducive climate and housing loan rates that this year's budget," he added.
"We in Surat will suffer from this problem the most because when compared to other cities of the state we have a bigger number of new middle class buyers," said G Patel, another builder.
Contractors have stopped construction work at government projects demanding more money because of the increase in prices of construction material. Local civic body contractors are also demanding a hike and are on a go slow mission.
Assistant commissioner of finance of Surat Municipal Corporation (SMC) Sharad Mehta told TOI, "This hike has resulted in the number of our contractors going slow on work. They are waiting for the government to respond and till the situation is clear this will go on. This situation has come about due to the rise in prices of the material like sand, rubble, cement, steel etc."