Ahmedabad: Housing projects in Gujarat may become costlier by 10-15 per cent if rising input costs of material and labour are not reined in in time, the Gujarat Institute of Housing & Estate Developers (GIHED) which represents the construction fraternity said today.
The GIHED has sought government's intervention to check the spiralling prices of cement, which they say have risen by Rs 70-85 per bag of 50 kg in last two months and has emerged as a decisive factor in real estate projects now.
"We have sought government's intervention to check escalating prices of cement, which have shot up by Rs 70-85 per bag in last few months. In all likelihood, the per bag cement price of Rs 315 today is expected to reach Rs 350," GIHED Secretary Ashish Patel said, adding the hike will be passed on to end users.
If nothing is done in this regard, we shall raise the issue through the forum of our parent body- The Confederation of Real Estate Developers Association of India (CREDAI), he said.
According to GIHED, the per square feet construction cost has almost doubled from Rs 700 in 2009, backed by rise in input cost of raw material and labour, shrinking the profit margins of the real estate sector in range of 20-40 percent.
The sand prices have also risen by 100 per cent in last three years, Patel said, adding the labour cost has shot up by 155 to 180 per cent across various categories since 2009.
The size of overall real estate industry in Gujarat is pegged at Rs 56,000 with Ahmedabad and Gandhinagar collectively contributing 42 per cent to it at Rs 22,000 crore, Patel said.
Patel said the cement prices went up after the Competition Commission of India (CCI) penalised the manufacturers at Rs 6307 crore for cartelisation.
GIHED said that "against a housing demand of 1.45 lakh units in Ahmedabad, the supply is mere 27,000 units".
The industry body has demanded a higher Floor Space Index (FSI) in Ahmedabad from the state government to spur vertical growth and help its members absorb price hike.