CREDAI Maharashtra strongly opposed the proposal to introduce a 1% metro surcharge on all property purchases in Pune, Mumbai, Thane and Nagpur from 1 April and called on the government to reconsider this decision.
Given the rise in prices of key raw materials, including cement and steel, Maharashtra realty developers are planning to stop buying raw materials and construction work on their sites. The developers have also requested the MahaRERA (Maharashtra Real Estate Regulatory Authority) with a request to extend the deadlines for completion of current projects by at least 6 months. Then they have time to put the construction work on hold until prices get rationalised.
Projects will be stopped or delayed-
The real estate sector has proven resilient in the difficult times caused by the pandemic. The industry has been able to survive thanks to the easing of the stamp duty, lower mortgage rates and agreements by developers. Indian real estate, the second largest employer, is in a recovery phase. It will not be able to absorb this runaway price increase, and many projects will be delayed or stopped without government intervention, which ultimately affects consumers and construction workers at a large pace.
Currently, about 10,000 construction sites in Maharashtra directly or indirectly employ about 1 million workers. Any closure of works will directly affect them and may also result in a minimum delay of six months.
The price of steel, the main component of building materials, was Rs 42,000 per tonne a year ago and rose to about Rs 84,800. Cement prices increased to Rs 400 from Rs 260 for a bag of 50 kg. The rate for 4-inch bricks was Rs 6,500 per thousand and increased to Rs. 8000. Sand and wash sand show the same price increase. Along with building materials, electrical cables, fixtures, tiles, pipes, plumbing, manufacturing, sand and secondary minerals also increased by 40% to 45%, according to the industry body.
Requires Government Intervention-
CREDAI Maharashtra, through its various city associations, has already sent several inquiries to Deputy Chief Minister and Finance Minister Ajit Pawar and Revenue Minister Balasaheb Thorat on various issues requiring government intervention during the pandemic. In addition, CREDAI-Maharashtra strongly opposed the proposal to introduce a 1% metro surcharge on all property purchases in Pune, Mumbai, Thane and Nagpur from 1 April and called on the government to reconsider this decision.
Price beyond affordability-
This was stated by the President of CREDAI Maharashtra Sunil Furde, “Prices of steel, cement and other building materials have been steadily rising over the past 2 years. Now they have risen to a level that many developers cannot afford, especially in Tier II and Tier III cities. The association of 61 member cities affiliated with CREDAI Maharashtra had no choice but to temporarily suspend purchases and suspend construction work.”
While some material price increases in recent weeks may be related to the war between Russia and Ukraine. More than 60 Maharashtra CREDAI departments have asked the government and agencies to check if there has been a recent rise in construction materials cost, over past few months, naturally or due to cartelization and profiteering.
The prices of important building materials, including steel, cement, brick, sand and wash sand, electric cables, tiles, pipes, plumbing, sand, secondary minerals, among others, increased by 40% and 45%. The effect of this on access costs is around Rs 400-600 per square feet. It is expected to affect home buyers, especially in affordable segments.