Tag Archives: Building engineering

Builders Losing on Projects Due to Falling ROI

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Inflation and peaking cost of raw materials have started denting in the balance sheets of the real estate firms here. In spite of bleeding balance sheets and dipping return on investment, the firms here commit that they will give the housing units to the buyers at the booking price only. KC Naik, president, Mangalore chapter of the CREDAI, says there is a boom clause in the agreement with the buyer but he has not used it till now. His firm Mahabaleshwar Promoters and Builders is currently executing two projects of 260 housing units and will inaugurate another two projects soon. “We have been in operation since the past two decades and not even once we have used the boom clause in our favour,” he said.

His idea is to accelerate the completion period of the project when cost of raw materials start going up. All houses are not sold at one go. So the first buyer is the lucky one who will get it at the lowest rate. It goes by INR 100-200 per sq ft subsequently.

The ROI is dipping and builders are losing 10-15 pc on the projects. In the past six months, the prices of sand, cement, steel and flooring tiles have increased from 20 pc to 100 pc. Prices of rough sand, used for construction of slabs, is up from INR 8 per cubic feet to INR 16. Fine sand used for plastering has gone up from INR 9 to INR 18. Adding to the woes is the scarcity of fine sand. Likewise steel is up by INR 33 to INR 40 to INR 45 per kg and cement from INR 250 to INR 310 for a bag of 50 kg. Flooring tiles has also increased from INR 33 to INR 38.

Buying an Under – Constructed Flat.

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A newly constructed home may have its own charm, especially when its price is yet to hit the roof. Many individuals take the risk of booking a house in an under-construction building mainly for the same reason. It fulfills the dream of owning a house, but is also cheaper than a ready for possession flat. However, reports about certain builders failing to complete the project on time have made many potential  home buyers apprehensive about booking a flat in an under-constructed project. Many also wonder if they should book a property whose final shape is still not known.

There is a biggest advantage of an under-construction flat that you can also get the flat customised as per  your needs. You can also choose the locality and the site of the house, direction and floor when the developer is about to start the project. Locating them is easy, given the large advertisement campaigns that usually accompany a just-launched project and you need not have to go through the brokers. However, it is always better to mull over few critical points before booking a flat in an under-constructed  project.