Ahmedabad: The prices of basic construction materials – steel and cement – have gone up by nearly 35% over the past two months, hurting the profit margins of developers. While steel prices have touched Rs 80,500 per tonne, cement costs Rs 430 per bag, adding to the cost of construction in the ongoing projects.
According to developers, rising raw material prices are not only affecting construction and procurement but are also expected to hit the demand for new projects.
Steel prices hovered around Rs 60,000 per tonne in December-end whereas cement cost Rs 325 per bag around the same period.
Tejas Joshi, president, Credai Ahmedabad, said, “Steel and cement account for an estimated 30% of the cost of production in real-estate projects. Projects which are underway will be adversely impacted because of the abrupt surge in raw material prices. This will hurt revenues of real-estate developers because they will not be able to pass on costs to consumers as prices for existing projects are fixed in advance.”
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