Cement price hike: Builders to stop construction works in Tamil Nadu

Realtors and home buyers in Tamil Nadu are on tenterhooks, thanks to the unprecedented hike in cement and other construction material prices, as several builders have either stopped work or have slowed down putting buyers in a quandary.

Ajit Chordia

Jumping into the bandwagon to register their protest, the Confederation of Real Estate Developers’ Association of India (CREDAI)’s Chennai chapter while expressing its strong resentment over sudden cement price hike, has threatened to discontinue construction activities indefinitely from July 7 and also stop procuring cement from south India if the government does not reign in on the rising cement prices.

“The steep hike will result in an increase of around Rs 45 per sq ft for property buyers without considering other costs. We cannot pass this extra burden to home buyers,” said Ajit Chordia, president of CREDAI-Chennai. Already in doldrums, the price increase will further affect the construction activity in and around Chennai and its suburbs.

“Almost 95 per cent of the public and private projects across south India and especially in Tamil Nadu are at risk,” said Suresh Krishn, vice president of Credai-Chennai.

Advocating to have a regulatory authority for cement industry for controlling prices, Sarita Hunt, MD of Jones Lang LaSalle (Chennai and Coimbatore), a leading real estate research firm, said, ‘The steep hike of cement price will increase the construction cost, which will in turn affect the growth of the already sagging realty sector.”

Sarita Hunt

According to Builders’ Association of India (BAI), prices have gone up by as much as 125 per cent for certain key construction material. The construction industry has claimed that the increase in the prices of key materials like blue metal by 125 per cent, hot mix by 75 per cent and cement by 50 per cent have brought work on several projects in the state and Chennai in particular to a grinding halt.

According to an estimate, projects worth around Rs 10,000 crore, including public and private, are being executed in Chennai.

While the cement prices went up by 12 per cent last year, this year it shot up by about 50 per cent. A high-grade cement bag that was available for Rs 250 about a month ago is now being sold at Rs 350-375 per 50 kg bag.

It is not just cement prices alone that realtors are worried about says Vivek Chandra of Srinidhi Builders. “Not only cement, prices of sand and steel have gone up. We are planning to go slow and the projects’ deadlines are sure to be breached. We have informed our clients about the impending delay in getting their keys due to unavoidable circumstances.”

Government projects in Chennai, including the metro rail, would be affected once the strike begins, say builders. Urging the Centre to establish a regulatory mechanism for cement prices and provide concessions on import duty, Chordia wants the government to allow construction firms to import cement from neighbouring countries.

However, manufactures claim that the hike in cement prices is due to the increase in cost of raw materials, and the recent power cuts has added up to it. Hope the prices of construction material stablise at the earliest for the benefit of home buyers.