Kolkata Property Prices May Go Up

According to CREDAI West Bengal, rise in the cost of construction materials and labour cost may attribute to the price hike of properties in Kolkata. Real Estate and construction industry, the second largest employment provider in India , has braved a host of challenges including the covid 19 lately . However the sudden skyrocketing of the prices of raw materials has left the industry with no option but to contemplate imminent price hike in property prices. Property Selling Prices may witness a hike by Rs. 350/- to 400/- per Sq. Feet. Price hike in the basic raw material for the Construction Industry viz. Cement, Steel, Aluminium, etc. along with the labour cost and transportation cost might attribute to the rise in selling price of the new properties. The construction cost has gone up by 12% in the past one year and the labour cost has increased by almost 20%. Further fuel prices also have gone up which has a considerable impact on the real estate industry. The cost of cement per bag varied from Rs 265 in Jan, 2020 to Rs 250 in October 2020 to Rs 300 in March 2021 to Rs 270 in October 2021 per bag. Price of Steel per KG increased from Rs. 45/-in Jan 2020 to to Rs. 62/ - per KG in 2021 October. Price of diesel per litre increased from Rs. 68/- to Rs. 92/- per litre. This will impact an increase in the transportation cost of all the raw materials. Besides the price of Tiles also increased from 20 to 30% in last one year.  The cost of artificial sand has gone up by 50% in one year. “In the recent past there has been escalation of costs of materials which has been very steep. This impacted our profitability as we have no escalation clause from our clients. There is a need to review our selling prices to soften the blow from the impact of this escalation. The lockdown due to covid-19, migration of labours to their home town/village, increased prices of fuel like petrol/Diesel, shortage of skilled and unskilled labour, has adverse impact on the Real Estate Sector and the prices of the new property is likely to be increased by Rs. 350/- to 400/ sq ft - informed Sushil Mohta, President, CREDAI West Bengal. "It is of huge concern if we are looking at a situation wherein property prices may go up by Rs 350 to Rs 400  per sq ft in Kolkata. Therefore it is imperative that something is done to stem the rise in the cost of major construction materials and labour cost. In the current situation, real estate developers will only get some breathing space if we increase project prices by 5 to 10%. In terms of major material costs, we've seen a 45% increase in steel which is a huge escalation, metal costs such as copper and aluminium have become very high, also RMC prices have gone up too and sand has seen a significant increase ! For a long time customers have been used to stagnant prices so it is important that we sensitized the public at large that owing to a continued spike in raw material prices, they will be exposed to an approximate 10% increase in housing costs", said Nandu Belani, President, Credai Bengal. "Most of the market in North Bengal is an affordable housing market. Therefore, sadly, with escalating prices of raw materials, it will be difficult to stem an impending increase in prices in the Siliguri / North Bengal market. Adding to our woes, transportation costs and sand prices have risen more compared to Kolkata and other micro markets in West Bengal, which is a huge setback. In the long run, apart from customers having to bear the brunt of commodity price hike,the larger picture of 'Housing for All' will also be affected”, added Naresh Agarwal, President, Credai, North Bengal. “Property prices in West Bengal have remained stagnant for a while and have seen a surge in demand this year after the ravages of the pandemic abated. But the blanket escalation of raw material costs and also labour costs over the last 4-6 months have resulted in a situation which will see property prices rise. We see an approximate ten percent increase in project costs over the next 6-12 months for both fresh launches and unsold inventory. Home buying is a sensitive decision for families and individuals and it is our responsibility to inform our buyers about the reasons for an imminent price hike we foresee” said Sidharth Pansari, Senior Member, CREDAI West Bengal Real Estate Sector is the major contributor to the national GDP, also it is major employment provider in the country. The Real Estate Sector provides one of 3 basic needs i.e. “Shelter”. The contribution of the Real estate segment to the country’s GDP in 2019-20 has gone up from 7% to 13% by the year 2025. Due to non-availability of input credit after change in GST law in end 2018, an additional burden of Rs 350 to Rs 400 / sq ft was imposed on the developers. “We thank wholeheartedly the state govt for providing the sops in terms of rebate on stamp duty and circle rate that enabled us to breathe. However hike in the prices of all these ingredients resulted in the increase in the sales price of the new property. We urge the  Central Government and State Government to  intervene and try to control the prices of Steel and other raw materials, in the interest of public at large to make home buying affordable for all. We also urge the central Govt to bring back the input tax credit to help the industry grow,” added Sushil Mohta.”