Construction cost up 25% since West Asia war began: NAREDCO president Parveen Jain

Construction costs in the real estate sector have risen by 25% since the West Asia war began in February, said NAREDCO president Parveen Jain.

Speaking to TNIE, Jain said, “The input cost of construction has gone up by 25% because all raw material prices have increased in the last six months. Copper has seen a price rise of 60% in the past six months. Even if things return to normal in the next few months or the US-Iran war stops, it will take another three months for supplies to normalise.”

He, however, said there was little possibility of residential property prices rising further as housing prices had already increased. “The revision or changes in residential properties in the real estate sector are already reflected in the current market value. Any change in prices is not possible at least this year,” Jain said.

He added that his company, Tulip Group, had been seeing slower demand this year compared with last year.

Jain said most real estate companies in the country were bullish on India’s real estate growth. “In India, there is always a shortage in supply compared to the overall demand. There is robust demand for residential properties and we are short of supply. The real estate industry is bullish on India for the next 10-15 years.”

The concern, however, is that short-term crises such as the West Asia war are hindering growth and making the overall outlook somewhat uncertain. “However, we have to deal with such crises if we want to grow,” he said.

Jain also said several real estate bodies had urged the government to provide land at subsidised rates or acquire land under the PPP model so that developers could build affordable housing, as land is a major component of development costs.