India: May Push Up House Prices Since Sand Price Up by 15%

IF that apartment you have been eyeing has become dearer or / if the developer has warned that your flat nearing completion will take a few months more for handover, recall the zeal of an unsuspecting young IAS officer and the media fracas that followed.

Developers /promoters, suppliers and sand miners that ET spoke to say that the National Green Tribunal order last week that followed the controversial suspension of Durga Shakti Nagpal who took on illegal sand mining in UP riverbeds near Delhi has drastically hit sand excavation jacking up prices of the material thats used across the construction chain.


The tribunal a special fast-track court set up under an Act of Parliament for fast resolution of cases related to environment had slapped a stay on all sand mining activity in riverbeds, which do not have the required environmental clearance. With that, even miners who have a licence from state governments have had to halt operations and apply for environmental clearance from the Union ministry of environment and forests or the State Environment Impact Assessment Authority, which is expected to take a minimum of 30 to 60 days. This, feel industry players, will increase property prices up to 10 %.

The acute shortage of the material that makes for nearly 10% to 15 % of construction cost in any housing project could also delay an array of projects under construction.  Projects are already slowing down because of shortage of sand, and whatever is available has become more expensive, says Mr.  Lalit Kumar Jain, Chairman of Confederation of Real Estate Developers Association of India and the managing director of Pune based developer Kumar Urban Development.

The price of sand, say developers and contractors, has already moved up by 20% to 30 %, varying from city to city. In the national capital region, prices have gone up from. 37 per cubic foot to Rs. 45 per cubic foot.

In Mumbai,it has gone up from Rs. 80 per cubic foot to Rs. 100 per cubic foot. None of our sand suppliers are willing to give us any assurance on the supply.

Now the price is changing on every delivery, says Mr. S.K. Sachdeva, Executive Director, Ahluwalia Contracts, which does 3rd party contracting for several leading developers / promoters .

Projects that the company is working on for developers such as Jaypee group, Logix,Assotech, Tata Housing and others in the NCR have slowed down he says. The cost of delay and the higher cost sand, says Mr. Anshuman Magazine, MD of property advisory firm CBRE, will force developers to pass on the burden to end consumers.

Yet, in the current market when sales are already slow in many locations many of them might not be able to increase prices, taking a hit on their margins, he observes. While developers/ promoters in Mumbai and the NCR will find it difficult to raise prices considering a drop in sales over the last few quarters because of high prices,the Bangalore realty market has seen stronger demand,which could help developers / promoters raise prices marginally.A sand miner based in Noida says right now there is a shortage of sand in the market because none is available in the market, legal or /  illegal.

ET
Share:

No comments:

Post a Comment

Popular Posts

Blog Archive

Recent Posts

Featured Post

BSE releases list of 25 stocks available for T+0 settlement starting March 28, 2024

BSE releases list of 25 stocks available for T+0 settlement starting March 28, 2024