How developers and contractors can respond to rising cement costs

Cement prices have been marching upwards since June 2019. Between then and now, cement has logged a price increase of approximately 26.5 per cent, according to Colliers.

Rising pet coke, coal and fuel costs as well as freight rates have all contributed to an increase in cement prices, says Indranil Basu, Managing Director, Project Management, South India at Colliers. He sees this trend continuing with an inevitable impact on product pricing in almost all real-estate asset classes.

So, how are developers responding?
“For ongoing projects, almost all developers have little choice but to absorb the price, which is shrinking margins,” remarks Basu. “However, for new and for upcoming projects, higher raw material prices are pushing up project costs and hence product costs, leaving developers with no choice but to pass on the increase to consumers.”

Cement price increases over the previous few months have increased the overall project cost by at least 3-5 per cent, shares Harshvardhan Tibrewala, Director, Roha Realty. He believes most developers have been absorbing this increase in project costs internally. “As of now, we are not passing any of this increase to buyers,” he affirms.

Contractors haven’t been left untouched by the price rise either.

CW explores how the price rise can be mitigated.