Realty developers surge residential units prices by up to 10%
Real Estate

Realty developers surge residential units prices by up to 10%

Listed real estate developers have increased prices of residential units by up to 10% on the back of strong demand and a substantial increase in raw material prices.

Leading developers including Godrej Group, DLF Ltd, Sobha Ltd, Oberoi Group, Lodha Group, and Mahindra Group have increased prices quarter on quarter (QoQ), an analysis of their earning calls after their third-quarter results revealed. They claimed the price increase has not affected sales.

They have increased costs across projects and in most of the geographies, Godrej properties managing director and CEO Mohit Malhotra told the media during the third quarter (Q3) analysts call last month. Most of these cost increases were taken to hedge against cost inflation, which has already happened. There was a very large amount of cost inflation that happened in 2021.

As per JLL India, development costs for existing projects grew by 9% between January 2020 and December 2021, while overall prices for new projects have increased by 13%. As per ICICI Securities, single-digit price hikes are sustainable and healthy as they protect margins, promote developers to roll out new projects and give confidence to buyers to buy a new house. They have a discipline of growing costs by 1.5% to 2% every quarter across their portfolio, as per Arvind Subramanian, MD and chief executive officer of Mahindra Lifespaces. It provides early buyers confidence in their choice.

The sharp increase in the price of almost all building materials, including steel, cement, copper, plastics, and aluminium, over the last year has led to an upwards of 10% increase in the construction cost. To balance this, they have further raised costs by another 3% to 4%. DLF has additionally been increasing costs across segments. With surging volumes and well-calibrated price increase, they anticipate further margin growth for their projects.

During the Q3 earnings call, DLF officials told the media that judicious price costs in line with market acceptability had improved the sales potential to Rs 47,000 crore with value growth of 17% driven by cost increase.

Image Source

Also read: Builders cannot ask for maintenance costs from buyers without OC

Listed real estate developers have increased prices of residential units by up to 10% on the back of strong demand and a substantial increase in raw material prices. Leading developers including Godrej Group, DLF Ltd, Sobha Ltd, Oberoi Group, Lodha Group, and Mahindra Group have increased prices quarter on quarter (QoQ), an analysis of their earning calls after their third-quarter results revealed. They claimed the price increase has not affected sales. They have increased costs across projects and in most of the geographies, Godrej properties managing director and CEO Mohit Malhotra told the media during the third quarter (Q3) analysts call last month. Most of these cost increases were taken to hedge against cost inflation, which has already happened. There was a very large amount of cost inflation that happened in 2021. As per JLL India, development costs for existing projects grew by 9% between January 2020 and December 2021, while overall prices for new projects have increased by 13%. As per ICICI Securities, single-digit price hikes are sustainable and healthy as they protect margins, promote developers to roll out new projects and give confidence to buyers to buy a new house. They have a discipline of growing costs by 1.5% to 2% every quarter across their portfolio, as per Arvind Subramanian, MD and chief executive officer of Mahindra Lifespaces. It provides early buyers confidence in their choice. The sharp increase in the price of almost all building materials, including steel, cement, copper, plastics, and aluminium, over the last year has led to an upwards of 10% increase in the construction cost. To balance this, they have further raised costs by another 3% to 4%. DLF has additionally been increasing costs across segments. With surging volumes and well-calibrated price increase, they anticipate further margin growth for their projects. During the Q3 earnings call, DLF officials told the media that judicious price costs in line with market acceptability had improved the sales potential to Rs 47,000 crore with value growth of 17% driven by cost increase. Image Source Also read: Builders cannot ask for maintenance costs from buyers without OC

Next Story
Infrastructure Transport

GMLR’s First Flyover To Open By May 2026, Says BMC

The Brihanmumbai Municipal Corporation (BMC) has announced that the first flyover of the Goregaon–Mulund Link Road (GMLR) project will be ready for use by May 2026.The GMLR, one of Mumbai’s most ambitious infrastructure ventures, involves a 12.2-kilometre corridor comprising tunnels, flyovers, and interchanges, built at an estimated cost of Rs 140 billion. The project aims to provide a seamless connection between Mumbai’s western and eastern suburbs, drastically reducing travel time and congestion.The first phase features a 1.2-kilometre flyover, beginning near Dindoshi Court and extendi..

Next Story
Infrastructure Transport

Assam Awaits Nod For Rs 60 Billion Brahmaputra Tunnel

Assam’s ambitious Rs 60 billion underwater tunnel project, India’s first to be built beneath a major river, is awaiting Union Cabinet approval, according to a report by The Times of India. The proposed tunnel will connect Numaligarh and Gohpur under the Brahmaputra River, significantly improving road connectivity and strengthening strategic infrastructure near Arunachal Pradesh, which borders China.Estimated to take five years to complete, the project marks a major milestone in India’s transport and defence infrastructure planning. “The Detailed Project Report (DPR) is ready and will s..

Next Story
Infrastructure Energy

Kochi Set To Commission South India’s First Hydrogen Station

Kerala is gearing up to embrace the fuel of the future — green hydrogen, with South India’s first green hydrogen plant and refuelling station nearing commissioning on the Cochin International Airport (CIAL) premises. The project marks a major milestone in India’s clean energy transition and could soon power the Kochi Water Metro and selected e-feeder services of the Kochi Metro.The project is being implemented by Bharat Petroleum Corporation Limited (BPCL) in collaboration with CIAL, featuring a 1,000-kilowatt facility at Nedumbassery. BPCL has also finalised plans for a second hydrogen ..

Advertisement

Subscribe to Our Newsletter

Get daily newsletters around different themes from Construction world.

STAY CONNECTED

Advertisement

Advertisement

Advertisement

Talk to us?