- Hyderabad on the top in realty sector
- Demand for houses increases with the livelihood opportunities
- Houses under Rs 50 lakh price tag are hard to find in city
- Escalation of prices of steel, cement and other construction materials is bane of common man
- Customers advised against buying properties sans RERA registration
- Think before you leap to buy UDS properties
- CREDAI National Vice-president Gummi Ramreddy
CREDAI National Vice-president Gummi Ramreddy has said that the real estate sector in all cities across the country is on the growth path, recovering from the Covid-19 impact. He rated the realty sector in Hyderabad as top and attributed it to the increased job opportunities in the City of Pearls.
The following is a free-wheeling interview with Ramreddy and touches various aspects of the realty sector, including the likely impact the growing prices of cement and steel would have in the city’s realty.
What would be the impact of hike in prices of steel and cement on construction sector?
Steel prices have increased enormously over a period of one year from Rs 40,000-42,000 per tonne to the current level of Rs 65,000 in the secondary market. However, in the primary market a ton of steel costs Rs 75,000. Five tons of steel is necessary to build even a small house. It is the bane of the common man.
Why did materials cost increase even as realty sector is recovering post-Covid-19?
It is being attributed to shortage of coal. It is a fact. Yet, hike in material costs is not justified. The decision to increase prices of materials abnormally should be reconsidered. The Government of India should focus on the issue. The cost of construction because of the increase in prices of building materials has gone up by at least Rs 500 per sft.
Who will bear the burden? Will it be shared between buyers and builders?
If buyers are over burdened all of a sudden, it is not easy to sell the flats. The land costs have increased. If the cost of construction were to be increased, the builders should sell the properties at Rs 7000 per sft as against the current price of Rs 4000. It is not going to be easy to sell projects. In this backdrop, the builder should bear the increased costs to an extent.
Did you take the issue of increasing prices of cement and steel to the notice of government?
Yes. We did. Not once but many times. The matter was taken to the notice of not only state government but also the Union Government. Union Minister Nitin Gadkari suggests realty sector to think in terms of alternatives. He spoke about it not once, but many times.
In fat, are there any alternatives to steel and cement?
Alternatives are not easy to find. In fact there are many alternatives. There are alternatives to steel in the form of optic fiber and wood. But, it will take some more time for them to become popular with the people. The increased cost of fuels also impacted construction sector.
Which building material costs increased and up to what extent?
Costs of all building materials have increased. In fact, tiles which cost Rs 40 now costs Rs 55. The PVC pipes and copper prices have shot up by 40 per cent. Prices of electrical and sanitary fittings increased too.
What is the reason for increase in building material costs in Hyderabad market?
Hyderabad ranked number one in real estate development in the country. It is attributed to series of positive measures initiated by the state government. Telangana also tops in health sector development. During Covid-19, many people from other states visited Hyderabad to receive treatment. The IT sector also registered impressive growth.
Employment opportunities are increasing here. Investors are also making a beeline to Hyderabad. As a result, there is huge demand for houses in the city.
What about the house sales?
The sales are very good in Hyderabad. However, the buyers should keep off from pre-launch sales and UDS sales of properties. They should not buy properties in such projects without assessing whether such builders would be able to complete the projects. Attracted by the low price tag, the buyers are jumping to conclusion and buying properties. Once the project gets launched, they have to sell the flats to the market rate to cover up construction costs.
Now they would be able to sell properties at low cost. Once the project gets grounded, they have to sell properties at prices compared to other builders. Can they sell properties on a par with other builders in the market? Only time will tell. What would be the condition of buyers, if the builders fail to complete the project? Similar situation occurred in Delhi. There were instances of thousands of apartment projects waiting to be delivered even after nine or ten years of launching the construction. Many developers have been cooling their heels behind the bars. That is why, buyers were advised against jumping to conclusions. They are advised against investing their money in projects that have no RERA registration.
What is the reason for less demand for affordable homes – homes that cost less than Rs 45 lakh?
In fact, it is not true. There was nothing like drop in the sale of houses costing less than Rs 45 lakh. But adjusting the price of a flat below the tag of Rs 45 lakh has become a Herculean task. Currently, there are no houses at that price. In fact, prime areas have no houses to offer in 60-70 square meter range. To buy such properties, one has to travel to a radius of 15 km from the city centre. It is hard to buy properties with price tag less than Rs 50 lakh in the city. The villas enjoy good demand in the market.
What would be the demand for commercial space?
There is good demand for commercial space. Annually, 2-crore sft of commercial space is being given on lease. The general opinion across the country is that the Hyderabad is good for living. The public taste switched over from Bangalore to Hyderabad. Even now, Bangalore is the preferred destination. The gap between Bangalore and Hyderabad in terms of choice of living is coming down. In terms of real estate development, Hyderabad is ahead of Bangalore.
How do you rate various cities across country in real estate development perspective?
Hyderabad continues to be on the top followed by Pune. The cities of Bangalore and Mumbai come next.
Delhi’s position has improved and is back on rails. Ahmedabad market is also good. After the pandemic situation, one city after the other is gradually recovering from the impact. Compared to the realty development prior to Covid-19, real estate sector everywhere is forging ahead.
