The cost of building Real estate in Hyderabad may rise due to a hike in the price of cement in the state of Telangana and Hyderabad. In Hyderabad the Confederation of Real Estate Developers Association of India (CREDAI) asked cement companies to roll back a steep 60 percent hike in the price of cement in the state. The CREDAI along with other industry bodies has stated that the hike in the price of cement is unwarranted and will hurt the real estate sector in Hyderabad and in both Telangana and Andhra Pradesh.
No Credible Reason to Hike Prices
Members of the CREDAI along with the Telangana Real Estate Developers Association, the Builders Association of India, the Telangana Builders Federation, and the Telangana Developers Association all have alleged that prices for cement in both Andhra Pradesh and Telangana have risen by 60 percent even while there is no shortage of the materials to manufacture cement in either of the two states. According to these organizations the price of cement has been raised without any commensurate rise in the input cost of making cement.
The Importance of AP and Telangana Manufacturers
There are twenty cement manufacturers in Andhra Pradesh and Telangana yet these twenty cement manufacturers are responsible for manufacturing twenty six percent of the cement supply for the entire nation. Telangana and Andhra Pradesh together consume between 22 to 24 million tons of cement annually according to the president of the CREDAI's Hyderabad chapter S Ram Reddy who is also the chairman of a newly formed joint action committee investigating the price hike.
S Ram Reddy's Perspective
Mr Reddy has stated that the housing sector is one of the key contributors to demand for cement in the country. In the words of Mr. Reddy the contractors and builders cannot be held to ransom by the cement manufacturers cartel by its decision to hike the price of cement by nearly 60 percent despite no commensurate rise in the input cost, taxes, or an increased demand for cement in the country.
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According to those familiar with the inner workings of the industry, the hike in the price of cement will lead to a higher building cost of Affordable Flats in Hyderabad and elsewhere in the country.
Mr Reddy vehemently opposes the price hike of cement by 60 percent and moves to have the price hike rolled back. If this does not happen he has proposed that the state government intervene in the matter on the side of builders and contractors.
Where the Impact is Most Felt
Builders and developers will most likely pass on the increased costs to end users and as most of the builders in the region are focused towards creating affordable housing, the price of luxury Apartments in hyderabad and the surrounding regions has risen as a direct result of the sixty percent hike in the price of cement in the region.