Real estate developers in Visakhapatnam have a reason to cheer. Demand for flats, which in the last two years had been on the decline, has once again picked up.
“Due to the economic recession, the response from the public was very poor till last December for properties in and around the city. Even after flat prices declined by 20 per cent in the last two years, customers were shying away from buying them. However, from February, we are witnessing a significant change,” K Subba Raju, chairman, Confederation of Real Estate Developers Associations of India (Credai), Visakhapatnam, told Business Standard.
From mid-January, around 2,000 flats were sold in Vizag city as compared with around 800 in the last two years. “There is hardly any scope for a further reduction in prices. Moreover, steel and cement prices have started rising again from the last three months. This apart, the separate Telangana statehood issue is pushing up the demand for housing in Visakhapatnam and its surroundings,” he said.
According to Suryanarayana Raju, managing partner, RR Builders, developers have reduced the price of their projects to clear the backlog. “A few crores of rupees were blocked in old projects over the last two years due to lack of demand. But with builders getting good enquires, they have decided to clear the old projects to take up new ones,” he said.
However, rising construction cost is a cause for concern. Over the last couple of months, construction cost has increased by Rs 100 per sft due to hike in steel, cement and labour costs, Subba Raju said. About two years ago, steel prices stood at Rs 50,000 per tonne and cement at Rs 250 per bag. It took over 2 years for steel prices to come down to Rs 32,000 per tonne and cement to Rs 150-160 per bag, But in the last three-four months, these prices have again increased to Rs 45,000 and Rs 200-210 respectively, he said.
“Wages have also increased abnormally. We used to pay Rs 100 to a male worker and Rs 75-80 to a female worker per day, but now are paying Rs 250 and Rs 175 respectively,” he said.