Realty developers to increase construction rate

Bangalore: Developers in Bangalore have decided to increase the rates of all projects by Rs 75-500 per sq ft depending on the stages of construction of projects. This roughly translates to 3-8 per cent of the present sale rate. The ecision was announced by CREDAI-Karnataka Confederation of Real Estate Developers’ Associations of India).

Mr A. Balakrishna Hegde, President, CREDAI-Karnataka, said that construction cost has gone up by 20-30 per cent, due to “steep increase” in the costs of land, construction materials, labour and other costs. The newly levied one per cent labour cess was an additional burden on the developers, he said.

“Another major hindrance has been the enormous delays in obtaining the various sanctions of plans, which means the investment on land keeps incurring interest during the time lag, thereby hiking the project cost,” he added.

“It has now become impossible for us to sustain our old rates if we have to maintain quality standards. What we are passing on to the end-user is only a small portion of the increased cost of construction,” he said.

The effective date of the price hike is June 10. CREDAI-Karnataka would conduct its annual real estate exhibition on May 31 and June 1, thereby giving “purchasers an opportunity to avail themselves of old rates; for a genuine buyers, this is the right time to buy,” Mr Hegde said. He clarified that the increase is not applicable to already-concluded deals.

On the real estate market scenario in Bangalore, he said that though enquiries from prospective purchasers continued to be satisfying since early 2007, genuine buyers were postponing their decision, anticipating a drop in prices. Mr Hegde added that the Bangalore market was holding good now.

There are about 1.5 lakh units under various stages of construction in the city, which will be completed over a period of three years. “There are no finished flats that are vacant or unsold,” Mr Hegde said.

The Karnataka Ownership Apartments Promoters’ Association (KOAPA), the trade body of organised real estate developers and builders in Karnataka, has now become CREDAI-Karnataka, under the banner of the national body CREDAI.

CREDAI-Karnataka currently has 124 members, including leading names such as Sobha Developers, Mantri Developers, Sterling Developers, Brigade Group, Prestige Estate Projects, and Puravankara Projects.