November 29, 2023: Cost pressures on developers remain benign, says a new report, with construction costs increasing only by an average of 5% in FY23 over FY22.
The TruBoard Real Estate Construction Cost Index showed upwards movement of 0.3% compared to a year ago for the quarter ended September 2023. However, the index remained flat compared to the preceding quarter, the company said in a media release. Quarter-on quarter, the index showed 1.4% contraction in the September quarter, the company said in a statement. The biggest increase in prices was seen in metal casting, finishing stones like granite, white cement and asbestos.
TruBoard Partners is an independent tech-focused monitoring solutions provider and an independent asset manager that provides management support for managing real assets on the ground. It provides services to the BFSI, infrastructure, real estate and renewable energy assets.
Sangram Baviskar, managing director, real estate practice, TruBoard Partners, said: “We feel that flattish trajectory of construction cost along with positive trend in capital values can be a driving force for the real estate industry. Developers and investors can leverage this stability to plan and execute projects with greater certainty. The focus on cost efficiently is likely to encourage innovation and adoption of advanced construction technologies, further enhancing the overall competitiveness of the industry.”
Anuj Agarwal, chief economist and head of research, TruBoard Partners, said: “Commodity inflation as gauged by WPI has bottomed out. The high base effect of last year will no longer keep the inflation prints low. While the global economy has fared stronger than expected despite the rising interest rates, risks to growth have not diminished. China’s post-COVID economic recovery has been weaker than expected. Commodity prices including energy commodities remain vulnerable to the 2 wars. Increase in construction costs over the next 3-6 months is likely to remain range bound at 2-5%.”
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An alumna of the Indian Institute of Mass Communication, Dhenkanal, Sunita Mishra brings over 16 years of expertise to the fields of legal matters, financial insights, and property market trends. Recognised for her ability to elucidate complex topics, her articles serve as a go-to resource for home buyers navigating intricate subjects. Through her extensive career, she has been associated with esteemed organisations like the Financial Express, Hindustan Times, Network18, All India Radio, and Business Standard.
In addition to her professional accomplishments, Sunita holds an MA degree in Sanskrit, with a specialisation in Indian Philosophy, from Delhi University. Outside of her work schedule, she likes to unwind by practising Yoga, and pursues her passion for travel.
sunita.mishra@proptiger.com
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