Realtors may seek extension for project completion owing to West Asia conflict

The second order effect of the ongoing West Asia conflict has started with play out in the real estate sector as sources in the know said that some realtors are mulling to approach their respective state RERA (Real Estate Regulatory Authority) authorities for extension of project timelines.

According to sources in the know, factors like rising in raw material cost, difficulty in procurement of imported materials used in high-end properties along with lack of fuel supply to continue project work are being seen across real estate industry. The problem is more acute among mid-level developers, some of which are facing project disruption.

“Cost escalation has already happened due to spike in metal prices. Continuing project work has been a challenge in the last few days due to lack of fuel like LPG. If the West Asia conflict prolongs, there is a possibility that realtors will approach RERA to give extension to project timelines,” a real estate industry consultant in Bengaluru told the BizzBuzz.

Meanwhile, real estate consultancy firm- ANAROCK has come up with a report saying that cost of imported building material is likely to be pushed up substantially as the Strait of Hormuz and remains out of bounds for most ships.

“At a time when housing sales were already tapering, Indian developers are now confronted with an even starker landscape and must find new ways to weather the intensified storm. Diplomatic manoeuvring has succeeded in getting at least some LPG tanker ships through the Strait. However, bulk imports must now travel an additional 6000-10,000 nautical miles, with marine fuel now at about Rs 1 lakh/tonne. Also, there are additional 'war surcharges' and steeply hiked shipping insurance costs,” ANAROCK said in the report.

It also added that rising steel and aluminium prices would increase the cost of material in coming quarters. Steel prices have risen by 20 per cent to around Rs 72,000 per tonne and also the price of hot rolled coil has increased. Similarly, aluminium products, which are being used increasingly in tall buildings, have also seen a spike in prices.

Against this backdrop, realtors are staring at an escalation in project cost. “Luxury housing is among the most affected segments.

The Italian Statuario and Calacatta marble used in….ultra-luxury units now come with an addition Rs 50-150/sq ft premium due to the rerouting fees,” the report said.