Owing to the steep increase in wages and increasing cost of raw materials, Confederation of Real Estate Developers’ Associations of India (CREDAI) Kerala Chapter, the key body in the real estate sector in the state, is mooting a plan for the unification of rates.
If all go as planned the unification of rate will come into effect soon which will be beneficial to buyers.
According to industry estimates, wages contribute about 30 percent of the total cost of the real estate property. The average prevailing wage rate in the sector is `500 per day for the domestic labourers and `300-`450 for migrant labourers.
But skilled migrant labourers are getting wages on a par with the domestic labourers. The real estate prices have increased by 30-40 percent in the last two years, the major reason being the increase in wages, points out S N Raghuchandran Nair, secretary-general, CREDAI-Kerala.
“Earlier, employing migrant labourers was affordable to the builders. But after the continuous hike in wages of labourers real estate projects are badly hit. The hiked wage sustained for at least two years earlier, but now the labourers including the migrants demand a hike in six months. The trend hit the viability of real estate projects,” he said.
Apart from this, the builders in the state team up to negotiate with the suppliers to get uniform rates for the building materials too. After the Union Budget, the steel prices increased by 16 percent. The cement price increased by over `50 per bag. The players in the sector are hopeful that if they go for bulk purchase, they would get materials at cheaper rates. The profit can be passed on to the customers, builders said.
M V Antony, chairman and managing director, Kunnel Engineers and Contractors Pvt Ltd, said the increase in the property prices over the last two years was `80 per square feet.
“The profit margin has decreased considerably for the past two years. The demand also moved southwards. Due to the pressure to complete projects on time builders were forced to pay more wages, sometimes even 50 percent more. This was a major concern not only for the developers but for the investors as well,” he said.
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