GUWAHATI: Home buyers in Assam are in for a bigger pocket pinch post Bohag Bihu.
Escalation of input costs, by about 37.50 percent over the past two and a half years, has now prompted the Assam Real Estate and Infrastructure Developers Association (AREIDA) to hike rates of all apartments by Rs 600 per sq ft of constructed area, with effect from April 20, 2022.
Addressing mediapersons here on Monday, AREIDA president P.K. Sharma informed that the rapid rise in costs (from October 2020 till date), has eaten into the margins of realty projects, rendering them unviable.
“We are faced with this alarming situation and have no choice but to take some drastic measures to survive. The revenue generated from the projects will not cover even the cost of construction given the fact that prices on actuals have risen by Rs 600 per sq ft since October 2020,” Sharma said.
The cost of key raw materials such as steel and cement used in construction has gone up with vendors citing global supply chain disruptions owing to the war in Ukraine.
“After COVID-19, the current crisis (in Ukraine) is a dual blow on real estate developers as they are finding it impossible to deliver projects within the projected timelines and costs. For steel particularly, the situation is so bad that suppliers are not willing to take orders even at elevated prices,” he said.
Construction works, whether Prime Minister’s Awas Yojna or infrastructure projects of the government, are being severely impacted, the association said.
“While prices of unsold inventory can be increased, we are stuck where flats have already been sold. Unless the escalation on actuals is allowed we are looking at the next wave of stalled and unviable projects,” Sharma said.
The prices of steel, cement and other construction materials have been rising steadily over the last two and a half years.
“These have now skyrocketed to a level beyond the affordability of all developers. As an immediate measure this association, in an emergent general meeting held on March 26, 2022; unanimously decided to increase the price of all flats by Rs 600 per sq ft with effect from April 20 2022, to cover the increased cost of construction,” he said.
While no one can correctly predict the future cost over the project period, Sharma said it was imperative to have an escalation clause in all sale agreements for the survival of the project, as the current situation has clearly established.
“The RERA Act 2016 did not restrict an escalation clause in the builder-buyer agreement. However, the State RERA Rules imposed a draft agreement with a mandatory no escalation clause. There have been several judgments in the meantime, which have decreed that the Rules can, under no circumstances, override the Act,” the AREIDA president pointed out.
The Supreme Court has also directed the central government to frame a national buyer-builder agreement applicable across the country.
“We have applied for the inclusion of an escalation clause in the builder-buyer agreement where escalation, based on actual figures, must be factored in. All concerned must understand that if a promoter is rendered bankrupt, due an abnormal situation, it will be impossible for him to complete the project and this can never be in the best interest of the buyer,” Sharma said.
“AREIDA has also applied before the RERA authorities for an extension of the project completion period by six months as projects across the state have been disrupted owing to the abnormal increase in cost,” he said.
Sharma, on behalf of the association, sought cooperation from the purchasers for the survival of the ongoing realty projects.
- From Canada to Europe, survey reveals the challenges facing women leaders
- No other country ‘practices terrorism’ like Pakistan does: EAM Jaishankar
- Swimming begins with butterfly specialist Astha Choudhury setting Games record
- Teenaged Antim wins 53kg wrestling gold, ‘earns’ Rs 500 for her effort
- IAF to formally induct indigenously-built Light Combat Helicopter on Monday
- Meghalaya ranks second in tap water coverage under Jal Jeevan Mission