Property prices in the Mumbai metropolitan area appear to be on the rise with a consensus feeling among developers that higher prices are no longer a choice but a necessity due to rising input costs .

According to the Maharashtra Chamber of Housing Industry (MCHI) and the Confederation of Real Estate Developers Associations of India (CREDAI), despite the good market sentiment across all segments – be it residential, retail or commercial – profit margins for developers shrink due to rising input costs.

According to data from the MCHI, the cost of inputs has increased sharply by about 40% over the past year. Cement prices rose 25%, while steel prices jumped 60%, and pipe and copper prices rose 40%.

Approval costs in Mumbai are also very high, and according to Ajay Ashar, the president-elect of MCHI and CREDAI, developers end up paying 50-60% of their entry cost in premiums. Developers said the sudden rise in the repo rate and mortgage rate fueled the plight of property buyers and developers.

According to Hitesh Thakkar, Vice President of NAREDCO, if the construction cost rises, developers who have projects in Mumbai can absorb the cost. However, developers who are in the affordable segment will be hit hard. He said the prices of cement, steel and other raw materials have risen, which has added to the cost of construction with the payment of bonuses among other expenses.

Rising costs, he said, affect the profit margin in the affordable segment. Meanwhile, NAREDCO demanded a reduction in the GST on cement and steel, which is currently 28%. Thakkar said the government should consider that the industry provides employment opportunities to the skilled and unskilled sector.

Thakkar said the government should heed their demands as this industry largely provides employment opportunities to the skilled and unskilled sector.