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Builder Profits Squeezing Real Estate Sector

Builder Profits Squeezing Real Estate Sector
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The increasing trends in the cost of construction are acting as a big obstacle for the real estate sector. Keeping in account the information provided by an online research site PropEquity which specializes in the real estate sector of India, the four major components of construction namely bricks, cement, steel and labor have seen a constant rise in cost during the last couple of years.

These rising costs will not only affect the profits of the builders but will also delay projects due to the increasing prices of construction. According to the survey conducted by the site it is estimated that almost half a million units will be delayed from schedule in almost 11 cities in India.

This delay will not only disappoint the buyers but the builders are also likely to lose interest in the completion of projects assuring further delays. According to the survey 1500 developers in 11 major cities of India are working and sadly delays have been experienced in handing over property even by the biggest names of the industry.

This trend in itself is discouraging as now builders will also be facing a more heated buyer along with cost over expenditures. In the past year though a positive air of recovery was felt when more affordable mid and premium projects were successfully completed and extensive amounts of units were sold altogether in the past two years which succeed in numbers compared to the past in large proportions.

This itself alarms the question of execution as whether or not execution at such an extended level is possible and that too in an atmosphere of increasing costs and diminishing margins. If not controlled this may further play a destructive role for the real estate sector.

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About James Pattric

James writes for the Residential category (along with Josh Johnson) and also heads up the Resources category.

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