Surge in prices of steel products that are used in the construction sector has an adverse impact on the real estate companies as these materials are now not in a position to pass the additional cost on their buyers and may witness shirking of margin by 4-6 per cent, realtors said on Tuesday.
The steel prices have increased at a time when demand for property is slowly getting back on the track with the government measures and low interest-rate regime, they said.
Price of construction steel or Thermo Mechanical Treatment (TMT) bars had recently touched ₹ 45,000 a tonne in some markets, which was at least 30-40 per cent higher than the rate in the pre-Covid period.
TMT steel bars are generally used material in construction for enhanced protection against earthquake and another type of natural disasters.
“The steel price rise is hurting the real estate companies as the property prices are under pressure. The additional cost will result in a shrink of gross margin by 5-6 per cent,” Bengal Peerless Housing Development Company CEO Ketan Sengupta told PTI.