Real estate developers who have hiked up residential prices indiscriminately do not have the right to talk about rising cement prices as it constitutes a minor fraction of the building cost, said the Tamil Nadu Industries Minister, P. Thangamani in the Assembly today.
Responding to the debate on the demand for grants to the Industries Department, he said contrary to builders’ claims that cement prices have suddenly gone up by ₹ 70 a bag to range around ₹ 360 – 370 (a bag of 50 kg), the actual prices were only about ₹ 320. He also pointed out that builders had actually bought cement at about ₹ 300 a bag even on June 24, 2014. However, they threatened to launch an agitation against the rising price of cement.
Stating he wished to clarify to the House the actual contribution of cement to the cost of housing, the Minister said cement cost accounts for just 1-2 per cent of the housing cost. Even if the cement price was as high as that quoted by builders, it would only contribute to an increase of about ₹ 40 a sq. ft of built up space. But builders use it as an excuse to increase prices by ₹ 500 – 1,000 a sq. ft, he said.
Quoting specific projects and the price of apartments, the Minister said an apartment of about 2,750 to 4,200 sq. ft is being sold anywhere between ₹ 4.2 crore to ₹ 14.19 crore. The square foot price ranges from ₹ 9,500 to ₹ 29,994. But the estimated cement cost for such apartments is about ₹ 4.45 lakh to ₹ 8.30 lakh with the builders using 1,250 to 2,370 bags. This accounts for about 1-2 per cent of the apartment cost, Thangamani said.
Between 2001 and 2006 cement prices were around ₹ 150-160 a bag and have gone up in stages to range around ₹ 300-320 now.