Can Real Estate Cost Escalations Affect Project Quality?
Cost Escalation in Real Estate
• Turbulence in manufacturing costs due to disruption in the supply chain • Cartelization and arbitrary prices levied by manufacturers
Impact on Developers
• Year-on-year increase in commodity prices by 35% • Construction cost increased by Rs 500/sq.f.t
Conflict for Developers
• Rising costs going beyond construction • A dilemma; whether to increase the price or bear the cost themselves
Can Cost Escalation affect Project Quality?
• A sharp rise in price will affect the sales • Profit margins affected in order to sustain selling velocity • Developers can’t afford to gain margins while lowering construction quality
How can Developers Overcome Cost Escalation?
• Set right configuration & pricing • Have thorough understanding of marketing trends, pricing, & consumer demands • Sell projects that are well suited for the market demands