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