The real estate market in Hyderabad is facing potential price increases for flats due to disruptions in global shipping and rising construction costs. The blockade in the Strait of Hormuz has significantly impacted the supply chain, elevating the costs of essential materials and extending delivery timelines. According to a report from Anarock, the rerouting of vessels has led to delays of up to 20 days for key construction supplies, compounding the existing challenges in the construction sector. Shipping costs have surged dramatically, with container rates rising between Rs 1.5 lakh to Rs 3.5 lakh, which directly translates into higher expenses for builders and developers.
Steel, a fundamental component in construction, has seen a notable price increase of around 20%, now reaching approximately Rs 72,000 per tonne. This spike alone is adding nearly Rs 50 per square foot to the cost of constructing high-rise buildings, which are prevalent in Hyderabad's real estate landscape. Furthermore, the costs of other vital materials are also climbing; marine fuel prices have hit Rs 1 lakh per tonne, with additional charges related to war risk and insurance amplifying the financial burden on construction projects. Aluminium prices have similarly risen to about Rs 3.5 lakh per tonne, exerting further pressure on the sector. With the combined impact of these price hikes, the overall cost of development is on an upward trajectory, leading experts to predict that flat prices in Hyderabad may follow suit.
In addition to material costs, rising fuel prices due to global economic conditions have escalated the operational costs of construction equipment, while increasing labor costs have further compounded the issue. Experts suggest that even if the international situation stabilizes, it will take one to three months for supply chains to normalize. This means that the current delays at ports and heightened shipping charges are likely to persist in the short term, continuing to exert pressure on the real estate market. The luxury housing sector may be disproportionately affected, as these projects typically rely on imported materials, although buyers in this segment may have the financial flexibility to absorb such increases.
Conversely, buyers seeking affordable housing options in Hyderabad could face greater challenges amid rising costs and escalating home loan interest rates. Additionally, travel restrictions may hinder Non-Resident Indian (NRI) buyers, who play a significant role in the premium real estate market, potentially slowing down transactions in this segment. In summary, the ongoing global crisis is presenting significant challenges for the real estate sector in Hyderabad. As developers grapple with increased material costs and delays, prospective buyers should remain vigilant about market trends and pricing dynamics in the coming months.