Building Sector Faces Concerns as Cement and Material Prices Surge
Industry leaders in the real estate sector have expressed growing concerns over the recent spike in cement and building material prices, warning that it may have a negative impact on the construction standards of houses.
Speaking separately in interviews with our correspondent, top executives acknowledged that the surge in building material costs would lead to higher production expenses, reduced company profits, and disruptions in the sector’s value chain.
Femi Oyedele, the Managing Director and CEO of Fame Oyster & Co. Nigeria, pointed out that the price hike might force contractors to renegotiate contract terms with project owners. He explained that the increase in cement prices would affect both the price and completion rates of building projects, as well as the overall demand for houses.
Oluwole Fapohunda, CEO of Seven30 Real Estate Limited, highlighted the critical role of cement in construction and emphasized that developers might have to compromise on material quality if homebuyers are unwilling to pay higher prices for properties. This could result in using lower quantities of cement, potentially leading to construction issues and building collapses.
Industry experts urged the government to intervene to prevent investments from being adversely affected. They called for measures to bring down the costs of building materials, considering the ripple effect on other construction inputs like iron rods and transportation.
Chudi Ubosi, Managing Partner of Ubosi Eleh and Co., cautioned that the price surge could shrink the company’s profits and impact ongoing projects, as developers often bear the brunt of such cost increases.
Despite the anticipated rise in rent and property prices, experts believed that these effects would not be immediate. However, the long-term implications of increased material costs are concerning, ranging from decreased housing supply to compromised construction standards.
To address the situation, Femi Oyedele advised developers to explore alternative means to reduce cement usage. He recommended using gum for tiling, Plaster of Paris for rendering, and bricks and stones as replacements for blocks. Additionally, adopting plasterboard and timber for partitioning could help reduce dependence on cement for building projects.
As per market research conducted by our correspondent, a 50kg bag of cement was being sold at prices ranging from N4,800 to N6,000 in cities like Lagos, Ogun, Ondo, and Abuja. In some locations, it was available for as low as N4,700 to N4,850. While the increase in prices has not been officially confirmed, retailers have attributed it to rising logistics and haulage costs due to the removal of fuel subsidies.
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