MUMBAI:Real estate developers across the country are joining hands to source raw material supplies in bulk from manufacturers at preferred rates as a cost saving measure to tide over the Covid19 triggered tough business environment.
Developers estimate the move to collate orders to get supplies will fetch at least 5-7% cost benefit to developers and ultimately to homebuyers. Apart from large developers that already derive such benefits due to their scale of operations, smaller and mid-size entities will also be able to gain cost efficiency on this count.
“We are planning to execute this at city and region level as each of these pockets will have different challenges to deal with in terms of payment terms, brand preferences, credibility of both material suppliers and developers. We will be passing on the cost benefit to homebuyers,” said Satish Magar, President of realty developers’ body CREDAI National.
According to him, initial efforts by developers in Pune to secure material in bulk have received good response and they are now looking to expand this to more than 200 cities across India.
This bulk procurement mechanism will be used initially for most input materials including tiles, bathroom fittings, elevators, pipes, cable and electrical fittings. Cement and steel manufacturers, who have bulk supply arrangements with developers will be out of this arrangement for now.
“The idea is to connect the disconnected and derive benefits for all. This will ultimately help in pushing demand and the economy as a whole due to the multiplier effect real estate has on over 250 sectors and ancillary businesses,” said Niranjan Hiranandani, President, NAREDCO that is also encouraging sharing of resources and materials among developers.
In the backdrop of Covid19 pandemic, NAREDCO is planning to set up a platform to tackle the issue of disruption in the supply chain and work towards speeding up construction work. NAREDCO is looking to bring in contractors also onto this platform in the second stage.
With orders bundled together at source itself at city and region level, logistics for the supply of input material can be smoothened relatively.
So far, the government has allowed workers who are available on site to carry out construction activity. Initially, the Ministry of Home Affairs (MHA) was unwilling to let construction activities other than emergency and pre-monsoon activities to start. However, now it has also agreed to allow further construction work.
May 27, 2020