Estimated reading time: 11 minutes
YUGEN REALTY, SURAT
For the last few months, Yugen Realty has been continuously drawing attention to one issue — the impact of global war, supply chain disruption, rising fuel prices and continuous price hike in construction materials is now becoming not just a challenge but a question of survival for the real estate industry. Now that same warning has turned into a real decision.
In an important meeting of more than 60 developers of Pal-Adajan area under the banner of CREDAI Surat, it has been unanimously decided that property prices will be increased by about 3% in the first phase from 15 July 2026.
However, each developer will take the final decision of price hike independently based on the stage of their project, remaining construction cost and market conditions. That is, if the increase is 3% somewhere, then some projects may also see an increase of 5% to 10% in the next phase.
This decision is not limited to Pal-Adajan only. Real estate industry experts believe that if the current situation continues, such decisions may also be seen in other areas of Surat in the near future.
Price hikes have already started in various cities of Gujarat, including Ahmedabad, and now Surat is also moving in the same direction.
Extraordinary increase in material costs
According to the data presented by CREDAI Surat, the prices of many key materials required for construction have increased significantly in the last six months.
There has also been a significant increase in the prices of other finishing materials, which is having a direct impact on the overall construction cost.
Although there has been immediate relief in some products like steel and AAC blocks, it has not had an effective benefit in the overall project cost, because the increase in most other materials has been much more effective.
Labour cost also increased pressure
Labour rate data presented by CREDAI shows that labour cost has also increased continuously in the last six months.
Real estate industry leaders say that the availability of skilled labour is decreasing. Due to the obligation to complete projects on time under RERA, developers are having to hire labour at higher rates.
The rising cost of living of labourers has also increased due to the increase in fuel prices, which is directly reflected in the labour rates.
Price hikes not for profit, to sustain business
Almost all the leading developers that Yugen Realty spoke to were in complete agreement on one point – these price hikes are not for profit but to compensate for the increased costs.
There are many projects which have been booked at the selling price of one to two years ago, while today their construction cost has increased significantly.
Hence, many developers are working today on very limited margins or in some places almost ‘net-to-net’ condition. If this situation continues for a long time, it will have a direct impact on new project launches, land acquisition and quality development.
Buyers – What does it mean for buyers?
Now, consumers who decide to buy a house will have to go ahead with the price hike of the first phase that will be implemented, in addition to this, in the future, separate collection of development charges, administrative charges, parking and other expenses may also be started in many projects.
The history of the real estate market shows that once the increased construction cost is included in the selling price of the project, prices usually do not come back down.
Especially in a fast-growing city like Surat, given the increasing population, constant migration and limited new inventory, prices are unlikely to remain stable in the coming years.
What will be the biggest impact of this decision?
The decision of 3% first phase price hike taken by developers in Pal-Adajan area is not just a local phenomenon. This decision can become a new benchmark for the entire real estate market of Surat.
Developers have been bearing the burden of increasing construction costs on their own for the last several months. Now for the first time, the industry has accepted in an organized manner that it is no longer possible for the developers to absorb the increased cost completely.
According to experts, similar meetings can be held in other areas of Surat in the next few months and initial price hikes of 3% to 5% can be seen depending on the status of the project. While new projects launched may also see new pricing of 8% to 12% considering the increased cost.
What does it mean for consumers?
For those who have been avoiding buying a property for the last few months thinking “let’s wait a few more days”, now is the time to take a decision.
Customers who complete booking or payment before July 15 can get the benefit of the current rate. After that, the first phase of price hike will be implemented and further revisions are also possible according to the project in the future.
In real estate, once the construction cost increases and is included in the selling price, prices usually do not come back down. The trend of the last ten years also shows the same.
New inventory will be affected
In the last one to one and a half years, the pace of new project launches in Surat has been slower than before.
Many developers are still preparing new costings. In some projects, despite the purchase of land and completion of all approvals, the launch has been postponed for some time.
If this situation continues for a long time, then the new inventory in the market may decrease next year. If the demand remains unchanged and the supply decreases, it is natural to create more pressure on prices.
Surat’s real estate market is now entering a new phase. Till now, developers were absorbing the increased cost in their margins, but now the industry has given a clear message that this situation cannot continue for much longer.
The Pal-Adajan meeting is not just an announcement of a 3% price hike; it is an important turning point for the entire Surat real estate market. If the global situation does not improve quickly and construction material and labour costs do not come down, then other areas of Surat may also see a phased increase in prices in the coming months.
One thing is now clear — price hikes in real estate are no longer just a possibility; they have become an inevitable consequence of rising construction costs.
WHAT DEVELOPERS SAYS? :
From an exclusive conversation with Yugen Realty Opinions of industry leading developers
Sanjay Mangukia : Chairman, CREDAI Surat (Pyramid Group)
Following the decision announced earlier by CREDAI Surat due to the global war and the increase in material and labour costs, more than 60 developers in Pal-Adajan area have unanimously decided to implement price hike from July 15. This increase is due to increased construction cost. For the past long, developers were bearing the additional cost themselves, but now it is not commercially feasible. Buyers should take timely decisions according to their needs and capabilities.
Dr. Jignesh Patel : President, CREDAI Surat (Tej Group)
In the last three to five years, global wars, floods and other situations have severely affected the supply chain of the construction sector. There has been a huge increase in the cost of key raw materials including aluminium, steel, cement as well as labour. After detailed cost analysis, it became clear that it is no longer economically feasible to complete the projects at the current selling prices. Therefore, the price increase will be 3% in the first phase from July 15, while in new projects, it may also see an increase of 10 to 12%. The public announcement has been made in advance so that the customers get the benefit of the old rate.
Janak Patel : Sangini Group
For the last four to five years, construction material and labour costs have been increasing continuously every year, while the selling prices have not increased at the same pace. As a result, the margins of developers have been continuously decreasing. The earlier GST input credit is also no longer available, while government charges have also increased. Today’s price hike is not for making profits, but is necessary to sustain the industry. Without an increase in selling prices, delivery of quality projects of ongoing and new projects, purchase of land for new projects and new development are not possible.
Dharmesh Balar : Balar Homes
The increase in fuel and gas prices after the world war has affected almost all construction materials. Costs have increased significantly in many sectors including aluminium, glass, plumbing, transportation, while labour costs are also increasing continuously. In such a situation, it has become inevitable to include some part of the increased construction cost in the price. In the first phase, an increase of about 3% will be made. If the price of raw materials continues to increase further, it may be necessary to revise the price further in the coming time.
Praveen Lakhani : Shulin Group
This price hike is not a decision taken to gain any commercial benefit. The industry has been forced to take this decision due to global war, disruption in the supply chain and continuously increasing construction costs. All the developers have come together to make this real situation reach the people. Providing correct information to the customers and maintaining transparency is as important as maintaining quality development and stability of the industry. Trust is our biggest responsibility.
Nikul Jasani : Ashtavinayak Homes
All the developers in the Pal-Adajan area have unanimously decided to increase the prices by 3% in the first phase. This increase has been made only keeping in mind the increased material and labour costs, not to increase profits. In the coming time, there is a possibility of increase in development charges, administrative charges, parking and other expenses, which may have an impact on the prices. Therefore, the present time is more favourable for those who are thinking of buying a house, because the current price may prove to be more beneficial compared to the future.
Keyur Sheta : Swarna Group
For Swarna Group, there is no compromise on quality. Due to the global situation and rising construction costs, the necessary improvement in prices has become inevitable. If a project has been selling at the old price for a long time or is much cheaper than the market, then customers should definitely think about its quality. Our goal is that a strong house built with the principles of honesty, trust, freedom and progress is the safest and long-term investment for customers.
Nilesh Sonani : Satva Group
Amid rising inflation and ever-increasing construction costs, maintaining quality at current prices is becoming more difficult day by day. We have only two options – either to improve the price or to compromise on quality. But no compromise is possible with quality and customer confidence. Therefore, price hike has become inevitable now. It would be more beneficial and prudent for those who are planning to buy a house to take a decision before the price hike comes into full effect.
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Disclaimer : This information has been collected through secondary research and Yugen Realty Newspaper is not responsible for any errors in the same.
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