Developers are concerned about the impact of rising building material costs on their revenue.
They expressed that concern on Saturday at the unveiling of Kingsize Place, in Oregun-Ikeja, Lagos.
The Chief Executive Officer, Hontar Projects, Deji Fasunwon, said the rising cost of building materials had made it challenging for developers.
He said, “One of the primary obstacles we have encountered due to the hike in the price of building materials is the loss of revenue, chiefly due to the continuous rise in prices of construction materials. This dynamic presents a significant challenge as our initial project budgets often become inadequate as we progress. By the time we are near completion, the expenses have gone beyond our planned budgets, leaving us either at a breakeven point or operating at a loss.
“Operating within an environment lacking sufficient support exacerbates these challenges. Securing funding proves to be a formidable task, prompting some of us to explore alternative means of financing. However, establishing a more conducive environment and facilitating easier access to funding by the government would greatly alleviate these burdens, benefiting both contractors like us and the clients we serve.”
In the same vein, the Chief Executive Officer of Magnificent Choice Services Project and Engineering Ltd, Jeremiah Akinsele, noted that the inflation was abnormal in the construction industry, adding that clients were not open to re-negotiating terms.
He asserted, “The re-negotiation process has resulted in a decrease in revenue, further exacerbating the situation where our budgets are insufficient to cover the property costs, once the construction industry comes to a halt, there would be an increase in crime.
“Clients, even though aware, are being obstinate when it comes to re-negotiation of terms, and this might force developers into using substandard materials, which may result in building collapse.”
Meanwhile, Fasunwon emphasised his company was keen on integrity, prioritising transparency and adherence to promised standards.
He added, “We pride ourselves on upholding our promises without compromise, particularly when it comes to the quality of materials we use. Our strict adherence to testing and obtaining approvals before construction underscores our commitment to compliance.
“Currently, we are undertaking a project comprising 32 units of four-bedroom townhouses, alongside a separate five-bedroom detached house, totalling three housing units. Additionally, there is a provision for a playground. Although we initiated the project for N85m, it has now surged to approximately N170m. This escalation is largely attributed to the rising costs of materials and associated expenses.”
