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• Real estate developers have reported a sharp increase in construction costs since global geopolitical conflicts disrupted commodity and supply markets.
• Rising prices of steel, cement, fuel, logistics and imported materials are increasing pressure on project execution and development expenses.
• Industry stakeholders have also flagged concerns over labour shortages, procurement delays and potential impact on housing affordability and project timelines.
Construction costs across India’s real estate and infrastructure sectors have risen by nearly 25% over the past few years as global geopolitical conflicts and supply-chain disruptions continue to impact material availability, transportation and overall project execution costs. Advertisement
Developers and industry bodies stated that prices of essential construction materials, including steel, cement, aluminium and fuel-linked products, have witnessed sustained volatility following disruptions in international commodity markets and shipping networks. Increased logistics expenses and delays in procurement have further added to pressure on ongoing projects.
Industry stakeholders indicated that developers are facing growing uncertainty in sourcing raw materials due to fluctuating import costs and supply bottlenecks linked to global trade disruptions. Construction firms working on residential, commercial and infrastructure projects have reportedly been compelled to revise budgets and reassess execution schedules because of escalating input costs.
Developers also pointed to rising labour expenses and workforce shortages as additional challenges affecting the sector. Availability of skilled construction workers has remained inconsistent in several urban markets, particularly for large-scale projects requiring intensive manpower and specialised execution capabilities.
The increase in construction costs comes at a time when India’s housing and infrastructure sectors are witnessing sustained development activity across major metropolitan regions. Developers have continued launching residential and commercial projects despite higher operational expenses, supported by demand across housing, warehousing, office and infrastructure-linked segments.
Industry representatives stated that prolonged cost escalation could place pressure on project viability, particularly for mid-sized developers and contractors operating with tighter financial margins. Rising expenses are also expected to influence pricing strategies for upcoming housing projects if material volatility persists over a longer period.
Infrastructure and construction firms have increasingly explored alternative procurement strategies, local sourcing and technology-led building methods to reduce dependence on volatile global supply chains. Developers are also focusing on operational efficiencies and phased execution planning to manage cost pressures more effectively.
The sector has simultaneously been dealing with higher financing costs, regulatory compliance expenses and evolving project timelines, particularly in urban markets where large-scale infrastructure and redevelopment activity is underway. Industry observers noted that sustained increases in construction costs could eventually affect affordability across residential real estate markets if developers pass on a portion of the additional expenses to buyers.
Construction and infrastructure demand across India has remained strong due to continued public investment in roads, railways, metro systems, industrial corridors and urban infrastructure projects. Private real estate development has also expanded across residential, commercial and logistics segments, increasing demand for construction materials and labour resources.
Industry bodies have urged policymakers to closely monitor supply-chain conditions and commodity price movements to reduce pressure on project execution and maintain stability in the construction sector. Developers stated that predictable material availability and cost stability remain critical for timely delivery of large-scale housing and infrastructure projects across the country.
Source PIB
5th Jun, 2025
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