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Construction costs in India have increased by more than 25% since the onset of global geopolitical conflicts, with developers citing supply chain disruptions, labour shortages and escalating raw material prices as key challenges affecting the real estate sector. Industry body CREDAI stated that shortages of critical materials such as steel, cement, aluminium, PVC products and glass have begun affecting project execution timelines and overall construction budgets. Developers have also raised concerns over delayed project completion, rising logistics expenses and increasing pressure on housing prices across multiple residential markets.
Construction costs across India’s real estate sector have risen by more than 25% since the beginning of recent global geopolitical conflicts, according to developers and industry representatives who have reported growing disruptions in material supply chains, labour availability and project execution schedules. Executives from major real estate companies stated that escalating raw material prices and logistical constraints have significantly increased project costs over the past few years. Advertisement
The Confederation of Real Estate Developers’ Associations of India (CREDAI) indicated that the sector is facing shortages of several key construction materials, including steel, cement, aluminium, copper, PVC products, tiles, pipes and glass. Industry stakeholders stated that rising fuel costs and international supply disruptions linked to ongoing conflicts in West Asia and other regions have directly affected the availability and transportation cost of construction inputs.
Developers noted that increased logistics expenditure and fluctuations in crude oil prices have added further pressure on construction budgets. Several companies stated that the impact has been particularly visible in large residential and infrastructure projects where material-intensive construction activity has continued despite volatile global market conditions. Labour migration and shortages of skilled workers have also contributed to delays and higher wage expenditure across multiple cities.
Industry bodies have warned that prolonged disruptions could affect project delivery timelines and place additional financial strain on developers. CREDAI chapters in several states have approached regulators seeking extensions under force majeure provisions of the Real Estate (Regulation and Development) Act, citing exceptional circumstances caused by material shortages and rising costs. In Gujarat, developers recently requested a six-month extension for ongoing projects due to increased prices of cement, steel, aluminium and crude-linked materials.
Developers stated that organised and larger real estate companies may be relatively better positioned to absorb temporary cost escalations because of stronger balance sheets and procurement networks. However, mid-sized and smaller developers are expected to face greater operational pressure due to thinner margins and limited pricing flexibility. Industry executives also highlighted that existing regulatory obligations under RERA restrict substantial revisions in committed selling prices after project launches.
Construction cost inflation has also affected redevelopment activity in several urban markets. In Ahmedabad, developers reported that redevelopment negotiations across multiple housing societies had slowed because previously offered financial terms were no longer considered viable under current material pricing conditions. Similar concerns have emerged in Kolkata and other cities where developers warned of possible delays in project completion and increased residential pricing pressure.
Property consultants and industry analysts indicated that rising labour costs, compliance expenses and environmental regulations are also contributing to overall construction inflation. According to JLL’s 2026 construction cost outlook, labour shortages and revised labour code implementation are expected to continue exerting upward pressure on project expenditure across residential, commercial and industrial asset classes.
Developers stated that if supply-side disruptions persist for an extended period, project launches could slow further while housing prices may witness incremental increases in order to offset rising input costs. Industry bodies have also urged government authorities to examine measures that could stabilise material availability and reduce volatility in construction-linked supply chains.
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