Greenfield construction costs in India have gone up marginally by 2-4 per cent over the previous year’s figure in the calendar year 2024, according to real-estate consulting firm CBRE South Asia.
In its annual report ‘India Construction Cost Trends 2024-25: Navigating Costs in a Transforming Landscape’, the company said that this was a notable deviation from the 6-8 per cent cost increases witnessed in 2021-22.
“This reflects the impact of reducing supply chain bottlenecks and stabilising inflationary pressures. The report examined the current market landscape and deliberated on factors influencing construction cost trends across key real estate asset classes.
In 2024, cement, steel, and aluminium costs dipped by 6-8 per cent, 3-5 per cent, and 0-2 per cent, respectively, on an annualised basis, while paint costs remained stable. However, wood and stone prices rose by 3-6 per cent and 0-2 per cent, respectively, during the year, reflecting selective demand pressures.
“Stabilising construction costs, rapid urban expansion, and sustained real estate demand foster resilience and new opportunities. While workforce shortages present challenges, the sector continues to attract strong investments, driven by sustainability, technology, and high-quality developments,” Anshuman Magazine, Chairman & CEO - India, South-East Asia, Middle East & Africa, CBRE, said.
“While certain key material costs experienced moderation, persistent shortages in skilled, semi-skilled, and unskilled labour resulted in a 5 per cent average increase in labour expenditures during the year. This labour cost escalation effectively negated the material cost reductions, thereby sustaining elevated overall construction costs,” the report said.
Construction costs are expected to align with inflation, with only a marginal increase projected for 2025, the report said.
In terms of cities, Mumbai witnessed the highest year-on-year increase of about 4-6 per cent in fit-out costs in 2024, while Delhi-NCR, Bengaluru, Chennai, Hyderabad, and Pune recorded a about 3-4 per cent growth.
“As new projects emerge across residential, commercial, and industrial sectors, fluctuations in greenfield construction costs play a critical role in project feasibility and financial planning. Understanding cost variations across asset classes is crucial for long-term market stability,” Gurjot Bhatia, Managing Director & Head, Project Management Advisory, Asia-Pacific, CBRE, said.