The cost of construction has increased 28 per cent higher than pre-pandemic levels but continues to be stable, compared to March 2022, according to a report by Colliers.
The cost of key construction materials has jumped 32 per cent in three years, affecting margins and the operational schedule of construction companies. However, the government’s efforts such as reducing exports and cutting import duties have kept raw material costs under check over the last few months, the report said.
As of March 2022, construction costs rose 10–12 per cent year-over-year as a result of a 20 per cent increase in key material costs such as cement, steel, aluminium and copper, along with fuel and labour costs, due to geopolitical issues, inflation, and more.
The overall cost of the four main building materials—steel, cement, aluminium, and copper—decreased by 8 percent by November 2022. But the price of cement and copper saw an increase of 9 per cent and 3 per cent, respectively.
“Costs of key construction materials are likely to remain volatile for the next few months due to uncertainties created by geo-political issues, persistent lockdowns in China, and a probable global recession. Prices of key construction materials will hinge on multiple factors including the global economic situation, inflation rates, and supply constraints. Therefore, developers are likely to push new launches till the input prices further decline, as any further surge in the cost of construction materials would impact the timely delivery of ongoing projects and disrupt their cashflows resulting in an increase in housing prices,” said Ramesh Nair, Chief Executive Officer, India and Managing Director, Market Development, Asia, Colliers.