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War Sparks 25% Surge in India Construction Costs
1 Jun
Summary
- Construction costs in India rose over 25% due to geopolitical tensions.
- Critical materials are scarce, impacting project timelines significantly.
- Developers seek RERA timeline extensions and policy support.
Geopolitical conflicts, including the US-Iran war, have triggered a significant surge in construction costs for India's real estate sector, with increases exceeding 25%. This escalating expense, coupled with a critical shortage of essential building materials, is placing immense pressure on project timelines and overall viability. Developers are facing a dual challenge of rising prices and limited availability, a scenario rarely seen before.
Industry players are implementing strategies such as diversifying procurement channels, increasing domestic sourcing, and reorganizing construction schedules to minimize disruptions. CREDAI has formally engaged with the Union Housing Ministry, requesting RERA authorities to grant a three-to-six-month extension for project completion timelines, classifying the current situation as a force majeure event.
Key affected materials include gas-dependent items like tiles, paints, and PVC pipes. Developers are experiencing cost increases ranging from 3-5% to higher percentages on specific components. The availability challenges are stressing the entire industry, prompting a collective effort to absorb these rising expenses while ensuring project momentum is maintained.
