by THO
Construction costs for greenfield real estate projects increased by 2-4% annually during the last calendar year on account of higher input costs, according to a report by real estate consultancy CBRE.
The report India Construction Cost Trends 2024-25: Navigating Costs in a Transforming Landscape noted a shift from the 6-8% cost increases seen in 2021-22, driven by easing supply chain issues and stabilizing inflation.
There was a marginal 2-4% year-on-year escalation in greenfield construction costs in 2024 compared to 2023, it said.
“Stabilizing 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 and CEO – India, South-East Asia, Middle East & Africa, CBRE, said.
Greenfield real estate projects refer to developments built on previously unused or undeveloped land.
Also Read: Real estate developers target Tier-2 and Tier-3 cities: 44% of 3,294 acres of land acquired in 2024
Fluctuating material costs
In 2024, cement, steel, and aluminium costs dipped by 6-8%, 3-5%, and 0-2%, respectively, on an annualized basis, while paint costs remained stable.
However, wood and stone prices rose by 3-6% and 0-2%, respectively, during the year, reflecting selective demand pressures.
While certain key material costs experienced moderation, persistent shortages in skilled, semi-skilled, and unskilled labour resulted in a 5% average increase in labour expenditures during 2024. This labour cost escalation effectively negated the material cost reductions, thereby sustaining elevated overall construction costs, CBRE said.
High-rise construction costs across cities
The report added that for high-rise residential projects (30 floors), construction costs in Delhi-NCR range between ₹5,500-6,100 per sq. ft., while mid-rise buildings (12 floors) cost around ₹3,100-3,500 per sq. ft.
The report added that India’s construction sector is growing, but managing costs remains a challenge. “Developers must adapt to changing material prices, evolving fit-out costs, and the increasing focus on sustainability and technology,” Gurjot Bhatia, Managing Director and Head of Project Management Advisory, Asia-Pacific, CBRE, said.
He added that understanding cost variations across different asset types, including homes, offices, warehouses, and retail spaces, is key to market stability.
