New Delhi: The average cost of construction for housing projects in big cities has gone up by 39% in the last four years to ₹2,780 per square feet, owing to increase in cost of building materials and labour, according to Colliers India, a real estate consultant.
Latest data released by Colliers India shows that the average construction cost for premium housing projects stood at ₹2,000 per sq ft in October 2020. The construction cost rose to ₹2,200 per sq ft in October 2021, ₹2,300 per sq ft in October 2022, ₹2,500 per sq ft in October 2023 and ₹2,780 per square feet in October 2024.
Also Read: Eye on Jharkhand polls, Modi unveils ₹6,640-Cr projects at Jamui
Colliers India said these are average costs for a Grade A residential building of 15 floors in tier-I cities.
The average cost of construction of housing projects rose by 11% due to a significant surge in labour costs coupled with a moderate price increase in construction materials like sand, brick, glass, wood etc., over the last one year. The cumulative effect of a rise in the prices of four key construction materials, including cement, steel, copper and aluminium, has been relatively low.
Average cement prices have seen a steep decline of 15 per cent, while average steel prices have witnessed a marginal 1% decrease over the last 12 months. The consultant, however, pointed out that the labour cost rose 25% in the past one year. The average rate of copper and aluminium increased by 19% and 5% respectively.
Also Read: Unsold housing inventory in NCR down by 57%, south 11% in 5 yrs
Chief executive officer, Colliers India, Badal Yagnik said, “While the rise in prices of key construction materials was relatively modest over the last year, labour costs have been driving the overall cost of construction upward. With labour accounting for more than one-fourth of overall construction cost, a 25% annual rise in labour costs has stretched construction budgets and impacted operational expenses.”
Yagnik further added that the need for skilled labour and the associated costs for training, safety and regulatory compliance further add to spiralling labour costs. To navigate the steady rise in overall construction costs and associated challenges, Colliers India said that developers are optimising costs by reassessing budgets.
Also Read: EMIs of affordable housing loan jump over 20% in last 2 years
The consultant report suggests that real estate developers are also looking at improving supply chain management by diversifying suppliers and opting for localised sourcing of key construction materials, the consultant added. Additionally, realty firms are increasingly making investments in training and automation to address challenges related to volatilities in the availability of skilled manpower, which in turn can potentially facilitate better project scheduling.
