NEW DELHI: Since the onset of global conflicts, construction costs have surged by over 25%, primarily due to supply chain interruptions, labor migration, and increased prices for raw materials. Top builders have noted shortages of essential materials, which are exacerbating the issue. Vikas Oberoi, chairman and managing director of Oberoi Realty, expressed during the FY26 earnings call, “Rising costs for energy, aluminum, and glass are stressing us out. This affects the entire industry and is beginning to take a toll.”
Experts believe that these crises may serve as a catalyst for leaders to outpace less agile competitors within the industry. Parvinder Singh, CEO of Trident Realty, remarked, “This period may act as a transformative phase for the sector, encouraging developers to bolster operational resilience and adopt forward-looking strategies.”
The escalating costs have cast doubt on the commercial viability of various projects, leading to challenging delivery timelines.
Shekhar Patel, President of CREDAI, noted, “Since the conflicts began, construction costs have risen more than 25%, a significant concern. Yet, the organized sector is better equipped to handle these challenges than in past cycles. More pressing than cost is material availability; certain essential items are simply inaccessible, regardless of price—an unprecedented situation for the industry.”
The lack of critical materials is extending project timelines. “When procurement becomes limited beyond mere pricing, it naturally impacts timelines,” Patel added.
CREDAI has reached out to the Union Housing Ministry to seek relief under RERA timelines to protect both developers and homebuyers.
Pradeep Kumar Aggarwal, Chairman and Whole-Time Director of Signature Global, emphasized, “The most significant challenge is labor shortages, compounded by NGT bans and elections. We’re attempting to address this through technology.”
Gaurav Pandey, managing director and CEO of Godrej Properties, informed investors about a projected cost impact of 5% to 6%. He noted, “The fundamental issue is a supply-side shock. If the situation in the Gulf persists for 6-12 months, it could pose broader economic risks beyond our sector.”
