CBRE South Asia Pvt. Ltd's annual report indicated a 2-4 per cent increase in greenfield construction costs in 2024 compared to 2023. This is a notable deviation from the 6-8 per cent cost increases witnessed in 2021-22 and reflects the impact of reducing supply chain bottlenecks and stabilising inflationary pressures. The report examined the current market landscape and deliberated on factors influencing construction cost trends across key real estate asset classes.
In 2024, cement, steel, and aluminium costs dipped by 6-8 per cent, 3-5 per cent, and 0-2 per cent, respectively, on an annualised basis, while paint costs remained stable. However, wood and stone prices rose by 3-6 per cent and 0-2 per cent, 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 per cent average increase in labour expenditures during CY 2024. This labour cost escalation effectively negated the material cost reductions, thereby sustaining elevated overall construction costs.
In terms of cities, Mumbai witnessed the highest Y-o-Y increase of ~4-6 per cent in fit-out costs in 2024, while Delhi-NCR, Bengaluru, Chennai, Hyderabad, and Pune recorded a ~3-4 per cent growth.
