Construction Costs Rise Over 25% as Material Shortages and Labour Constraints Impact Real Estate Sector: CREDAI

India’s real estate sector is facing growing pressure as construction costs have increased by more than 25 percent since the onset of global geopolitical conflicts, according to industry body CREDAI. Developers across the country are grappling with rising input costs, supply chain disruptions, labour shortages and the limited availability of critical construction materials.

Industry leaders noted that escalating prices of cement, steel, aluminium, glass, construction chemicals and other key materials have significantly increased project costs. At the same time, shortages of essential products and labour migration have created fresh challenges for project execution and timely delivery.

CREDAI President Shekhar Patel stated that while cost escalation remains a concern, the larger issue is the availability of critical materials. In several cases, developers are struggling to procure key inputs regardless of the price they are willing to pay. This has resulted in delays across residential, commercial and infrastructure-linked developments.

Developers have also highlighted the impact of labour shortages, which continue to affect productivity at construction sites. Industry stakeholders said worker migration and regional restrictions have reduced the availability of skilled and semi-skilled labour, making it difficult to maintain construction schedules.

Several developers believe the current situation could affect the commercial viability of projects if disruptions continue for an extended period. Rising costs are forcing companies to reassess budgets, explore alternative materials and adopt technology-driven construction methods to improve efficiency and reduce dependency on manual labour.

CREDAI has approached the Ministry of Housing and Urban Affairs seeking timeline relief under RERA regulations to help developers manage delays caused by factors beyond their control. The industry body believes such measures would protect both developers and homebuyers while ensuring project completion remains financially viable.

Market experts also warn that continued increases in construction costs could eventually influence housing prices. If supply chain issues and material shortages persist, the sector may witness longer delivery timelines and higher project costs in the coming months.

Despite the challenges, larger organised developers remain relatively better positioned to manage the disruptions through stronger procurement networks, technology adoption and improved operational planning.