Labour Costs Surge 25%, Driving Construction Expenses Up 11% in 2024

Construction costs surged by 11% year-on-year in 2024, driven by a staggering 25% rise in labour costs, according to a Colliers India report. The increase occurred despite stable or declining prices for key materials like steel and cement.

Labour costs, constituting over 25% of overall construction expenses, have skyrocketed by 150% over five years. While steel and cement prices dropped by 1% and 15% respectively over the past year, the cost of materials like sand, bricks, and wood saw moderate increases, further contributing to the overall spike.

The report highlighted that the residential segment faced the steepest cost escalation at 11%. However, robust growth in commercial, industrial, and warehousing segments offset some challenges, with 37 million sq. ft. of office space and 22 million sq. ft. of industrial and warehousing projects completed in the first nine months of 2024.

Badal Yagnik, CEO of Colliers India, emphasized that escalating labour costs are compounded by the demand for skilled workers and expenses related to training, safety, and compliance. This trend, coupled with potential volatilities in construction material prices, signals sustained upward pressure on construction budgets.

The report underscores the need for innovative cost-control measures to mitigate rising operational expenses.