Cost of construction rises up to 11 percent annually in 2024 across real estate segaments Colliers

The average cost of costruction is estimated to have increased by up to 11% over the past year. Average cement prices have seen a steep decline of 15%, while average steel prices have witnessed a marginal 1% decrease over the last 12 months, according to Colliers. The cumulative effect of rise in the prices of four key construction materials including cement, steel, copper and aluminum have been relatively low. Badal Yagnik, CEO, Colliers India said, “While 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. Moreover, the need for skilled labour and the associated costs for training, safety and regulatory compliance further adds to spiraling labour costs. As of October 2024, cost of construction in the residential segment saw an estimated 11% increase year-on-year. Amongst various real estate segments, construction cost escalation has been relatively sharper in the residential segment. The growing focus on better building quality and the rising demand for well-equipped gated communities have encouraged residential developers to improve their projects, which has led to higher construction costs in the housing sector. Real estate developers 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. 
 

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