Construction costs up 25% since global conflicts began, developers flag material shortages: CREDAI

New Delhi: Construction costs have risen more than 25% since the start of global conflicts, driven by supply chain disruptions, labour migration, higher raw material prices and shortages of key materials, executives at top builders said.

“Energy costs, aluminium, glass have gone up, labour has become expensive, availability of materials has become a bit of a challenge,” Vikas Oberoi, chairman and managing director, Oberoi Realty, told investors during the FY26 earning call. “These are stressing us out. But it's a problem for the entire industry…but now it's slowly starting to hurt you in a way.”

Also read: Naredco proposes changes to ease Delhi Transit-Oriented Development restrictions


Of course, the crises would be used by the leaders to leap ahead of the relative stragglers in the industry, experts said.

“This phase could become a turning point for the sector, prompting developers to strengthen operational resilience and adopt more future-ready development strategies,” said Parvinder Singh, CEO, Trident Realty.

Rising costs have put a question mark on the commercial viability of several projects and made delivery timelines more challenging.

"Construction costs have risen by over 25% since the onset of hostilities — a pressure that is meaningful and warrants attention. However, the organised sector today is far better equipped to navigate such challenges than it has been in previous cycles,” said Shekhar Patel, President, CREDAI. “The more immediate concern is not just cost escalation but availability. Certain critical materials are not accessible in the market regardless of price– a situation the sector has rarely encountered.”

Non-availability of critical materials is causing timelines to stretch.

“When procurement becomes a constraint beyond pricing, project timelines naturally come under stress,” Patel said.

CREDAI has engaged with the Union Housing Ministry, seeking appropriate RERA timeline relief to protect both developers and homebuyers.

“The biggest challenge is to get labour. Because of the NGT ban and then elections, there has been a shortage and we are trying to mitigate it by using technology,” said Pradeep Kumar Aggarwal, Chairman and Whole-Time Director, Signature Global.

'Costs & More'

Gaurav Pandey, managing director and CEO, Godrej Properties, told investors the cost impact would be between 5% and 6%.

“I think more fundamental is the supply side shock…. If the (situation in the Gulf) continues for 6-12 months, then I think that's something which has different economic risks than only sector specific,” Pandey said.

The shortage of construction chemicals has become a major concern, with developers facing delays in sourcing critical products such as admixtures, sealants, adhesives, waterproofing compounds, and surface treatments. The cost of waterproofing chemicals has increased 50%. This has affected both the pace and quality of construction at several sites.

"Since the onset of the global conflict, construction costs have surged by over 25%, putting severe pressure on developers already dealing with supply-chain disruptions and labour shortages,” said Suresh Garg, CMD, Nirala World. “The situation has been worsened by the migration of workers back to their hometowns and other regions in search of safety, stability, and better opportunities, leaving many projects short of skilled and semi-skilled labour.”

Also read: From factory floors to design studios: How India’s ceramic industry in Morbi is reinventing itself

Meanwhile, prices of cement, construction chemicals, steel, sand, bricks, bitumen, electrical wiring, and other essential inputs continue to rise, while there is an availability challenge for some items. As a result, developers are being forced to revise timelines, adopt substitutes, absorb higher costs, and manage delays.

“Unless these challenges ease, housing prices will remain under pressure and may go up in future and project delivery will slow further across the real estate sector,” Garg said.

The Knight Frank–NAREDCO Real Estate Sentiment Index for Q1 2026 (January–March 2026) reflected a departure from the sustained optimism in recent years in stakeholder sentiment. The current sentiment score plunged to 49 from 60 points in Q4 2025, slipping into pessimistic territory. The future sentiment score stands at a neutral 50 points.