Construction cost for greenfield projects witnessed a modest 2-4% year-on-year increase in 2024 compared to 2023, marking a significant shift from the 6-8% cost hikes observed in 2021-22. This moderation is attributed to easing supply chain constraints and stabilizing inflationary pressures, said CBRE South Asia Pvt. Ltd, in its report titled “India Construction Cost Trends 2024-25: Navigating Costs in a Transforming Landscape”.
The report thoroughly examines the evolving market landscape, analyzing factors that influence construction cost trends across major real estate asset classes. Notably, key construction materials such as cement, steel, and aluminium saw annual price declines of 6-8%, 3-5%, and 0-2%, respectively, while paint prices remained unchanged. Conversely, wood and stone prices rose by 3-6% and 0-2%, respectively, reflecting localized demand pressures.
Anshuman Magazine, Chairman & CEO – India, South-East Asia, Middle East & Africa, CBRE, said,“India’s construction sector remains a key pillar of economic growth, poised to become the world’s third-largest market by 2025. Stabilising construction costs, rapid urban expansion, and sustained real estate demand foster resilience and new opportunities. While workforce shortages present challenges, the sector continues to attract strong investments, driven by sustainability, technology, and high-quality developments.”
Despite material cost moderation, the sector faced a persistent shortage of skilled, semi-skilled, and unskilled labor, leading to an average 5% increase in labor costs during CY 2024. This rise effectively counterbalanced material cost savings, keeping overall construction costs at elevated levels, the report mentioned.
In terms of cities, Mumbai witnessed the highest y-o-y increase of 4-6% in fit-out costs in 2024, while Delhi-NCR, Bengaluru, Chennai, Hyderabad, and Pune recorded a 3-4% growth.
Gurjot Bhatia, Managing Director & Head, Project Management Advisory, Asia-Pacific, CBRE, said,“India’s construction industry is witnessing progression, but with this growth comes the challenge of managing costs effectively. As new projects emerge across residential, commercial, and industrial sectors, fluctuations in greenfield construction costs play a critical role in project feasibility and financial planning”.
He further said, “Stakeholders must navigate the ripple effects of macroeconomic trends on material costs, evolving fit-out costs, and the growing emphasis on sustainability and technology integration. Understanding cost variations across asset classes—whether in residential buildings, office spaces, warehouses, or retail centres—is crucial for long-term market stability. The continued emphasis on quality, sustainability and digital adoption is expected to shape the future of real estate development in India.”
