New Delhi, Nov 23 (PTI) The average cost of construction of housing projects in big cities has risen 39 per cent to Rs 2,780 per sq ft in the last four years, while construction material and labour have become costlier, according to Colliers India.
Data from real estate consultant Colliers India shows that the average construction cost for premium housing projects was Rs 2,000 per sq ft in October 2020.
The construction cost rose to Rs 2,200 per sq ft in October 2021, Rs 2,300 per sq ft in October 2022, Rs 2,500 per sq ft in October 2023 and Rs 2,780 per sq ft in October 2024.
These are average costs for a Grade A residential building with 15 floors, Colliers India said. The data pertains to tier-I cities.
Over the past one year, the consultancy said the average cost of construction of housing projects has increased by 11 per cent, due to a significant rise in labour costs, as well as a marginal increase in prices of construction materials such as sand, brick, glass, wood, etc.
Notably, the cumulative impact of price hikes for the four major construction materials, including cement, steel, copper and aluminium, has been relatively low.
The average prices of cement have seen a massive drop of 15 per cent over the past 12 months, while average prices of steel have seen a marginal 1 per cent drop.
However, the consultancy pointed out that labour costs have increased by 25 per cent over the past one year.
The average rates of copper and aluminium have increased by 19 per cent and 5 per cent, respectively.
“While the price increase for key construction materials was relatively modest over the past year, labour costs are driving up the overall cost of construction,” said Badal Yagnik, chief executive officer, Colliers India.
“With labour accounting for more than one-fourth of the total construction cost, a 25 per cent annual increase in labour cost has pushed up construction budgets and impacted operating expenses.”
Further, Yagnik added that the need for skilled labour and the associated costs for training, safety and regulatory compliance further add to labour costs.
To deal with the steady increase in total construction cost and associated challenges, Colliers India said developers are optimising costs by re-evaluating budgets.
The consultancy added that real estate developers are also looking at improving supply chain management by diversifying suppliers and opting for local sourcing of key construction materials.
Additionally, realty firms are increasingly investing in training and automation to address challenges related to instability in the availability of skilled manpower, which in turn can facilitate better project scheduling.
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