The country's overall construction cost will see an average increase of 6% across sectors in FY24, according to the latest JLL Construction Cost Guide.
Among cities, Mumbai remains the most affordable In terms of higher costs, while Chennai offers a more cost-effective option. The rising costs in Mumbai can be attributed to the rising prices of basic construction materials like cement, reinforcing steel, structural steel and stones. The guide provides valuable information on market trends and costs of building real estate assets in key markets in India. It includes a cost matrix representing different styles and quality levels, along with an analysis of market trends for key building materials.
Gibu Jose James, Managing Director, Project Development Services (PDS), JLL India, said, “Today, companies are re Evaluating its real estate options to optimize spending While the exact impact of the pandemic on construction costs is still a topic of debate, the general trend is clear: construction costs are rising and as a result, customer spending is expected to prioritize aspects that improve the user experience Final. Understanding and managing costs effectively is critical to maintaining budget control and delivering high-quality, economically viable projects.”
Looking ahead with confidence, he expressed his firm belief in the growth of construction activity in India. Labor cost will increaseWhile several factors influence the cost of construction in India, employment is also emerging as a critical driver of economic growth. Therefore, as construction expands in rural and non-urban areas, the gap between supply and demand narrows, leading to a more stable labor market and lower wage disparities. Currently, labor rates have seen an average annual increase of 6% over the past three years, impacting construction costs by approximately 2%. The industry relies heavily on its workforce, as evidenced by its expansion to nearly 71 million employees in fiscal year 2023, up from 63.98 million the previous year, due to urbanization and increased infrastructure requirements. However, this growth is primarily seen in unskilled labor, exacerbating the shortage of skilled workers. The shortage of vocational training institutions hampers skills development.
Looking forward to the futureIt is clear that the construction cost is expected to see an overall increase over the next year. Even in the face of uncertainty, there are still opportunities for transformation in the industry. The construction and real estate sectors remain focused on sustainability, digitalization and adaptability, shaping their future. By investing in greater flexibility and efficiency, lasting value can be created beyond 2024.
Expect increased government investment in infrastructure, urbanization and real estate, as well as expansion in data centers and the semiconductor industry. However, caution is warranted as investors contest the next national elections in 2024. On the positive side, the potential of digital technologies to reduce the cost of projects and generate added value shines brightly.