JLL’s most recent Construction Cost Guide predicts that in the financial year (2024) across all sectors, the nation’s overall construction costs will rise by an average of 6%.
With higher prices, Mumbai remains the most expensive city overall, but Chennai is a more cost-effective option. The increased cost of necessary building supplies like cement, structural steel, reinforcement steel, and stones is the cause of Mumbai’s higher prices.
The handbook offers information on real estate asset construction costs and market trends in important Indian markets. It contains an analysis of market trends for key building materials and a cost matrix representing various styles and quality levels.
“To maximize expenditure, businesses are currently reevaluating their real estate decisions. The general trend is clear: construction costs are rising, even though the precise impact of the pandemic on these costs is still up for debate, according to Jipu Jose James, Managing Director, Project Development Services (PDS), JJL, India.
Customer spending is therefore anticipated to prioritize functions that improve the end-user experience. Cost management is essential to maintaining budget control and completing commercially and qualitatively viable projects.
An increase in labor costs
While several factors affect building costs in India, labor is also a key component in the country’s economic expansion. As a result, the supply-demand gap is narrowing as construction shifts to non-metropolitan and rural areas, resulting in a more stable labor market and lower wage inequality, according to the report.
Labor rates have risen by an average of 6% per year over the last three years, increasing construction costs by about 2%. The industry heavily relies on its workforce, as evidenced by its increase to approximately 71 million employees in FY2023, up from 63.98 million the previous, year, due to urbanization and rising infrastructure demands.
However, this growth is primarily in unskilled labor, exacerbating the skilled worker shortage. Lack of vocational training institutions impedes skill development, according to the report.
According to the report, global construction costs will rise in the coming year.