- Construction cost increased by 35 percent in 3 years
- The daily wage of a construction worker is Rs 1,200
- Cement price increased by 18 percent in 3 years
- Steel price increased by 47 percent in the market
Construction costs in real estate are continually rising. Statistics indicate that construction costs have increased by about 35% over the past three years. The increase in prices of construction materials such as steel and cement, as well as wages for construction workers, is impacting home prices. Therefore, experts in the real estate sector recommend making a quick decision when it comes to purchasing a home, as prices are unlikely to decrease.
Everyone hopes to either build their own homes or buy one. People are making efforts to either construct new houses or purchase flats in apartments. However, opportunities for average and middle-class individuals to buy homes are gradually diminishing, primarily due to rising home prices. As land values increase and construction costs rise, the prices of homes are steadily going up. Notably, in the past three years, construction costs have surged significantly. Builders report that costs have risen by more than 35% over the past three years due to increases in labour wages, as well as the prices of cement, steel, concrete, aluminum, copper, and diesel.
In metro cities such as Hyderabad, Bengaluru, Chennai, Mumbai, and Delhi, the daily average wage for skilled construction workers is Rs 1,200. For unskilled workers, the wage is Rs 900. Additionally, the prices of key construction materials like steel and cement have surged significantly. Over the past three years, the price of cement, which is crucial in construction, has increased by 18%. At one point, the price rise reached up to 39%. Towards the end of last year, there was a slight decrease in prices, providing some relief to the construction sector. For example, the price of Grade 53 cement was Rs 5,120 per metric tonne at the beginning of 2020, increased to Rs 7,100 by 2021, and then decreased to Rs 5,960 by the end of 2022. Currently, the price of a 50 kg bag of cement ranges from Rs 270 to Rs 410, depending on the company.
Steel prices have also risen dramatically over the past three years. Three years ago, the price of reinforcement steel was ₹42,480 per ton. It has increased by 43% and reached Rs 60,000 per tonne by the end of last year. Currently, the price of steel in the market ranges from Rs 62,000 to Rs 72,000 per tonne, depending on the company. With the rise of high-rise apartments, the consumption of concrete has significantly increased. The prices of M25, M30, and M35 grade concrete were Rs 5,012 per cubic meter in 2020, but now the price has risen to Rs 5,650 per cubic metre. The use of aluminum and copper in construction is also high, particularly in electrical work. The prices of these materials have surged dramatically in the market. Compared to 2020, aluminum prices have increased by 46% by the end of 2023. Currently, the price of aluminum is Rs 1.86 lakh per metric tonne.
On the other hand, a report by JLL indicates that rising fuel prices are indirectly contributing to increased construction costs. Construction materials like cement, steel, concrete, sand, and bricks are manufactured elsewhere and transported to construction sites. When fuel prices rise, the transportation costs for these materials also increase, affecting overall construction expenses. Diesel prices have risen by 32% over the past three years, leading to higher transportation costs for construction materials and thus increasing construction expenses.
Currently, the market features a range of construction projects, from affordable housing to high-rise apartments. For high-rise buildings with more than 30 floors, the construction cost per square foot ranges from Rs 5,300 to Rs 6,300, according to real estate experts. This cost is expected to rise further for premium and high-quality projects.
For buildings with more than fifteen floors, the construction cost per square foot is between Rs 3,800 and Rs 4,500. Buildings ranging from 5 to 12 floors have a construction cost of Rs 2,900 to Rs 3,300 per square feet. In the case of affordable housing, stand-alone apartments up to five floors have an average construction cost of Rs 2,200 to Rs 2,600 per square feet. For villas with a ground floor plus two additional floors, the construction cost ranges from Rs 4,300 to Rs 12,000 per square feet, depending on the project. Commercial high-rise buildings tend to have lower construction costs compared to residential buildings, with costs ranging from Rs 4,100 to Rs 4,800 per square feet.
