NewKerala.com

Construction Costs in India Set to Rise 3-5% in 2026 on Labour, Metal Prices

A new JLL report forecasts a 3-5% increase in construction costs across India in 2026, driven primarily by consistent upward pressure on labour expenses. While material costs like cement and steel saw declines in 2025, prices for aluminium and copper surged due to global factors. The industry is navigating a complex landscape of new labour codes that increase costs and GST reforms that provide some tax relief. This cost dynamic is actively reshaping real estate investment, fueling expansion into Tier-II cities and redefining market geography.

Key Points: India Construction Costs to Rise 3-5% in 2026: JLL Report

  • Labour costs rising 5-6%
  • Metal prices show mixed trends
  • GST reforms offer some savings
  • Strategic shift to long-term value
2 min read

Construction costs likely to rise amid strong fundamentals in India: Report

JLL report forecasts 3-5% rise in India's construction costs for 2026 due to labour shortages and metal prices, reshaping real estate geography.

Construction costs likely to rise amid strong fundamentals in India: Report
"This isn't just a cost differential-it is fundamentally reshaping capital allocation, driving the Tier-II expansion, and redefining India's real estate geography. - Aditya Desai, JLL"

New Delhi, March 24

India's construction industry is likely to see a 3-5 per cent rise in costs across asset classes in 2026 amid rise in labour costs and higher metal prices, a report said on Tuesday.

Developers who embrace workforce formalisation, leverage GST savings strategically, and invest in technology adoption will emerge as leaders in this dynamic landscape, the report noted.

The report from real estate services firm JLL said material costs showed mixed trend in 2025 as cement, steel and diesel dropped by about 1-2 per cent, 3-4 per cent and 5-6 per cent respectively, while aluminium and copper jumped 8-9 per cent and 9-10 per cent on global demand and supply chain dynamics.

Labour costs are experiencing the most consistent upward pressure, increasing by 5-6 per cent across all categories, driven by skilled labour shortages and infrastructure demand, it added.

"India's construction industry is experiencing a significant transformation, driven by strong economic fundamentals, evolving market dynamics, and transformative regulatory reforms," the report said.

Though GST reforms provided 10 per cent tax relief on cement, promising savings of 2-3 per cent for developers and 1-1.5 per cent for homebuyers, the new labour code mandated enhanced social security benefits, healthcare coverage, and standardised wage frameworks, driving labour costs up 5-12 per cent across all skill categories.

This trend also reflects the construction industry's strategic shift toward long-term value creation while navigating significant regulatory changes and evolving market dynamics, it noted.

"Mumbai commands Rs 4,600-5,200 per sq. ft. for luxury high-rises, while Chennai, Bangalore, and Hyderabad deliver competitive rates at Rs 4,200-4,800 per sq. ft. This isn't just a cost differential-it is fundamentally reshaping capital allocation, driving the Tier-II expansion, and redefining India's real estate geography," said Aditya Desai, Executive Director, PDS, India, JLL.

- IANS

Share this article:

Reader Comments

P
Priya S
Just when we were thinking of buying a flat in Bangalore! 😓 A 3-5% rise might not sound like much, but on a 1.5 crore apartment, that's an extra 4.5-7.5 lakhs. The GST relief on cement is welcome, but will builders actually reduce prices or just pocket the difference?
R
Rohit P
The shift to Tier-II cities is the real story here. If Hyderabad and Bangalore are offering competitive rates compared to Mumbai, it makes so much sense for companies to set up offices there. This will boost development across the country, not just in a few metros. 🇮🇳
S
Sarah B
Interesting to see the global supply chain impact with aluminium and copper prices jumping. India's construction boom is clearly tied to international markets. The focus on technology adoption is crucial to manage these variable costs efficiently.
K
Karthik V
While the report is comprehensive, I feel it's a bit optimistic about developers "strategically leveraging" GST savings. In my experience, such savings rarely reach the end customer. The regulatory push for formalising labour is good, but execution and transparency will be key.
M
Meera T
The skilled labour shortage is a serious issue. We need more vocational training institutes and better recognition for skilled masons, electricians, and plumbers. Treating them with respect and providing social security is the least we can do. Their work builds our nation.

We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.

Leave a Comment

Minimum 50 characters 0/50