Mumbai will remain pricey in 2024 since building costs in India are expected to increase by 6%, according to a report
Based on JLL’s most current Construction Cost Guide, which was just issued, the country’s total construction costs would rise by an average of 6% in 2024 across a number of industries. Mumbai is still the most costly city among them all, with higher prices, while Chennai is a more affordable choice.
The rising cost of necessary building supplies, including cement, structural steel, reinforcing steel, and stones, is the reason behind Mumbai’s higher pricing.
According to Jipu Jose James, MD of JLL India’s Project Development Services (PDS), “Businesses are reevaluating their real estate choices today to optimize spending.” The basic trend is clear: building costs are rising, even if the precise effect of the pandemic on these costs is still up for debate.
Customer spending is thus anticipated to give priority to features that improve the end-user experience. James said, “Maintaining budget control and delivering economically feasible, high-quality projects need an understanding of and efficient management of costs.
Labor expenses rise
While a number of variables affect building costs in India, labor is also identified as a key component in the country’s economic growth. Therefore, the supply-demand imbalance is closing as construction moves into rural and non-metropolitan regions, leading to a more stable labor market and less pay inequality.
Right now, labor rates have increased by 6% annually on average over the last three years, which has had an effect on building costs of around 2%. Due to urbanization and rising infrastructure needs, the sector is significantly dependent on its workforce, as shown by its growth to over 71 million workers in FY2023, up from 63.98 million the year before.
But this increase is mostly seen in low-skilled labor, which makes the scarcity of competent workers worse. The lack of vocational training facilities makes skill development even more difficult.
Considering the future
In the next year, there will likely be a worldwide rise in construction costs. There are still prospects for industrial change, notwithstanding the risks. In order to shape their future, the real estate and construction industries continue to prioritize sustainability, digitization, and agility. Long-term value may be generated beyond 2024 by making investments in increased agility and efficiency.
We anticipate more government spending on real estate, infrastructure, and urbanization, as well as the growth of data centers and the semiconductor sector. But as investors handle the approaching national elections in 2024, prudence is advised. Positively, digital technologies have a great potential to lower project costs and provide additional value.
