The total construction cost of residential buildings has remained stable since March this year but it has risen 28 per cent from the pre-pandemic levels, according to property consultant Colliers India.
In its report ‘Construction costs update’, the consultant has done analysis on prices of key construction materials and also the overall average construction costs for standard Grade-A residential buildings of 15 floors and also for standard pre-engineered Grade A industrial buildings.
The average cost of construction for residential buildings increased from Rs 2,200 per square feet in November 2021 to Rs 2,300 per square feet in March 2022.
The construction cost remained stable at Rs 2,300 per square feet in November this year as well with a softening of prices of many raw materials.
According to the report, raw material costs were constantly on the rise since the last three years till they touched the highest levels in March 2022.
This rise was led by key construction materials (cement, steel, aluminium, copper), labour costs and fuel costs, it added.
“Since March 2022, however, costs of most input materials have moderated owing to government interventions such as decreasing exports for key materials and reducing import duties. While input costs have declined over the last few months, labour costs have risen,” the report said.
Aluminium registered the highest decline of 55 per cent, followed by steel at 6 per cent decline. However, Cement and copper costs increased by 9 per cent and 3 per cent, respectively along with labour costs. This, coupled with decreased fuel costs has kept overall construction costs stable since March 2022.
“While the overall cost of construction has remained stable since March 2022, they are still 28 per cent higher than pre-pandemic levels,” the consultant noted.
Colliers India CEO Ramesh Nair said costs of key construction materials are likely to remain volatile for the next few months due to uncertainties created by geo-political issues, persistent lockdowns in China and a probable global recession.
“In the last couple of years, the cost of construction has increased significantly. Margins have collapsed drastically, especially in the affordable housing segment,” Pradeep Aggarwal, Founder and Chairman of Signature Global, said.
He urged the government to look into the per square feet selling price fixed years ago under various affordable housing schemes.
“To support and achieve the Housing for all mission, the government should enhance the price cap under affordable housing schemes,” Aggarwal said.
Construction firm BCD Group Managing Director Angad Bedi said there has been some decline in the overall construction cost with the softening of steel prices.
However, Bedi said the construction costs have gone up significantly in the last 2-3 years.
Saransh Trehan, Managing Director of Trehan Group, said input costs went up significantly over the last one and half years, but there has been some softening in prices of key building materials.