Mumbai has the highest construction cost among the six metros in India, according to a recent report by JLL India. The cost of construction in Mumbai is on average 10% higher than other metros, and across asset classes.
Hyderabad and Chennai, on the other hand, have the lowest average construction costs where costs are about 14% lesser than Mumbai.
The higher costs in Mumbai are largely attributable to corresponding higher prices of key construction materials like cement, reinforcement steel, structural steel, stones, etc.
“Going ahead, we see cost is one of the key drivers in real estate decisions. Many firms today are relooking at their real estate choices to optimise spend. While the true impact of pandemic on construction costs is still being discussed and debated, the general trend is obvious – construction costs is on the rise. Understanding and managing costs are key to keep budgets under control and deliver an economic and quality product,” said MV Harish, managing director, PDS, JLL India.
The average cost of construction for a luxury residential apartment in a high-rise building in Mumbai is Rs 5,625 per sq ft, while in Delhi & Pune, the price would be Rs 4,950 per sq ft and Rs 4,905 per sq ft respectively, while in Hyderabad such a house would command Rs 4,275 per sq ft.
Similarly, constructing a mid-rise luxury apartment will cost Rs 3,875 per sq ft in Mumbai and Rs 3,410 per sq ft in Delhi.
While constructing a medium-rise commercial building in Mumbai would cost Rs 3,250 per sq ft, the price would be Rs 2860 per sq ft in Delhi and Rs 2470 per sq ft in Hyderabad for constructing similar property. Construction cost for a medium-rise commercial building in Delhi and Pune are almost at the same level.
Similarly, construction cost for a high-rise commercial building in Mumbai is Rs 3,875 per sq ft, while it is Rs 3,410 per sq ft and Rs 3,379 per sq ft in Delhi and Pune. The cost of constructing a high-rise commercial property in Hyderabad is the lowest i.e. Rs 2,945 per sq ft.
There has been significant cost impact of covid-19 of 5-6% on existing green field & interior fit-out projects which is primarily driven by procurement challenges which may have led vendors to procure from first available source at higher price, increased cost towards Health & safety (setting up of quarantine facility, sanitation, thermal scanners and like), skilled labor availability.
he major impact has been on services especially long lead imported items where there are limited local sourcing of materials. The cost impact ranges from 2-3% for new projects that are undertaken in recent times. There are few challenges like idleness of plant and machinery along with enormous market competition which are compelling contractors to discount their margin as they bid for new projects.