New Delhi, April 23 (Mayank Nigam) The overall construction cost in the country is expected to increase by an average 6 per cent across various sectors in the Financial Year (FY) 2024, according to a latest construction cost guidebook release recently by JLL, a leading global commercial real estate and investment management company. Among the cities, Mumbai continues to be the most expensive while Chennai offers a more cost-effective option, the Guidebook stated.
The higher costs in Mumbai can be attributed to the increased prices of essential construction materials like cement, reinforcement steel, structural steel, and stones. The guidebook provides valuable insights into market trends and construction costs of real estate assets in major Indian markets. It includes a cost matrix that represents different styles and quality levels, along with an analysis of market trends for major building materials. Jipu Jose James, Managing Director, Project Development Services (PDS), JLL India said “While the exact impact of the pandemic on construction cost is still a topic of discussion, the general trend is evident – construction cost is on the rise. “As a result, customer expenditure is expected to prioritize aspects that enhance the end-user experience. Understanding and effectively managing costs are crucial in maintaining budget control and delivering economically viable, high-quality projects.”
Confidently looking ahead, he expressed strong belief in the growth of construction activity in India. While various factors influence the cost of construction in India, labour emerges as a critical driver of economic growth too. Hence, as construction expands into non-metropolitan and rural areas, the supply-demand gap is narrowing, resulting in a more stable labour market and reduced wage disparities, he said. Currently, labour rates are experiencing an average annual increase of 6 per cent over the past three years, impacting construction cost by roughly 2 per cent. The industry heavily relies on its workforce as evidenced by its expansion to around 71 million employees in FY2023, up from 63.98 million the previous year, owing to urbanization and growing infrastructure demands. However, this growth is primarily observed in unskilled labor, exacerbating the shortage of skilled workers. The deficiency of vocational training institutions further impedes skill development, he added. Construction cost is anticipated to experience a global increase in the coming year.
The construction and real estate sectors remain focused on sustainability, digitization, and adaptability, shaping their future. By investing in enhanced agility and efficiency, lasting value can be created beyond 2024. Anticipating increased government investment in infrastructure, there is rise in urbanization, and real estate, as well as the expansion of data centers and the semiconductor industry. However, caution is warranted as investors navigate the upcoming countrywide elections in 2024. On a positive note, the potential of digital technologies will reduce project cost and generate added value.