Mumbai Continues to Have Highest Construction Costs in India

Mumbai has turned out to be the most expensive city for construction. Apart from various things, the city is also known for its impressive skyline.

The cost of construction has seen a uniform rise in India, with an average increase of 6% for the fiscal year 2024, as per the latest Construction Cost Guide by JLL. The hike in prices of materials like cement and steel is the reason for Mumbai's increasing costs. Therefore, it is expected that consumers will spend more on features that improve the experience.

The report also focuses on the importance of cost management for staying within budget while delivering economically viable and high-quality projects. In contrast to Mumbai’s high construction costs, Chennai's construction costs have been more economical.

Labour costs have also risen, with a 6% annual increase over the past three years. This has influenced construction expenses by approximately 2%. The industry's dependence on its workforce is evident, as it expanded to over 71 million employees in FY2023. This is a big jump from last year’s 63.98 million. However, this growth is primarily in unskilled labour, pointing to the scarcity of skilled workers. The report also highlights the lack of vocational training facilities.

The Construction Cost Guide by JLL provides a detailed view of the trends affecting real estate asset construction costs across major Indian markets. It goes into the fluctuations in prices of key building materials and presents a cost matrix that encapsulates various architectural styles and quality standards.

Mumbai's real estate market has also shown a 17% surge in home sales in the first quarter of FY24, pointing to 23,743 units sold. The office leasing sector also witnessed growth, with a 29% increase to 2.8 million square feet. This shows Mumbai's place as a prime real estate destination, despite its high costs.

Reports also suggest that a rent crisis is going on in India. While rents typically rise by 10% annually, some areas have seen hikes up to 50%. In Tier-I cities, the annual increase has been between 30–40%, far from the usual rates of 5–10%.