In 2026, construction expenses for all types of real estate are expected to go up by 3% to 5%: JLL
By Bricksnwall | 2026-03-25
A
JLL analysis says that construction expenses for real estate projects may go up
by 3–5% because of rising input costs, such as labor.
According
to JLL's Construction Cost Guide, India – 2026, released on March 24,
construction costs for real estate projects are expected to rise by 3–5% across
all asset classes in 2026. This is because input costs, such as labor, may rise
by 5–12% after the new labor code goes into effect in November 2025.
In
2025, the costs of materials were not the same across all categories; some were
going up while others were going down. It added that the prices of cement,
steel, and diesel went down a little, by 1–2%, 3–4%, and 5–6%, respectively. On
the other hand, the prices of aluminum and copper went up a lot, by 8–9% and
9–10%, respectively, because of global demand and supply chain issues.
It
noted that labor prices are going up the most consistently, by 5–6% across all
categories, because there aren't enough trained workers and there is a lot of
demand for infrastructure.
The
government's GST 2.0 program gives a much-needed 10% tax break on cement, which
will save developers 2–3% and homebuyers 1–1.5% on property prices. However,
the new labor code that went into effect in November 2025 requires better
social security benefits, healthcare coverage, and standardized wage
structures, which will raise labor costs by 5–12% across all skill levels. The
end consequence is that building expenses could go up by 3 to 5 percent this
year, which could have an impact on the economics of the project, it said.
In
India's six largest cities, we can see the story: luxury high-rises in Mumbai
cost ₹4,600–5,200 per sq. ft., while Chennai, Bengaluru, and Hyderabad offer
competitive prices of ₹4,200–4,800 per sq. ft. This isn't simply a difference
in price; it's changing how capital is allocated, fueling the Tier-II
expansion, and changing the geography of India's real estate market. Aditya
Desai, Executive Director of PDS, India, JLL, said, "Those who stay alert
and adapt quickly will be able to take advantage of big opportunities in this
new environment."
In
2026, construction costs are predicted to go up by 3 to 5 percent because of
changes in regulations, a lack of experienced workers, and tougher
environmental standards. Digital technologies assist ease these stresses by
making things run more smoothly and adding more value to projects. "Even
though construction costs are going up around the world and the market is
uncertain, there are big opportunities," said Ashok VS, Head of Cost
Management at JLL PDS in India.
On
March 23, the real estate groups CREDAI and NAREDCO claimed that the real
estate industry is starting to run out of some building supplies. They also
said that if the US-Iran conflict goes on for a long time, construction costs
could go up.
Source: Hindustan Times
