Construction Cost Forecast India 2026

Key Takeaways

• 3-5% increase in construction costs projected for 2026, driven by rising input prices and regulatory changes.
• JLL India releases 'Construction Cost Guide, India - 2026', estimating a 3-5% rise in construction costs across all asset classes.
• Government initiatives, such as GST 2.0, aim to reduce tax burdens and mitigate cost pressures.

Market Analysis

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The construction cost landscape in India is expected to experience a moderate increase of 3-5% in 2026, according to JLL India. The report highlights the impact of rising input prices, including labour costs, which have increased 5-6% across all categories. Skilled labour shortages and infrastructure demand have driven these labour cost increases.

Regulatory Changes and Industry Impact

The new labour code, effective since November 2025, has mandated enhanced social security benefits, healthcare coverage, and standardized wage frameworks, resulting in a 5-12% increase in labour costs. Additionally, stricter environmental standards and digital technologies are expected to contribute to the rise in construction costs.

Industry Response and Outlook

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Real estate associations CREDAI and NAREDCO have expressed concern about potential shortages of construction materials, which may lead to increased construction costs and project delays. Sanjeevini Group Chairman Umesh Gowda H A has emphasized the need for proactive cost optimisation and efficient planning to mitigate the impact of rising input costs.

Macro Economic Context

Underlying housing demand in India remains resilient, despite near-term challenges. The industry has navigated similar cycles in the past and is likely to adapt to the current market conditions.