Iran-Israel Conflict Escalation Triggers Rise in Indian Homebuilding Costs

India's Real Estate Sector Feeling the Heat of Global Steel Price Surge

Key Highlights:

• Steel prices have surged by nearly 20% to Rs 72,000 per ton, driven by supply disruptions, higher shipping costs, and war-related logistics challenges.
• The sharp increase in steel prices is translating into higher construction costs across major cities, with Rs 50 per sqft added to construction costs in Mumbai.

Impact on High-Rise and Luxury Housing Segments

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• Steel accounts for a significant share of high-rise construction, making it one of the most sensitive inputs to global price fluctuations.
• The current surge in steel prices is likely to continue, with experts predicting that the cost of hot rolled coil may hit Rs 62,000 per ton by June if the situation does not change for the better.

Regional Impact

• Mumbai: The spike in steel prices is adding Rs 50 per sqft to construction costs, with over 10,000 luxury units under construction.
• Delhi-NCR: Construction costs are expected to rise by Rs 40-60 per sqft, with projects with higher steel intensity seeing sharper increases.
• Bengaluru: Costs are expected to rise by Rs 30-50 per sqft, with mid- to high-rise residential developments common in the region.

Industry Response

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• Prashant Thakur, Executive Director & Head - Research and Advisory, ANAROCK Group, warns that the current situation may lead to delayed and stalled projects.
• Shekhar Patel, President of Confederation of Real Estate Developers Associations of India (CREDAI), maintains that the Indian real estate sector remains largely stable despite the evolving geopolitical situation.

Short-Term Disruption, Long-Term Watch

• Industry bodies maintain that the current impact remains limited and largely transitional, with temporary supply chain disruptions observed due to global energy volatility.
• However, if the situation persists for a month or longer, it may begin to reflect in input costs, leading to a gradual impact on overall pricing.