Greenfield Construction Costs Marginally Up by 2-4% in 2024, says CBRE Report

New Delhi, March 10, 2025: CBRE South Asia Pvt. Ltd, India’s leading real estate consulting firm, has released its annual flagship report titled ‘India Construction Cost Trends 2024-25: Navigating Costs in a Transforming Landscape’. The latest report indicates a marginal 2-4 per cent year-on-year escalation in greenfield construction costs in 2024 compared to 2023. This is a notable deviation from the 6-8 per cent cost increases witnessed in 2021-22 and reflects the impact of reducing supply chain bottlenecks and stabilising inflationary pressures. The report examined the current market landscape and deliberated on factors influencing construction cost trends across key real estate asset classes.

In 2024, cement, steel, and aluminium costs dipped by 6-8 per cent, 3-5 per cent, and 0-2 per cent, respectively, on an annualised basis, while paint costs remained stable. However, wood and stone prices rose by 3-6 per cent and 0-2 per cent, respectively, during the year, reflecting selective demand pressures.

While certain key material costs experienced moderation, persistent shortages in skilled, semi-skilled, and unskilled labour resulted in a 5 per cent average increase in labour expenditures during CY 2024. This labour cost escalation effectively negated the material cost reductions, thereby sustaining elevated overall construction costs.

It is to be noted that the per cent change is calculated at an India level, taking respective material prices across major cities into consideration; per cent movement in labour cost is an average reflection of skilled, semi-skilled and unskilled labour Looking ahead, construction costs are expected to align with inflation, with only a marginal increase projected for 2025.

In terms of cities, Mumbai witnessed the highest Y-o-Y increase of ~4-6 per cent in fit-out costs in 2024, while Delhi-NCR, Bengaluru, Chennai, Hyderabad, and Pune recorded a ~3-4 per cent growth.

Anshuman Magazine, Chairman & CEO – India, South-East Asia, Middle East & Africa, CBRE, said, “India’s construction sector remains a key pillar of economic growth, poised to become the world’s third-largest market by 2025. From impressive skylines in cities to extensive infrastructure projects that connect remote areas of the country, the construction sector serves as a vital foundation for India’s broader economic objectives. Stabilising construction costs, rapid urban expansion, and sustained real estate demand foster resilience and new opportunities. While workforce shortages present challenges, the sector continues to attract strong investments, driven by sustainability, technology, and high-quality developments.”

Gurjot Bhatia, Managing Director & Head, Project Management Advisory, Asia-Pacific, CBRE, said, “India’s construction industry is witnessing progression, but with this growth comes the challenge of managing costs effectively. As new projects emerge across residential, commercial, and industrial sectors, fluctuations in greenfield construction costs play a critical role in project feasibility and financial planning. Stakeholders must navigate the ripple effects of macroeconomic trends on material costs, evolving fit-out costs, and the growing emphasis on sustainability and technology integration. Understanding cost variations across asset classes—whether in residential buildings, office spaces, warehouses, or retail centres—is crucial for long-term market stability. The continued emphasis on quality, sustainability and digital adoption is expected to shape the future of real estate development in India.”