The average cost of construction is estimated to have increased by up to 11% over the past year. While average cement prices have declined by 15%, and steel prices have seen a marginal 1% decrease over the last 12 months, the overall rise in construction expenses has persisted. The combined impact of price changes in four major construction materials—cement, steel, copper, and aluminum—has remained relatively modest.

According to industry estimates, labour costs have been the key driver of rising construction expenses. With labour accounting for more than one-fourth of total construction costs, a 25% annual increase in labour wages has placed pressure on construction budgets and operational spending. The growing need for skilled workers, along with expenses related to training, safety, and regulatory compliance, has further contributed to escalating labour costs.

As of October 2024, construction costs in the residential segment recorded an estimated 11% year-on-year increase. Among all real estate categories, cost escalation has been most significant in the residential sector.

A rising emphasis on higher building quality and the increasing demand for well-equipped gated communities have encouraged developers to upgrade their projects, leading to higher construction expenses in the housing segment.

To address challenges arising from fluctuations in skilled labour availability, developers are increasingly investing in training programs and automation, which can aid in improving project planning and scheduling.

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