West Asia crisis may push up realty construction costs by 5% in near term

The West Asia crisis could increase India's real estate construction costs by 5% and disrupt schedules due to material shortages.

The escalating West Asia conflict is beginning to exert cost pressure on India's real estate sector, with material prices rising and industry leaders warning of a potential 5% spike in construction costs if hostilities persist through April.

Construction schedules are also likely to be affected because of shortage of materials and resources if the conflict prolongs.

Harshavardhan Neotia, Chairman of Ambuja Neotia Group, said the crisis is triggering a "classic cost-push cycle" for real estate, with crude oil moving from sub-$70 levels in February to well above $110–120 per barrel in March and natural gas witnessing sharp spikes.

"Early pressure is already visible across steel, logistics, and petrochemical-linked materials. If this persists, construction costs could rise meaningfully over the next 1–2 quarters, which may have a bearing on pricing going forward," Mr. Neotia said.

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Sushil Mohta, President of CREDAI West Bengal and Chairman of Merlin Group, struck a more immediate note of caution. "If the war continues in April, the cost of construction will go up by 5 per cent immediately. Construction schedules will also be derailed due to shortage of building materials," he told PTI.