Mumbai has the highest construction cost in India

According to JLL's latest construction cost guide, the cost of construction has seen a similar rise in India, with an average increase of 6% for fiscal year 2024. The rise in prices of materials like cement and steel is the reason for Mumbai's rising cost of living. Therefore, it is expected that consumers will spend more on features that improve the experience.

The report also focuses on the importance of cost management to stay within budget while delivering economically viable and high quality projects. Unlike Mumbai's high construction costs, Chennai's construction costs have been more affordable.

Labor costs have also increased, with an annual increase of 6% over the past three years. This has impacted construction expenditure by approximately 2%. The industry's reliance on its workforce is evident, as it expands to more than 71 million employees in FY2023. This is a big jump from last year's 63.98 million. However, this growth is mainly in unskilled labour, pointing to a shortage of skilled workers. The report also highlights the lack of vocational training facilities.

The Construction Cost Guide by JLL provides a detailed view of the trends impacting real estate asset construction costs in key Indian markets. It takes into account fluctuations in prices of key building materials and presents a cost matrix that encompasses different architectural styles and quality standards.

Mumbai's real estate market has also seen a 17% growth in home sales in Q1FY24, pointing to sales of 23,743 units. The office lease area also saw growth, with a 29% increase to 2.8 million square feet. This shows Mumbai as a prime real estate destination, despite the high costs.

Reports also suggest that there is a rent crisis going on in India. While rents typically increase by 10% annually, some areas have seen increases of up to 50%. In tier-I cities, annual growth has been between 30-40%, a far cry from the normal rate of 5-10%.

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