News: JLL: Construction Costs to Rise 3-5% in 2026-24-03-2026
Construction costs for real estate projects are likely to go up by 3-5% across asset classes in 2026, according to JLL’s Construction Cost Guide, India - 2026, released on March 24. The main driver is labour, whose cost may rise 5-12% across skill categories after the new labour code took effect in November 2025, mandating enhanced social security benefits, healthcare coverage and standardised wage frameworks.
The guide said the government’s GST 2.0 initiative gives a 10% tax relief on cement, promising savings of 2-3% for developers and 1-1.5% on property prices for homebuyers, but the net result is still an increase that may affect project economics.
Material costs moved in different directions in 2025. Cement, steel and diesel prices eased by 1-2%, 3-4% and 5-6%, while aluminium and copper rose 8-9% and 9-10% respectively on global demand pressures and supply chain dynamics. Labour costs increased 5-6% across all categories because of skilled labour shortages and infrastructure demand.
Aditya Desai, Executive Director, PDS, India, JLL, said luxury high-rises cost Rs 4,600-5,200 per sq. ft. in Mumbai and Rs 4,200-4,800 per sq. ft. in Chennai, Bengaluru and Hyderabad, a gap he said was reshaping capital allocation and driving Tier-II expansion.
Ashok VS, Head of Cost Management, JLL PDS, India, attributed the expected rise to regulatory changes, skilled labour scarcity and stricter environmental standards, adding that digital technologies help offset these pressures.
On March 23, realtors’ bodies CREDAI and NAREDCO said the industry had begun facing a short supply of some building materials and costs could rise if the US-Iran crisis continues for longer.
