US-Iran War Pushes Real Estate Construction Costs Up 25%

According to the Confederation of Real Estate Developers’ Associations of India (CREDAI), development costs in India’s real estate sector have increased by more than 25% as a result of the ongoing US-Iran conflict. Several listed developers have also expressed concern about rising input costs, warning that if geopolitical tensions persist, project viability and delivery deadlines will suffer. 

Industry players have also warned that the difficulty goes beyond growing prices, with certain vital construction materials being difficult to obtain regardless of price, a condition rarely seen in the sector.

As supply restrictions begin to affect availability, project timetables may be strained, prompting developers to diversify procurement channels, boost domestic sourcing, and reorganize construction plans in order to minimise delays and preserve execution momentum. 

Real estate developers such as Oberoi Realty, Lodha Developers, Rustomjee Group, and Raymond Realty, among others, have highlighted rising construction costs and growing cost pressures in the sector, citing rising raw material, labour, and overall project execution costs. 

Why are construction costs rising as a result of the war between the United States and Iran?

The US-Iran confrontation has pushed up crude oil prices and interrupted global shipping lines, putting pressure on construction costs in India’s real estate sector. The rise in fuel costs has raised transportation and logistics costs, while important inputs such as steel, cement, and other building materials have grown more expensive, creating the prospect of greater project costs and property prices. 

CREDAI says construction cost up by 25%

The current global conflict is another test of that resiliency. Since the start of hostilities, construction expenses have risen by more than 25%, indicating a significant and urgent need for care. However, the organised sector now is significantly better suited to deal with such issues than in earlier cycles,” said Shekhar Patel, president of CREDAI National. 

Certain crucial materials are unavailable in the market, regardless of price, which is a rare occurrence in the field. When procurement becomes a constraint beyond pricing, project timetables are naturally put under strain, pushing developers to rearrange procurement pipelines, accelerate domestic sourcing, and reschedule construction activity to preserve momentum wherever possible,” Patel added.

According to CREDAI, pressure on the supply chain has increased as labour moves away from metropolitan building regions owing to gasoline shortages. This combined problem of materials and personnel requires both industry flexibility and policy support. On that front, CREDAI has contacted the Union Housing Ministry, requesting suitable RERA timeframe relief to protect both developers and homebuyers. 

Earlier this month, HT Real Estate reported that CREDAI had written to the Ministry of Housing and Urban Affairs, urging it to direct state RERA authorities to grant a blanket extension of three to six months for project completion timelines and to declare the current situation a force majeure event for the real estate sector.

The developers’ group stated that delays in raw material supply, combined with labor shortages caused by the crisis, have hampered building activity and delayed project completion across the country. 

What are the listed developers saying?

During Lodha Developers’ Q4FY26 earnings call earlier this month, Abhishek Lodha, CEO and MD, stated that the Middle East turmoil is now impacting building costs by 3-5% of total costs. He stated that gas-dependent material categories had been the most affected, with the total impact on margins remaining’very modest.’ 

“We estimate that the impact of construction cost hikes is now between three and five percent of total construction costs. Gas-dependent categories are the most heavily affected. This includes tiles, paints, PVC pipes, aluminum formwork, and some waterproofing materials,” Lodha stated.

Oberoi Realty’s CMD, Vikas Oberoi, stated that rising construction and energy prices, expensive labor, and material supply difficulties are placing pressure on the real estate market. “These are stressing us out, but it is a problem for the entire industry,” Oberoi remarked during the company’s Q4 FY26 earnings call recently.

Oberoi stated on May 11, 2026 that the business now expects construction prices to grow and has factored this increase into the projects it is pursuing. 

“The availability of supplies has become a bit of a difficulty, and this is freaking us out. However, as I previously stated, it is an industry-wide issue that we are all dealing with. But, yes, it’s slowly beginning to hurt you,” Oberoi explained.

According to Boman Irani, CMD of Rustomjee Group, better known as Keystone Realtors, construction prices are growing as a result of disruptions in material supplies and reliance on international inputs. “If the dollar continues to spike, then that will be a further increase in the cost,” Irani said.

According to Irani, the regional cost rise ranges from 8% to 13%. “I do not mean 8% to 13% altogether, but rather in certain goods, resulting in an overall cost rise of roughly 5%. We are well insulated because, as you can see from our unsold already launched stock, we will continue to sell, allowing us to absorb any cost increases that occur,” Irani stated. 

According to Harmohan Sahni, MD and CEO of Raymond Realty, any increase in construction expenses will most likely occur over time. During Raymond Realty’s Q4FY26 earnings call on May 6, 2026, Sahni stated that if the conflict lasts for an extended period, building costs will rise by around 3-4%.