A comparison of construction costs across metros

01 Mar 2021 Long Read

According to a report, Hyderabad currently has the lowest average construction cost in the country compared to all the major metros and almost 14% lesser than Mumbai, which is the most expensive city in terms of construction.

Higher costs in Mumbai are largely attributed to higher prices of key construction materials such as reinforcement steel, cement, structural steel and stones.

According to a study by JLL, the average construction cost for a luxury residential apartment in a high-rise building in Mumbai is Rs 5,625 per sq ft, while in Hyderabad, such a house would cost just Rs 4,275 per sq ft. Compared to other metros such as Pune, Bengaluru and New Delhi, the overall average construction cost increase in Mumbai is estimated at 10%.

Construction cost for various asset classes in major metro cities (Rs/sq ft)
Building type Floors Pune Mumbai Hyderabad Delhi Chennai Bengaluru
Highrise luxury apartments 30+ 4,905 5,625 4,275 4,950 4,410 4,500
Mid-rise luxury apartments 15+ 3,379 3,875 2,945 3,410 3,038 3,100
Average standard apartments 12 2,725 3,125 2,375 2,750 2,450 2,500
Average standard apartments, low-rise 5 2,071 2,375 1,805 2,090 1,862 1,900
Tall buildings 60+ 8,502 9,750 7,410 8,580 7,644 7,800
Villas 2 4,142 4,750 3,610 4,180 3,724 3,800
Medium-rise commercial buildings < 12 2,834 3,250 2,945 3,410 3,038 3,100
Highrise commercial buildings 12+ 3,379 3,875 2,945 3,410 3,038 3,100

While constructing a medium-rise commercial building in Mumbai would cost Rs 3,250 per sq ft, the cost would be Rs 2,860 per sq ft in Delhi and Rs 2,470 per sq ft in Hyderabad for constructing a similar property.

Similarly, the construction cost for a high-rise commercial building in Mumbai is Rs 3,875 per sq ft, while it is and Rs 3,379 per sq ft and Rs 3,410 per sq ft in Delhi and Pune, respectively. The cost of constructing a high-rise commercial property in Hyderabad is the lowest at Rs 2,945 per sq ft.

There has been a significant cost impact of 5-6% on ongoing greenfield and interior fit-out projects, which is primarily driven by procurement challenges, which may have led vendors to procure from the first available source at a higher price, increased cost towards health and safety due to Covid-19 and skilled labour availability, he added.

The major impact has been on services, especially imported items where there is limited local sourcing of materials, JLL’s real-time study covering over 200 project budgets across major cities (including Hyderabad) during Q4 2020 showed.

Material and transportation costs have spiked in the metro cities due to material demand, its non-availability and transportation challenges, once the supply chain reinstates, the prices shall return to normal, expects JLL India.

According to Motilal Oswal Real Estate, the last few months noted a surge in demand for residential real estate. The recovery rate is close to 90% of pre-Covid levels for residential properties. While multiple reasons such as effective pricing, interest rates at an all-time low and flexible office policies are boosting demand, the biggest driver is the increased emotional value of homeownership.

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