Real Estate Sector Grapples with Labour Shortages and Rising Costs Amid LPG Crisis

India’s real estate sector is facing a critical shortage of skilled workers and rising labour costs as soaring cooking gas prices push migrant workers back home. Developers across major cities like Mumbai, Delhi-NCR, and Pune have reported a significant decline in labour availability, driven by the increased cost of living for migrant workers.

Developers have noted that the spike in liquefied petroleum gas (LPG) prices, coupled with supply constraints linked to the West Asia conflict, has made it difficult for migrant workers to sustain themselves in urban areas. This has led to a noticeable dip in labour availability across key property markets.

Labour costs have already risen by 5–15% due to the demand-supply mismatch, developers estimated, with the long-term impact likely to be more severe. Vishal Agarwal, Joint Managing Director at Pune-based Krisala Developers, highlighted the immediate labour disruption, particularly over March and early April. Many migrant workers, especially bachelors and contract labour, are finding it challenging to afford basic necessities like cooking fuel and food.

“Larger, organised projects with in-house facilities have been relatively more stable, but the broader ecosystem is certainly under pressure. It is, in many ways, reminiscent of a softer version of the reverse migration we saw during the pandemic,” Agarwal said.

Rohit Gupta, Group Chief Executive Officer (CEO) of Pune-based Mantra Group, noted that while the broader real estate industry is feeling the pinch of this labour shortage, his company has managed to cushion the impact to a large extent. “By proactively focusing on on-site worker welfare, ensuring basic amenities, and maintaining strong contractor relationships, we have managed to retain a significant portion of our workforce, though we remain vigilant as the situation evolves,” Gupta said.

The concerns over migrant workers have emerged during a time when India’s real estate sector is witnessing a construction boom, with strong demand in housing, commercial office, and hospitality industries. In high-growth markets, the imbalance between demand and available skilled labour is even more pronounced.

“There has been a noticeable increase in labour costs. Skilled labour, in particular, has seen an escalation of approximately 8-10%, driven by supply constraints, higher cost of living, and intermittent disruptions in construction activity,” said Niranjan Hiranandani, Chairman of the National Real Estate Development Council (Naredco) and Founder and Chairman of Mumbai-based Hiranandani Communities.

Hiranandani added that supply-side disruptions in key construction inputs such as fuel, tiles, and allied materials have impacted site-level activity. “Lack of sufficient manpower may delay construction and completion of projects in the long run, as this is the most important pillar of real estate,” said Sachin Bhandari, Executive Director and CEO of Pune-headquartered VTP Realty, while expressing hope that the geopolitical situation would normalize and the crisis can be contained in good time.

Real estate firms typically procure manpower for their projects from contractors. In the current scenario, contractors are forced to retain labour at higher costs, developers noted. Amit Mamgain, Co-Founder and Director of Gurugram-headquartered Yugen Infra, said while labourers are moving back to their hometowns due to a spike in the cost of living, contractor networks and other labour supply mediums can manage the workforce requirements within the industry.

While the impact is evident, it may vary depending on the size of the developer and location, among other factors. Hiranandani said the labour shortages can lead to execution delays, cost escalations, and pressure on project timelines. “While organized developers are mitigating this through better planning and mechanization, the broader impact on delivery schedules across the sector is evident,” he added.