US-Iran Tensions Could Spike Construction Costs and Delay Real Estate Projects

Real estate developers’ bodies Credai and Naredco have issued a warning that a prolonged US-Iran conflict could significantly impact the construction industry. Key materials such as steel and tiles could become more expensive due to rising fuel and freight costs, leading to increased construction costs. This, in turn, may delay project timelines and raise housing prices.

The impact is largely driven by higher crude oil prices and logistics disruptions, which are already feeding into steel and other construction inputs, putting pressure on developers’ margins. The two associations, together representing around 20,000 developers, also expressed concern about possible delays in completing real estate projects due to likely shortages of construction materials.

Parveen Jain, president of NAREDCO, stated that the ongoing tension in the Gulf region is beginning to reflect in the real estate sector, mainly through shortages of construction materials and price increases. “Key materials such as steel, PVC products, wires, pipes, and even glass are currently in short supply. In addition, segments like ceramic manufacturing have been impacted due to fuel-related challenges,” he said. He further noted that if the conflict continues for a longer period, it could lead to further increases in construction costs and may affect project timelines.

Shekhar Patel, national president of Credai, commented that the Indian real estate sector remains largely stable despite the evolving geopolitical situation, with no significant impact on construction activity as most key raw materials are manufactured domestically. “At present, only temporary supply chain disruptions are being observed due to global energy volatility. Certain clusters, such as the marble and tile manufacturing hub in Morbi, Gujarat, are facing short-term challenges due to fuel supply constraints and heightened logistics pressures. These, however, are transitional in nature,” he said. However, “if the situation persists for a month or longer, it may begin to reflect in input costs, leading to a gradual impact on overall pricing,” he added.

Earlier, an analysis by Anarock had indicated that the Strait of Hormuz blockade since early March has impacted the real estate sector by driving up material costs, disrupting supply chains, and heightening the risk of delays or stalled projects. Rising ribbed steel rod prices are expected to weigh on construction in high-rise markets like Mumbai, Delhi-NCR, and Hyderabad, while also pushing up luxury housing prices, with developers likely to raise rates by over 5%.

The real estate sector is closely monitoring the situation, as prolonged disruptions could have far-reaching effects on the industry, affecting both developers and homebuyers. Developers are exploring alternative sourcing options and cost management strategies to mitigate the potential impact on their projects and maintain stability in the market.