US-Iran Tensions Surge: Real Estate Projects Face 25% Cost Increase and Delays

Escalating geopolitical tensions in West Asia, particularly the ongoing conflict environment between the United States and Iran, are beginning to impact India's real estate sector in a significant way. Builders and industry experts warn that disruptions in global supply chains have driven construction costs up by more than 25 percent, threatening project timelines and increasing the likelihood of higher home prices.

The sharp rise in crude oil prices, escalating transportation costs, and shortages of critical construction materials have collectively placed immense pressure on developers across the country. Industry leaders fear that if the situation persists, both residential and commercial projects could face prolonged delays.

According to Shekhar Patel, National President of CREDAI, the industry's biggest challenge is no longer just rising prices but the availability of essential materials. He noted that several key construction inputs have become difficult to procure despite developers being willing to pay higher prices.

The impact is being felt across multiple product categories. Prices of tiles, paints, PVC pipes, aluminium formwork systems, and waterproofing chemicals have surged sharply. Industry sources indicate that waterproofing chemicals alone have witnessed price increases of up to 50 percent. In addition, shortages of admixtures, sealants, and adhesives are disrupting construction schedules.

Transportation has also become a major concern due to rising fuel costs and disruptions in global shipping routes. Labour shortages are compounding the problem, as many workers have returned to their hometowns amid economic uncertainty and logistical challenges.

Recognizing the extraordinary circumstances, CREDAI has urged the Union Ministry of Housing and Urban Affairs to classify the current situation as a force majeure event. The organization has also requested state Real Estate Regulatory Authorities (RERAs) to grant project deadline extensions ranging from three to six months.

For homebuyers, the consequences could be significant. Industry estimates suggest that developers may be forced to increase prices of newly launched projects by 8 to 13 percent if construction costs remain elevated. Affordable housing projects are expected to be the most affected, while buyers who have already booked homes may experience delays in possession and handover schedules.