West Asia Conflict Drives Up Real Estate Prices in MMR by Rs 50 per Sq Ft

The real estate market in the Mumbai Metropolitan Region (MMR) is bracing for a surge in prices as construction material and logistics costs escalate due to disruptions in the Strait of Hormuz. According to a report by Anarock Group, a leading real estate services and consulting firm, the ongoing conflict has already added approximately Rs 50 per sq ft to the cost of high-rise construction. This additional burden is likely to be passed on to homebuyers, particularly in the affordable and mid-income segments.

Key construction inputs have witnessed sharp price increases. Steel prices have risen by around 20%, from Rs 62 to Rs 72 per kg, while hot rolled coil is currently priced at Rs 51 to Rs 56 per kg and is expected to increase further if disruptions persist. Aluminium, used in building facades and infrastructure such as metro stations, has climbed to Rs 3.5 lakh per tonne due to production cuts in Gulf countries. Bitumen, essential for road projects, is now priced at Rs 48 to Rs 51 per kg.

The spike in costs is primarily driven by logistics disruptions. With the Strait of Hormuz effectively blocked, shipments are being rerouted via the Cape of Good Hope, adding 6,000 to 10,000 nautical miles and delaying deliveries by 10 to 20 days. This has increased freight costs by Rs 1.5 to Rs 3.5 lakh per container, further compounded by higher marine fuel prices around Rs 1 lakh per tonne, along with war surcharges and insurance premiums.

Keval Valambhia, Chief Operating Officer of CREDAI-MCHI, a developers’ industry body, noted, “We are seeing early signs of 5–8% cost pressures, especially in energy-intensive materials and logistics. Segments like tiles and ceramics are already witnessing supply-side stress due to LPG constraints, which could have a cascading effect on finishing timelines.”

While developers and contractors are currently absorbing the additional costs, a prolonged conflict could lead to price hikes and project delays. “Even if the Gulf war ends tomorrow, a full reset will take one to three months… much of the damage to 2026 is, so to say, cast in steel and concrete,” the report stated.

An official from the Maharashtra State Road Development Corporation (MSRDC), which is executing the Missing Link project on the Mumbai-Pune Expressway and the Versova-Bandra Sea Link, commented, “As of now, contractors are managing the shortages and cost hikes. But we may face a problem down the road.”

An official from the MMRDA indicated that project costs may fluctuate based on the variation clause in the contracts, as per indices provided by the central government. However, delays and project halts may be on the horizon. “At this stage, developers are largely absorbing these shocks, but a prolonged disruption could translate into delayed execution cycles and selective price recalibrations,” said Valambhia.

The MMRDA is closely monitoring the situation and is prepared to adjust project costs accordingly. However, the long-term impact of these cost pressures remains uncertain, and the real estate market is likely to see significant changes in the coming months.