August 19, 2025: Mumbai has emerged as the costliest market for real estate construction in India, with luxury housing construction costs crossing Rs 5,000 per sq. ft—far higher than cities such as Kolkata, where budget housing begins at Rs 1,500 per sq. ft. Data shows that the average construction cost of residential projects across India has climbed nearly 40% between 2019 and 2024, with the sharpest rise occurring after 2021 due to inflation, supply chain issues, and rising infrastructure demand.
In tier-1 cities, the cost of Grade A projects increased from Rs 2,200 per sq. ft in October 2021 to Rs 2,800 per sq. ft by October 2024, a jump of 27.3% in three years. For Mumbai developers, however, the impact is even greater because of the city’s already high land and compliance costs.
The rise in raw material prices has been a key factor. Steel and cement became 30–57% more expensive over five years, while copper rose 91% during 2019–2024. Labour wages surged 25% in just the last year and have risen 150% since 2019, putting additional pressure on builders. Fuel-driven logistics costs and higher approval charges have further strained budgets.
Homebuyers in Mumbai are directly impacted. Housing prices in the city have risen 9–12% annually in recent years, with affordable housing buyers hit the hardest. A hike of Rs 500–Rs 800 per sq. ft can translate into Rs 5–8 lakh more for an apartment, making homeownership increasingly difficult for middle- and lower-income households.
According to ANAROCK Research, the share of affordable housing in new project launches has collapsed from 40% in 2019 to just 12% in early 2025, while its sales share has dropped to 18%. In contrast, luxury housing remains relatively insulated, with higher costs often adding to the project’s premium.
Analysts warn that without regulatory relief—such as the proposed cut in GST on cement from 28% to 18%—Mumbai’s affordable housing goals risk being pushed further out of reach.
Source: Storyboard18
