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Escalating conflict in West Asia is starting to put cost pressures on India’s real estate sector, with material prices rising and industry leaders warning of a potential 5% rise in construction costs if hostilities continue into April.
Construction plans are also likely to be affected due to shortages of materials and resources if the conflict drags on.
Harshavardhan Neotia, chairman of Ambuja Neotia Group, said the crisis is triggering a “classic cost-cutting cycle” for real estate, with oil moving from below $70 in February to well above $110-120 a barrel in March and natural gas seeing sharp jumps.
“Initial pressure is already evident in steel, logistics and petrochemical-related materials. If this continues, construction costs could increase significantly in the next 1-2 quarters, which may impact future prices,” Neotia said.
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Sushil Mohta, president of CREDAI West Bengal and chairman of Merlin Group, gave an immediate warning. “If the war continues even in April, construction costs will immediately rise by 5 percent. Construction plans will also be derailed due to shortage of construction materials,” he told PTI.
Mr Mohta also pointed to longer-term risks, warning that a protracted conflict could dampen India’s wider economy, with real estate, which is highly dependent on overall economic conditions, facing slow sales and leasing along with higher costs.
In practice, construction steel prices have already seen a sharp increase. TMT steel prices rose around 20% in some markets, jumping from around ₹62,000 to ₹72,000 per tonne between February and March, with broader reports pointing to an 18-25% increase in the last 2-3 months, realtors said. Cement prices have remained relatively stable at 0-5% movement, although demand pressure is building, reflected in 10.7% growth in cement production in January 2026.
Mahesh Agarwal, managing director of Purti Realty, said his company has yet to raise prices but is closely monitoring developments.
“Rising input costs, especially in energy, steel and cement, are the challenges currently facing the real estate industry. We aim to continue to maintain stability and transparency for our customers,” he said.
Meanwhile, in its latest outlook for the infrastructure construction sector, rating agency ICRA identified geopolitical tensions in West Asia as key factors pushing bitumen prices. These prices are expected to impact the operating profitability of construction companies. ICRA expects operating margins to remain in the range of 10.3-10.8% in FY2025-26 and 10.1-10.6% in FY2026-27 – a sharp decline from the 13.0-14.0% levels recorded in FY2020-21.
ICRA, however, expects construction companies’ revenue growth to recover to 6-8% in FY2026-27 compared to an estimated 2-4% in FY25-26, supported by a pick-up in Jal Jeevan Mission projects and a gradual recovery in road project procurement. Order inflows are expected to grow by around 10 percent in FY2026-27.
Suprio Banerjee, Co-Group Director, Corporate Ratings, ICRA, noted that EPC companies with West Asian exposure are also expected to face pressure on execution momentum due to ongoing geopolitical challenges.
Diversified EPC players are better positioned, with expected revenue growth of 8-10% in FY2026-27, while road-focused entities continue to face pressure to add orders and intense competition, he added.
Published – April 1, 2026 11:07 AM IST
