In Q3 2022, year over year, the cost of greenfield development climbed by 5% to 7% overall.
Hyderabad: The year 2022 saw a rise in material costs as a result of manufacturing being reduced owing to the pandemic and rising transportation costs worldwide brought on by supply chain constraints. In Q3 2022, year over year, the cost of greenfield development climbed by 5% to 7% overall.
The top real estate consulting company in South Asia, CBRE South Asia, released the findings of its report, “Project Management 2.0 – Driving Value in the “New Normal” Era,” which analyses the current market environment and considers the variables influencing cost trends across significant asset classes.
The CBRE expects the trend to continue until the end of 2022. During the quarter, labour costs rose by 8% to 10% and reinforcing steel prices by nearly 20%. Looking ahead, however, it is generally believed that inflationary pressures will decrease in 2023.
This might help to prevent price increases in materials by addressing supply chain issues and stepping up government policy action. The research also emphasises that, despite forecasts for a slowdown in total cost growth in the upcoming quarters, cost pressures are likely to remain for the foreseeable future.
It is projected that material costs may moderate in 2023 despite persistent geopolitical complications, with an expectation of longer-than-usual lead times for material deliveries and short-term labour shortages
The forecast for construction costs is still stable but cautious due to market volatility, monetary tightening, ongoing high inflation, a potential for a recession in developed nations, and upcoming problems brought on by geopolitical unrest. These factors are all expected to prevail in 2023. As a result, CBRE predicts a little increase in building costs overall in 2023 across all cities, with Mumbai expected to see a larger increase.
