How the Iran-Israel conflict is driving up homebuilding costs in Mumbai, NCR and Bengaluru

Iran-Israel war effect: Rising steel prices set to make homes costlier in India, construction cost to go up

• Steel up 20%, construction costs rise in India
• Mumbai high-rise costs up Rs 50 per sqft due to steel price hike
• Delhi-NCR and Bengaluru also face rising construction expenses

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The ongoing Iran–Israel conflict is beginning to ripple through India’s real estate sector, with rising steel prices emerging as a key pressure point for developers, particularly in high-rise and luxury housing segments.

According to estimates by ANAROCK, steel prices have surged by nearly 20 percent to around Rs 72,000 per ton, driven by supply disruptions, higher shipping costs and war-related logistics challenges.

This sharp increase is already translating into higher construction costs across major cities. In Mumbai—India’s largest high-rise market—the spike in steel prices alone is adding roughly Rs 50 per sqft to construction costs. Industry observers said that developers are likely to see similar cost pressures in other key micro-markets such as Delhi-NCR and Bengaluru.

Steel accounts for a significant share of high-rise construction making it one of the most sensitive inputs to global price fluctuations. Experts said that the current surge is largely being driven by supply chain disruptions, rising freight costs and energy-linked inflation triggered by geopolitical tensions.

Prashant Thakur, Executive Director & Head - Research and Advisory, ANAROCK Group, said that the Strait of Hormuz blockade since early March 2026 has hit the sector hard with rising material costs, supply delays - and potentially delayed and even stalled projects.

“At a very rough estimate, this adds approximately Rs 50 per sqft to the cost of building high-rises in Mumbai, which currently has well over 10,000 luxury units under construction. Skyscrapers use ribbed steel rods embedded in concrete to give it tensile strength, and this added cost has a direct correlation to the cost and speed of constructing them,” he said.

Thakur added that diesel for construction cranes and mixers is heavily associated with over $100 price of Brent crude. This price shock will reflect significantly on construction sites in Mumbai, Delhi-NCR, Hyderabad, and other high-rise-centric cities around the country.

The cost of hot rolled coil now hovers at Rs 51,000-56,000 per ton and may hit Rs 62,000 by June if the situation does not change for the better, he said.

Ripple effect across NCR and Bengaluru

Market observers said that similar cost pressures are now being felt across other high-rise-heavy markets such as Delhi-NCR and Bengaluru.

According to market analysts, in Delhi-NCR, where luxury and high-rise developments dominate key corridors like Gurugram and Noida, construction costs are expected to rise by Rs 40–Rs 60 per sqft. Projects with higher steel intensity—such as luxury towers with glass façades and complex structural designs—could see sharper increases.

In Bengaluru, where mid- to high-rise residential developments are common, the impact is expected to be slightly lower but still significant, with costs rising by Rs 30–Rs 50 per sqft.

Thakur said that at a time when housing sales were already tapering, Indian developers are now confronted with an even starker landscape and must find new ways to weather the intensified storm.

Short-term disruption, long-term watch

Industry bodies, however, maintain that the current impact remains limited and largely transitional.

Shekhar Patel, President of Confederation of Real Estate Developers Associations of India (CREDAI), said that the Indian real estate sector remains largely stable despite the evolving geopolitical situation.

“At present, only temporary supply chain disruptions are being observed due to global energy volatility. Certain clusters, such as the marble and tile-manufacturing hub in Morbi, Gujarat, are experiencing short-term challenges owing to fuel supply constraints and elevated logistics pressures. These, however, are transitional in nature,” he said.

Patel, however, added that if the situation persists for a month or longer, it may begin to reflect in input costs, leading to a gradual impact on overall pricing.