Strait of Hormuz disruption pushing south Mumbai real estate cost: Report

The ongoing disruption around the Strait of Hormuz amid the West Asia war is beginning to impact real estate sector in parts of the world including Indias financial capital in Mumbai the industry experts sayAccording to a research the developers are facing delays of 1020 days for shipments of construction materials as vessels are being rerouted via longer routes This has increased shipping costs by Rs 1535 lakh per container adding pressure on ongoing and upcoming projectsKey construction materials have seen sharp price increasesIn an analytical report Dr Prashant Thakur Executive Director amp Head Research amp Advisory ANAROCK Group stated that the construction materials have seen price rise in recent time These include Steel prices have risen by around 20 per cent to Rs 72000 per tonne Marine fuel costs have surged to Rs 1 lakh per tonne Aluminium prices have climbed to approximately Rs 35 lakh per tonneThese increases are pushing up construction costs with estimates suggesting an additional Rs 50 per sq ft for highrise buildings Cities dependent on vertical development including Mumbai and Delhi are expected to feel the impact most the report statedLuxury housing faces direct impactIt stated that highend housing markets especially in areas such as South Mumbai Worli and BandraKurla Complex are likely to see the strongest effectsMumbai remains Indiarsquos leading market for ultraluxury homes priced above Rs 40 crore accounting for nearly 88 per cent of such sales in 2024 Premium materials like imported marble and fittings have become more expensive due to increased freight and insurance costsHowever experts believe that luxury buyers may absorb price hikes with developers expected to increase prices by over 5 per centNRI buyers and market dynamicsNonresident Indians NRIs who contribute significantly to luxury housing demand may also be affected Travel disruptions linked to the Gulf situation could delay property visits and purchase decisions the report statedNRIs typically account for 1522 per cent of highend housing sales and up to 30 per cent of total sales value in premium projects making them a crucial segmentWider economic impactThe crisis has also pushed up fuel prices influencing construction logistics and labour costs Over the past four years construction costs in major cities have already risen by nearly 39 per cent further tightening margins for developersEven if the situation improves quickly experts warn that cost pressures will remain for at least 13 months as shipping backlogs clear and supply chains stabiliseOutlook for 2026According to the report while the disruption may not significantly dent luxury home demand it is expected to Delay project timelines Increase overall construction costs Put pressure on midrange housing affordabilityThe situation has highlighted the need for stronger domestic supply chains and reduced reliance on imports for critical construction materials