As the Iran war drags into its fourth week, India’s real estate sector is beginning to feel the heat, grappling with supply constraints in raw materials that could potentially delay project deliveries. While industry experts say there is no direct impact yet, a prolonged conflict could have far-reaching consequences.
Parveen Jain, president of the National Real Estate Development Council (NAREDCO), said construction costs are rising due to the sector’s heavy reliance on energy and logistics, along with emerging supply-side constraints in key materials.
“Investor sentiment and capital deployment are also turning more cautious. The impact is indirect for now, but if the situation persists, costs could rise further and project timelines may get stretched,” he said.
Last week, Finolex Cables told TNIE that the industry is witnessing shortages of raw materials such as PVC and steel, although the company is yet to feel the full impact. S Sridharan, chairman of Sabari & Lyra Properties and executive committee member at Credai National Delhi, said developers have so far refrained from raising prices by relying on existing inventories.
“The electrical segment is the worst affected. Prices of cables, conduits, PVC and CPVC pipes could rise by nearly 25% due to elevated crude prices,” he said.
PVC, a byproduct of crude oil, saw prices surge 40-50% since February 28, though they are currently hovering around $104.
Jain added that input costs have risen across the board. “Steel and cement costs are up due to higher transportation expenses. Prices of PVC pipes and fittings are increasing with petrochemical costs, while wires and cables are becoming costlier due to rising copper prices. Materials such as glass, tiles, ceramics and sanitaryware are also seeing price increases,” he said.
Developers are also beginning to face supply-side challenges as the conflict continues. Anantharam V. Varayur, co-founder of Manasum Senior Living, said some disruptions are emerging, though not all are driven by actual shortages.
“In certain cases, supply appears to be tightening at the vendor level, possibly with pricing in mind. We are staying closely engaged with suppliers to avoid delays,” he said.
He added that input costs are showing an upward trend. “The increase is not uniform, but there is clear pressure on overall construction costs. For now, we are absorbing the impact, but it adds complexity to ongoing projects,” he said.
The sector has also been hit by the shutdown of ceramic units in Morbi in recent days, which is expected to disrupt tile supplies.
“Tile supply will be impacted. There is some inventory available and limited production continuing with existing fuel stocks,” Sridharan said.
The crisis is likely to weigh on companies’ revenues and profits in the coming quarters, as rising input costs squeeze margins. While selective price hikes may offer some relief, developers may find it difficult to fully pass on higher costs to buyers.
Margin pressures could also make developers more cautious about launching new projects, particularly in the affordable housing segment.