The ongoing Middle East conflict has had major ramifications for global equity and oil markets. But soon, it will start reflecting on your house purchase as well, particularly in the city of Mumbai.
According to a report from Anarock, the ongoing maritime disruptions due to the Iran War have added 10 to 20 days of transit time for construction materials, thus driving up shipping costs by Rs. 1.5 to 3.5 lakh per container. With marine fuel prices also surging to Rs 1 lakh per tonne, the total war-risk and rerouting surcharges are piling an additional Rs 2-3.5 lakh per container on Gulf-linked cargoes.
This logistical challenge is weighing on raw material prices, with steel prices jumping approximately 20% to Rs 72,000 per tonne. For developers, this translates to a rough increase of Rs 50 per square foot in high-rise construction costs.
This is quite significant in the context of Mumbai, where there are currently more than 10,000 luxury units under construction, spread across the city, Anarock added.
The cost spikes come at a sensitive time for the high-end property sector. In 2024, India recorded the sale of 59 ultra-luxury homes, totalling about Rs 4,754 crore. An ultra-luxury home typically refers to properties priced above Rs 40 crore. Mumbai dominated this elite segment, accounting for roughly 88% of both the units sold and total value.
Another problem for the real estate sector is demand, which is often heavily reliant on Non-Resident Indians (NRIs). Global travel disruptions tied to the Middle East conflict are affecting NRI buyers, who traditionally contribute 15% to 22% of high-end property sales in cities like Mumbai and New Delhi.
In premium and luxury projects, NRIs account for up to 30% or more of the total sales value. As developers absorb these costs, the price tag for an exclusive pin code in South Mumbai is likely to climb even higher, at least in the near future.
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