Construction cost in Hyderabad least among top six cities

​Hyderabad: The average cost of construction for a residential apartment in a mid-rise building in Hyderabad is pegged at Rs 2,375 per sft, whereas, Mumbai is termed the costliest with an average cost of Rs 3,125 per sft, said a real estate consulting firm.

According to CBRE South Asia’s recently released report titled – India Real Estate – Variance in Construction Costs, Mumbai remains the most expensive among the six leading cities in India, while construction costs in Chennai and Bengaluru are almost at par, as are those in Delhi and Pune, whereas Hyderabad has the least cost. 

The report further assumes the variation in costs to different demand levels, proximity to supply centres as well as the efficiency of logistics networks across these cities. Moreover, engineering costs too vary in accordance to the region. 

In Hyderabad, the cost of construction of a Grade A office is Rs 2,375 per sft, a shopping complex or multiplex is Rs 3,895 per sft, a five-star hotel including FF&E is Rs 11,400 per sft and the cost of constructing a heavy industrial structure is Rs 4,085 per sft.

Besides, the report attributes the implementation of Goods and Services Tax (GST) has brought down the overall construction costs to a certain extent. Wherein, to assess the impact of GST on construction costs, the firm compared pre-GST taxation rates with the current system.  “The implementation of GST has come as a breather for the real estate industry. Aimed at introducing country-wide uniform taxation, GST has enabled builders to source materials from only registered suppliers in a transparent manner. While the impact on taxation on various works components was found to be varied, GST seems to have managed to scale down the overall construction costs to a certain extent,” the consulting firm stated.

Hence, despite a continued rise in construction costs, the consulting firm observes a growth curve in the chart of India’s real estate activity. It further added that the price of cement has nearly tripled in the past 16 years and the cost of structural steel has doubled between April 2005 and November 2017. Despite this, the overall stock of developed real estate in leading urban centres is expected to reach 8.2 billion sft by 2025 and will provide employment to nearly 17 million people.

Anshuman Magazine, Chairman, India and South East Asia, CBRE, said: “The construction sector is one of the largest employment generators and has strong linkages with various industries. We foresee strong growth for the sector over the next five years, owing to a thrust from the real estate and infrastructure sectors. Already, the implementation of GST has impacted the cost of raw materials and streamlined inter-state and import taxes, giving the industry a major boost.” Going forward, CBRE foresees technology to play a dominant role in the realty sector, with the potential to transform the way building assets will be designed, constructed and operated in the future.