The Indian construction industry is a vital pillar of the nation’s economic fabric and has exhibited remarkable resilience in the recent years. It has strategically navigated through adversity post-pandemic and showcased adaptability and innovation in response to evolving circumstances. According to industry estimates, the construction industry is experiencing an upward trend in India and is set to reach $1.4 trillion by 2025. This growth is propelled by government initiatives, changing consumer preferences and significant technological advancements.
Over the past two years, India has demonstrated notable enhancement in its supply-chain efficiency, adapting effectively to global disruptions and diverse regulatory environments. While input expenses have generally decreased owing to the decline in global raw material prices, there has been a minor increase in labour costs. The rise in construction expenses can be attributed to a combination of elements such as the escalating cost of goods and services, higher wages to compensate for rising consumer goods prices and the surge in labour wages necessitating changes in existing project models. Additionally, increased fuel prices have led to a decrease in the production of major building materials like steel, aluminium and cement, resulting in higher costs for contractors due to supply-demand mismatch.
As the construction industry evolves to address labour cost through strategic improvements in operational efficiencies, technological leverage and skill development, it naturally sets the stage for the next wave of transformative trends. This deliberate shift towards tech, innovation and sustainability is not just a response to immediate challenges but a proactive alignment with the future. It’s within this context that the industry’s digital transformation and technological integration gain momentum, marking a pivotal turn towards harnessing technology’s potential to redefine construction processes and outcomes.
Transitioning to trends influencing the future
Artificial Intelligence (AI) in India’s construction sector is reshaping traditional practices. It is enhancing project management, optimizing resource allocation and minimizing delays. Further, the integration of robotics and automation is streamlining construction processes, from bricklaying to repetitive tasks, enhancing efficiency and reducing labour costs. Overall, these technological advancements are revolutionizing the construction landscape in India, fostering better project outcomes, cost-effectiveness and collaboration among stakeholders.
As the industry pursues numerous infrastructure projects and expansive real estate developments, the challenges surrounding the availability of skilled workforce have become even more pronounced in this technological era. Consequently, skilled labour shortages have emerged as a pervasive issue, impeding ongoing projects nationwide and intensifying the struggle to meet critical manpower requirements.
To address this issue, employers today are adopting innovative recruitment strategies. They are actively collaborating with vocational training institutions and educational partners to promote career prospects in the construction industry. Also, companies are resorting to increasing wages, benefits and incentives. As a result, average hiring costs for skilled, semi-skilled and unskilled labour have witnessed an annual increase in the second half of the last year. These forward-thinking initiatives by the employers are not only fueling the growth of the real estate industry but are also paving the way for increased employment opportunities and skill development.
Sustainable construction practices
Sustainability is also emerging as one of the important key trends, with the sector embracing practices that ensure environmental responsibility and resilience against climate change. The global shift in workplace behaviour has resulted in new ways of thinking about the construction of offices. Companies are now adopting hybrid work models and spaces with a blend of flexible and event spaces. Likewise, many companies have set net-zero carbon targets, expanding real estate sustainability strategy beyond energy savings to include decarbonization and Environmental, Social and Governance (ESG) criteria. The construction sector is also shifting towards sustainability, focusing on resilient infrastructure capable of withstanding climate change and natural disasters.
Flexible designs, advanced materials and real-time monitoring through smart technologies are becoming essential. Flight-to-quality remains a major driver as occupiers look to right-size portfolios in higher-quality space. Currently, many firms seek to incorporate flexible design with a focus on increasing multipurpose collaborative and community spaces and standardizing offices to a single universal size to manage growth and promotions. Hence, the companies today are shifting towards sustainability in the workplace and are optimizing resource utilization, minimizing waste, and enhancing energy efficiency during the construction phase. Additionally, the trend of sustainable workplace practices is not only aligning with environmental conservation, but it is also contributing to cost-effectiveness by reducing the need for excessive materials and optimizing construction processes.
Looking ahead, the emphasis on sustainable fit-outs is poised to become a central component of corporate real estate strategy. This evolution reflects a broader recognition that sustainability is a critical factor in how spaces are acquired, developed, and managed. Furthermore, as technology continues to shape occupier requirements, the cost associated with fit-outs—especially in premium markets like Mumbai, Delhi, Bangalore, and Hyderabad—has seen a noticeable uptick. Despite the initial higher costs of sustainable materials and technologies, their long-term benefits, such as improved energy efficiency and durability, present a compelling case for their adoption. These investments not only contribute to achieving ESG commitments but also promise significant cost savings over time, reinforcing the strategic value of sustainable construction practices in today’s rapidly changing workplace environments.
Despite the challenges within the construction sector, a promising outlook for stabilising construction costs is on the horizon, buoyed by a blend of advantageous factors. The industry is strategically navigating through labour shortages, volatile material costs and supply chain disruptions by harnessing government incentives and embracing technological breakthroughs. This proactive approach signifies a shift towards a future marked by stability and sustainability.
The confluence of evolving market dynamics, strategic industry adjustments, cutting-edge technological developments and favourable governmental policies is set to play a pivotal role in moderating construction costs. Together, these elements forge a path toward a more predictable and resilient construction landscape, ensuring the sector’s sustained growth and adaptability to future challenges.
Anshuman Magazine, Chairman & CEO – India, South-East Asia, Middle East & Africa, CBRE
