Hormuz blockade drives up construction costs, threatens delays in India’s realty sector
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The ongoing disruption in the Strait of Hormuz is beginning to weigh heavily on India’s real estate sector, with soaring input costs, shipping delays and supply chain disruptions threatening project timelines, particularly in the luxury housing segment, according to a report by Anarock Group.
A blockade in the key waterway has forced vessels carrying construction materials to reroute via the Cape of Good Hope, adding 10–20 days to transit time and increasing freight costs by ₹1.5–3.5 lakh per container. The impact is being compounded by elevated marine fuel prices, now hovering around ₹1 lakh per tonne, along with additional war-risk premiums and insurance surcharges.
“The Strait of Hormuz blockade since early March 2026 has hit the sector hard with exploding material costs, supply delays — and potentially delayed or stalled projects,” said Prashant Thakur, Executive Director and Head, Research and Advisory at Anarock Group.
Surge in input costs
Steel prices have risen nearly 20% to ₹72,000 per tonne, adding roughly ₹50 per sq ft to high-rise construction costs. This is significant for cities like Mumbai, where more than 10,000 luxury housing units are currently under construction.
Other key materials are also witnessing sharp inflation. Aluminium prices have climbed to about ₹3.5 lakh per tonne amid production disruptions in Gulf countries, while bitumen prices remain elevated at ₹48,000–51,000 per tonne. Imported luxury materials such as Italian marble are now costlier by ₹50–150 per sq. ft due to higher logistics expenses.
Rising crude prices, with Brent crude trading above $100 per barrel, are also pushing up diesel costs, further increasing expenses for construction equipment and on-site operations.
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Supply chain disruptions deepen
Shipping bottlenecks and route diversions have significantly increased the cost of Gulf-linked cargoes, with cumulative surcharges now ranging between ₹2 lakh and ₹3.5 lakh per container. Disruptions in maritime routes through the Red Sea are adding to delays and uncertainty.
Even if the conflict eases, industry experts expect a lag of 2–8 weeks for shipping congestion to clear, while elevated freight and insurance costs may persist due to existing contracts.
Luxury housing faces maximum impact
The impact is expected to be most pronounced in premium real estate hubs such as Mumbai Metropolitan Region, particularly micro-markets like Worli, South Mumbai, BKC and Lower Parel, where high-rise and ultra-luxury projects dominate.
India’s ultra-luxury housing segment, defined as homes priced above ₹40 crore, saw 59 transactions worth about ₹4,754 crore in 2024, with Mumbai accounting for nearly 88% of both volume and value.
Despite rising construction costs, developers expect limited impact on demand in this segment, as affluent buyers are relatively insulated from price increases. Most developers anticipate price hikes of over 5% to offset rising costs.
NRI demand faces headwinds
Non-resident Indians (NRIs), who contribute 15–22% of high-end housing sales in cities like Mumbai and Delhi, and up to 30% or more of total sales value in premium projects, may, however, be impacted by travel disruptions linked to the ongoing conflict.
Limited flight availability and logistical challenges could delay site visits and purchase decisions, potentially affecting deal closures in the near term.
Sector outlook remains uncertain
The crisis comes at a time when housing demand was already showing signs of moderation and construction costs have risen sharply over the past few years. Developers now face the dual challenge of managing cost inflation and maintaining project timelines.
Even in a best-case scenario, a full normalisation of global shipping could take one to three months, potentially disrupting construction schedules through the year.