Land, demand fuel 59% surge in top 7 Indian housing markets

Land, margins and market pricing — not bricks and cement — are driving India’s housing costs, as a survey by Anarock data shows. Building a home in India’s top seven cities got a lot more expensive over the last five years — but buying one got expensive nearly twice as fast.

Between 2021 and 2025, the average cost of constructing a standard-plus residential project rose 34 per cent, from ₹2,681 to ₹3,604 per sq ft — a compound annual growth rate of about 6.9 per cent. Average residential capital values jumped 59 per cent, from ₹5,826 to ₹9,260 per sq ft, growing at roughly 12 per cent a year.

That 25-percentage-point gap is the real story: only about two-thirds of the rise in home prices traces back to construction costs. The rest comes from land, developer margins and shifting demand.

“Land prices in the major cities have risen sharply in the last five years,” said Santhosh Kumar, Vice-Chairman, Anarock Group. “Factors like infrastructure-led appreciation, demand-supply dynamics, location premiums and developer pricing have all contributed to the increase in residential capital values.”

Unlike cement, steel and labour, land isn’t counted in construction-cost figures — yet it’s now doing much of the work in pushing prices up. Anarock data shows land values across the top seven cities rose 50–120 per cent between 2021 and the first half of 2026 (an 8–15 per cent CAGR), with NCR (70–130 per cent) and Bengaluru (60–120 per cent) seeing the sharpest jumps.

“Higher land acquisition costs complicate both project feasibility and home pricing,” Kumar said, “especially in established corridors, where infrastructure improvements cause land values to rise steeply even before a project’s launch.”

On top of that, geopolitical turmoil is now squeezing builders from another direction. Middle East tensions between March and July drove an estimated 8–10 per cent rise in construction costs, with steel and fuel-linked logistics moving the sharpest — even though labour remains the single largest cost component by weight.

Steel has been the standout mover — TMT bar prices are up roughly 20%, to about ₹72,000 a tonne — while fuel and site logistics, though a small slice of overall cost, have jumped 15–20%. Finishing materials and MEP work aren’t far behind, both up 8–13% on higher import and metal costs.

Even setting aside the recent shock, buildings are simply getting more complex. Core construction costs across the top seven cities rose 13% between 2023 and 2025, from ₹1,956 to ₹2,212 per sq ft — but mechanical, electrical and plumbing (MEP) costs rose faster still, up more than 17%, from ₹672 to ₹788 per sq ft. MEP now accounts for nearly 22% of total construction cost in 2025, with Mumbai seeing the sharpest rise at 19.6%.

The 8–10% cost spike lands unevenly across the industry. Projects already launched and sold have little room to pass on higher costs, squeezing margins directly. Developers starting new projects have more room to reprice — if buyers in that segment can absorb it.

Premium and luxury housing, catering to less price-sensitive buyers, can largely absorb the hit. Affordable and mid-income housing is more exposed: expect calibrated price hikes, leaner specifications, product-mix shifts, slower launches, and a tilt toward locations with stronger pricing power.

“The Middle East tensions have caused steel, fuel-linked logistics, imported finishing materials and MEP costs to rise sharply, adding another estimated 8–10% to overall construction costs,” Kumar said. “Developers are now challenged on passing this on to homebuyers without affecting affordability and sales momentum.”

I have jointly invested in a property but my relative sold the property without my knowledge. What are the remedial measures available to recover the property? Haridas, Sharjah.

You have legal recourse as under Section 31 of the Specific Relief Act, 1963, courts can cancel a sale deed executed without proper authority. Where fraud, forgery or impersonation is involved, criminal proceedings may also be initiated under the Bharatiya Nyaya Sanhita, 2023.

For NRIs, is a single Will sufficient for Indian and foreign assets? Please clarify. Deepak Tilsani, Dubai.

Different countries have their own probate procedures, and using a single will across borders may slow down measures taken. It is suggested to have separate Wills, one for Indian assets and another for assets abroad.

That way, the executor dealing with property in India can get probate from an Indian court and overseas executor won’t need to chase Indian authorities.