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How We Can Construct A Home at A Low Cost In Mumbai?

How We Can Construct A Home at A Low Cost In Mumbai?

The cost of construction is the highest among asset classes in Mumbai as compared to other metros cities. It is mainly due to the high prices of primary construction materials such as cement, reinforcement steel, structural steel, and stones.

Mumbai's construction cost is 14% more than Hyderabad and Chennai. According to Construction Cost Guide Book, an analysis guidebook by JLL, taking into account other metros like Delhi, Mumbai, Bengaluru, Pune, has an overall average cost increase of 10%. It highlights the construction cost of real estate property in key markets of Mumbai. And includes a cost matrix representing different style and quality levels, analyzing the market trends of primary building materials.

  1. When we see Chennai and Hyderabad construction cost, there is a slight difference between Chennai and Hyderabad. Chennai has the lowest average construction cost, which is about 14% less than Mumbai. The impact of COVID-19 on market benchmarking rates across asset classes has been neutral to significant.
  2. As we advance, we see the cost as one of the key drivers in real estate decisions. Many companies today are rethinking their real estate options to optimize spending. While the pandemic's actual impact on construction costs is still being discussed and debated, and still the general trend is not absolutely clear that construction costs are going up. Customer spending is going to be more directed towards those aspects that lead to a better Client experience. The average cost of construction of residential apartments in Mumbai and other locations in high-rise and mid-rise buildings in major cities are as below.
  3. The average construction cost in Mumbai is around Rs 5,625 per sq ft for a luxury residential apartment in a high-rise building. At the same time, the price will be Rs 4,950 per sq ft and Rs 4,905 per sq ft in Pune and Delhi, respectively. At the same time, such a house would command Rs 4,275 per sq ft in Hyderabad. Here we get a mid-rise luxury apartment in Mumbai that will cost around Rs 3,875 per sq ft and Rs 3,410 per sq ft in Delhi. Here we see the estimated cost of construction of a commercial building in a high-rise and medium-rise building in major cities. The cost of construction of a medium-rise commercial building in Mumbai would be Rs 3,250 per sq ft. The price would be Rs 2860 per sq ft, Rs 2470 per sq ft in Delhi, and Rs 2470 per sq ft for constructing a similar property. A medium-rise commercial building construction cost in Delhi and Pune is almost identical.
  4. We see that the construction cost in Mumbai of a high-rise commercial building is Rs 3,875 per sq ft. The construction cost of Pune and Delhi, respectively, is around Rs 3,410 per sq ft and Rs 3,379 per sq ft in. The guidebook states that the lowest price of building a high-rise commercial property in Hyderabad is Rs 2,945 per sq ft.

 

1):- Maharashtra construction cost using Contractors  (Materials+Labours outsourced)

Area of construction

670 sq ft

Construction Estimate

1088750 Rs

Cost per sq ft

1625 Rs

 

2):- Maharashtra residential estimate construction cost based on quality - construction cost using Contractors (Material + Labour outsourced)

Type

Average Quality

Good Quality

Best Quality

Area of construction

670 sq ft

670 sq ft

670sq ft

Construction Estimate

9,71,500 Rs

10,88,750 Rs

13,06,500Rs

Cost per square feet

1450 Rs

1625 Rs

1950 Rs

 

3):- Maharashtra estimates construction cost (If we buy material and only labour outsourced)

Area of construction 

670 sq ft

      Construction estimate

13,00000 Rs

Cost per sq ft

1300 Rs(excluding labour)

 

4):- Maharashtra Commercial Building Construction Cost (Material + Labour outsourced)

Area of construction

670 sq ft

Construction estimate

770500 Rs

Cost per sq ft

1150 Rs


 

Impact of COVID 19 on construction cost

  1. The impact of COVID-19 on market benchmark rates across asset classes has been neutral to significant. Existing greenfield and interior fit-out projects have had a significant cost impact of 5-6%, primarily driven by procurement challenges, which may have led to sellers procuring higher prices from previously available sources. And there has been an increase in the cost of security (quarantine facility, sanitation, installation of thermal scanners, etc.), availability of skilled labour etc.
  2. The significant impact on services, particularly due to long lead to imported goods with limited local material sourcing. The cost impact for new projects taken up in the recent past is in the range of 2-3%. It added challenges like sluggishness of plants and machinery and heavy competition in the market and forcing the contractors to reduce their margins to bid for new projects.
  3. Factors affecting construction cost are including increased material and transportation costs (due to demand for material, non-availability and transportation challenges). Once the supply chain is restored, prices are expected to return to normal.
  4. The additional cost is borne for following - the COVID-19 protocol in the work and labour camps, Due to prolonged idleness and market competition, contractors are reducing profit margins, plant and machinery costs. However, the overall delta will be 2-3%for new projects and 5-6% for existing projects as material and transportation meet 50-60% of the total cost. 


Some other factors about Mumbai real estate

  • Everybody knows Mumbai is the most expensive among the six major cities in India. It suggested variations in the cost of manufacturing items at different demand levels, proximity to supply centres, logistics and transportation efficiency.
  • On the bright side, the report mentions that implementing the Goods and Services Tax (GST) will stabilize the cost of construction. Taking the total stock of developed real estate in major cities of the country to 8.2 billion square feet by the end of 2025 will probably employ about 17 million people.
  • The implementation of GST has come as a relief to the real estate industry. With an aim to introduce uniform taxation across the country, GST has enabled builders to procure materials transparently only from registered suppliers.

 

The cost of building a house can be mainly divided into the following categories.

Land Cost: Cost of owning a land parcel for building a house in Mumbai.

Design cost: This includes architectural, structural and mechanical, electrical, and plumbing (MEP) design.

Licensing cost: It includes tax for government approvals such as land surveys, plan approvals, etc.

Material purchase cost: It includes purchasing materials such as cement, steel, sand, aggregate, bricks, blocks, tiles, and other finishing materials.

Labour cost: It includes manpower estimate cost for construction of (reinforced cement concrete) RCC structure, brickwork, plastering, other finishing works, and exterior development (such as a compound wall, hardscaping, and landscaping).

 

How you can reduce construction costs in Mumbai

India is a country where every family dreams of living in their own home. But with the current rise in land cost, construction material prices, and labour charges, it is becoming increasingly difficult for middle-class families to fulfil their dream of living in their own homes. That's why we thought of putting forward some tips that can be helpful for such families in building their dream home.

  1.  Choose Plot size wisely according to construction ideas.
  2.  When the construction has started, do not make changes after.
  3.  You must consider a good save on finishing materials by direct purchasing.
  4.  You should buy construction materials from local vendors.
  5.  Save on Machinery Cost by just ensuring not to idle it.
  6.  You should choose the right size of the house.
  7.  Reduce the number of walls according to the need

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