The rising geopolitical tensions around the Strait of Hormuz are a serious reminder of how interconnected global energy routes and domestic economic sectors have become. Nearly 20% of the world’s oil trade passes through the Strait of Hormuz, making any disruption in the region immediately significant for energy-import-dependent economies such as India. For the real estate and construction sector, this has direct implications on input costs, logistics, manufacturing, and project execution timelines.
Construction is highly sensitive to fluctuations in energy and commodity prices. Escalation in crude oil prices impacts transportation and manufacturing costs across the value chain. We are already witnessing pressure on key construction materials such as steel, copper, aluminium, PVC products, and other energy-linked inputs. In several cases, raw material costs have seen increases of 10–12% in recent months amid supply-chain uncertainty and energy disruptions.
The impact extends beyond materials. Gas supply disruptions are affecting tile and ceramic manufacturing, leading to delays in deliveries and production cycles. Simultaneously, labour availability is becoming another area of concern as rising living costs and economic uncertainty trigger
workforce migration pressures in certain regions. Together, these factors can affect construction timelines and overall project viability.
The affordable and mid-income housing segments remain the most vulnerable because pricing flexibility in these categories is limited. Developers cannot indefinitely absorb rising costs without affecting project economics.
In this environment, the industry must move towards greater resilience and efficiency. Strategic sourcing, long-term procurement partnerships, adoption of construction technologies, precast systems, and AI-led project management tools can improve productivity and reduce waste. Equally important is policy support through faster approvals, infrastructure expansion, and rationalisation of development-related costs.
India’s long-term real estate fundamentals remain strong, driven by urbanisation, infrastructure investment, and rising housing aspirations. However, the current geopolitical climate reinforces an important lesson: future-ready real estate development will increasingly depend on operational resilience, supply-chain diversification, and disciplined execution alongside demand growth
Dr. Niranjan Hiranandani
Chairman, NAREDCO
