Building malls now needs deeper pockets as construction costs rose 13.9%

New Delhi: Construction costs for malls have risen a record 13.9% over the past two years, driven by upgraded facade designs, addition of multiple basement levels and costlier mechanical, electrical and plumbing (MEP), along with related expenses.

The luxury housing segment followed with a 12.8% increase, while mid-market residential projects saw an 11.9% rise, as developers invested in improved amenities, according to Savills India.

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The affordable residential segment saw an increase of 11.1% in costs, reflecting continued demand-led pressures. In contrast, commercial office (7%), hospitality (6.5%) and grade-A warehousing (5.8%) registered moderate increases, while general manufacturing (3.8%) reported the lowest growth, suggesting relatively stable construction cost conditions.

"As development activity accelerates across office, residential, retail, and industrial and logistics sectors, construction cost dynamics are becoming increasingly strategic. Input volatility and execution challenges are prompting developers to prioritise efficiency, sustainability and robust planning as key differentiators in driving long-term value," said Arvind Nandan, managing director, research and consulting, Savills India.

As per data from IMARC Group, India's construction market, valued at $685 billion in 2025, is projected to grow to $1.2 trillion by 2034 at a compound annual growth rate of 6.9%. The growth is primarily driven by sustained infrastructure investments, urban development and expansion across office, residential, manufacturing and logistics sectors.