Estimated reading time: 6 minutes
YUGEN REALTY, SURAT
The ongoing war in the Middle East and rising geopolitical tensions are now beginning to have a direct impact on Gujarat’s real estate sector. Disruptions in global supply chains and increasing raw material costs have created significant pressure on the construction industry.
Prices of steel, cement, aluminium, tiles, glass, plumbing materials, and other construction inputs have risen substantially over the past few months, resulting in an average increase of 20% to 25% in project costs for developers.
According to industry experts, this is not merely a cost escalation issue; it is a factor affecting project planning, pricing strategies, and overall profitability.
Rising material costs, higher labour expenses, and financial pressures are making it increasingly difficult for developers to sell projects at previously planned prices.
Ahmedabad Gives the First Signal
Ahmedabad’s developers have already taken the first step in response to rising costs. Following a meeting of more than 400 developers organized by CREDAI Ahmedabad, it was announced that from July 1, 2026, prices of new projects would increase by up to 10%, while projects nearing completion would see price increases of up to 5%.
This means that a home priced at ₹50 lakh could become costlier by ₹2.5 lakh to ₹5 lakh, while a property worth ₹1 crore may see an increase of ₹5 lakh to ₹10 lakh.
Ahmedabad’s decision is being viewed as an important indicator for the entire Gujarat real estate market.
Industry data suggests that sharp increases in plumbing, metal, and aluminium prices have had a particularly significant impact on overall construction costs.
Direct Impact of Cost Inflation in Surat
In Surat, construction costs have increased by approximately ₹200 to ₹300 per square foot. As a result, a 1,200 sq. ft. apartment now carries an additional cost burden of around ₹3 lakh, while a 1,800 sq. ft. apartment may cost approximately ₹4.5 lakh more, and a 2,400 sq. ft. apartment could see an increase exceeding ₹6 lakh.
This rise in costs is expected to directly affect the pricing of newly launched projects. Developers are currently facing the challenge of completing projects that were sold based on older cost estimates while dealing with substantially higher construction expenses.
Pressure on Ongoing Projects; New Launches on Hold
For the past three to four months, the construction industry has been absorbing the burden of rising costs. Continuous increases in steel, cement, and other construction materials have placed significant pressure on project margins.
Many developers are currently absorbing these additional costs themselves, but industry experts believe this situation is not sustainable in the long term.
At the same time, many developers in Surat have postponed the launch of new projects. Even where land acquisition and approval processes have been completed, increasing costs have pushed several projects into a “wait-and-watch” mode.
Developers fear that launching projects at current market prices could adversely impact profitability.
If this situation persists, the market could witness a reduction in new supply, which may become another factor driving property prices upward.
Current Price Increase Is Only the First Phase
Industry experts believe that the current round of price increases is only the first phase. New projects may witness price hikes of around 10%, while projects nearing completion may see increases of up to 5%.
If prices of steel, cement, and other raw materials continue to rise, further price revisions in the coming months cannot be ruled out.
It is reported that Ahmedabad has witnessed a decline of nearly 75% in new project launches since March. If a similar trend emerges in Surat and South Gujarat, a shortage of new inventory could develop in the near future.
The real estate market operates on a simple principle when supply decreases and demand remains steady, price increases become almost inevitable.
What Industry Leaders Say
Speaking with Yugen Realty, CREDAI Surat Chairman Sanjay Mangukiya stated :
“Due to tensions in the Middle East and disruptions in global supply chains, construction material prices continue to rise. Developers in Surat are currently absorbing a major portion of the increased costs, but this is not a sustainable business model in the long run. Several new projects are currently on hold because their financial viability has changed under current cost structures. Ahmedabad’s decision serves as an important signal for the industry. If costs do not decline, developers in Surat and South Gujarat may also be compelled to revise prices. Ideally, the increase should be more than 20%, but developers appear likely to implement a first-phase increase of around 10%.”
Shreyas Savani, President of Surat East Builders Association (SEBA), said :
“Ahmedabad’s decision reflects the realities of the current market. Over the past few months, construction materials including steel, cement, aluminum, and plumbing products have witnessed significant price increases. Developers have absorbed much of the additional cost so far, but for the industry’s sustainability, quality development, and future growth, price revision is no longer an option—it has become a necessity.”
What Does This Mean for Homebuyers?
For people planning to purchase a home, the current period could be crucial. Considering rising costs, fewer new launches, and limited inventory, property prices are expected to increase further in the coming months.
Industry estimates suggest that if current conditions continue, some market segments could witness cumulative price increases of 15% to 20%.
Demand for Relief in Affordable Housing
The real estate industry believes that the ₹45 lakh limit defined for affordable housing in 2017 no longer reflects market realities.
Considering increased construction costs and higher property prices, industry stakeholders have urged the government to raise this threshold to ₹75 lakh.
Extending the 1% GST benefit to properties priced up to ₹75 lakh could provide significant relief to middle-class homebuyers.
Price Hike Is No Longer a Choice, but a Necessity
The Middle East conflict, rising material costs, declining new launches, and increasing pressure on developer margins are collectively pushing Gujarat’s real estate market in a new direction.
Ahmedabad has already initiated price revisions, and market indicators suggest that Surat and South Gujarat are unlikely to remain unaffected.
Under current circumstances, an increase in property prices is no longer merely a possibility—it is rapidly becoming a business necessity for the real estate industry.
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Disclaimer : This information has been collected through secondary research and Yugen Realty Newspaper is not responsible for any errors in the same.
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