While the US-Iran peace deal and lower oil prices may ease cost pressures for real estate developers, the benefits are unlikely to be immediate, say experts
For India’s real estate sector, which has been grappling with elevated construction and logistics costs, the US-Iran peace deal has raised hopes of cost stability. Experts say the agreement could help stabilise construction costs, though any relief is likely to be gradual rather than immediate.
The US-Iran war had triggered a sharp rise in input costs, with developers estimating that construction expenses increased by as much as 25% amid soaring fuel prices, shipping disruptions, supply-chain bottlenecks, labour migration, and higher prices for key materials such as steel, aluminium, and electrical equipment.
A durable peace and the uninterrupted movement of cargo through the Strait of Hormuz could help cool global oil and commodity prices, easing some of the inflationary pressures that have weighed on project costs over the past several months. Lower fuel prices would not only reduce transportation costs but also improve supply chain efficiency, helping developers manage costs more effectively and protect project margins, say real estate experts.
The peace deal and the opening of the Strait of Hormuz will help moderate oil and commodity prices and ease inflation in key building materials. This should gradually ease developers’ input costs, although supply chain normalisation may take a few more months to fully reflect on the ground, they said.
Beyond construction economics, greater stability in the Gulf region could also have a positive ripple effect on housing demand in India. A large share of Indian expatriates working in the Middle East are active participants in the country's residential property market, and improved economic confidence in the region could support investment flows into Indian real estate, they said.
That said, developers caution against expecting an immediate reset. While softer crude prices may provide near-term relief, the sector continues to contend with broader cost pressures, including labour availability, financing costs and material price volatility. Any meaningful reduction in construction costs is likely to emerge gradually as supply chains stabilise and the benefits of lower energy prices work their way through the system, they said.