Mumbai Developer Oberoi Realty Faces Rising Construction Costs and Energy Prices Amid Ongoing West Asia Conflict
Vikas Oberoi, CMD of Oberoi Realty, has expressed concerns about the rising costs of construction and energy, which are affecting the real estate sector in Mumbai.
Increasing Construction and Energy Costs Put Pressure on Real Estate Sector
Oberoi stated that the ongoing West Asia conflict is causing a significant increase in construction costs, energy prices, and labour costs, making it challenging for the real estate sector to operate efficiently.
- Construction costs are rising, affecting project budgets.
- Energy costs have increased, impacting operational expenses.
- Labour costs have become expensive, adding to project expenses.
- Material availability has become a challenge, affecting project timelines.
Oberoi Realty Adjusts Project Pricing and Contingency Planning
Oberoi said that the company has factored in the expected increase in construction costs and energy prices into its project budgets, ensuring that contingency plans are in place to mitigate potential losses.
- The company has repriced several aspects of its projects to account for higher future costs.
- Oberoi Realty has built contingencies into its projects to protect its margins.
- The company plans to launch new projects, including Three Sixty North in Gurugram and Oceanic on Carter Road.
Strategic Business Decisions to Mitigate Impact of Rising Costs
Oberoi emphasized the importance of diversifying the company's business model to reduce dependence on lease models and focus on sale models.
- Oberoi Realty plans to focus on strata sales, which will help improve cash flows.
- The company is considering a 50-50 or 60-40 sale-and-hold model for its commercial projects.
Upcoming Launches and Business Expansion Plans
Oberoi announced that the company plans to launch several new projects in the next quarter, including Three Sixty North in Gurugram and Tower D of Forestville in Thane.
- Oberoi Realty plans to raise up to ₹6,000 crore through the issue of securities to support business expansion.
- The company's consolidated net profit rose to ₹2,507.64 crore in 2025-26, up from ₹2,224.05 crore in the preceding year.
Strong Demand for Luxury Homes Drives Sales Bookings
Oberoi Realty's sales bookings or pre-sales rose to ₹5,447 crore last fiscal from ₹5,281 crore in 2024-25, driven by strong demand for luxury homes.
Oberoi emphasized the importance of adapting to changing market conditions and customer preferences to ensure the company's continued growth and success.