Inflation isn't just something that affects groceries or fuel—it has a direct impact on how much it costs to build homes and how much buyers end up paying. In real estate, inflation often shows up faster and stronger than in other sectors. That's because construction relies on many moving parts: raw materials, labor, fuel, machinery, and finance. When prices go up in any of these areas, home prices usually follow.

In growing areas like Shettigere, Bangalore, where projects like Godrej MSR City are shaping the new urban edge, understanding inflation's effects helps both developers and buyers plan better.

Global and Regional Inflation Outlook (2024–2025)

In 2022, global inflation peaked sharply due to the pandemic's aftereffects, war-related supply shocks, and rising energy prices. By 2025, inflation is easing but still above normal levels.

• Global inflation in 2025 is expected to hover around 4%, still higher than the pre-COVID average.
• India's retail inflation (CPI) is expected to stay in the 4.5%–5% range.
• Construction inflation often runs higher than general inflation—in some regions, by 8–12%.

This matters because materials like steel and cement are traded globally, and even small disruptions can send costs soaring.

The Real Cost Drivers in Construction

1. Building Materials

Materials like steel, cement, concrete, and copper wiring have been on a rollercoaster ride since 2020.

• Steel prices jumped over 200% during 2020–2022 and remain unstable.
• Cement costs are rising due to higher fuel and logistics charges.
• Electrical components are expensive due to import dependency and supply bottlenecks.

Even small changes in these prices can add lakhs to a project's budget. This is especially true for large-scale developments like Godrej MSR City, where materials are ordered in bulk and price stability is key.

2. Supply Chain Issues

Inflation is not just about prices—it's about delays too.

• Geopolitical issues, port delays, and fuel costs mean it takes longer and costs more to move materials.
• Some developers are forced to delay work or switch to alternate suppliers.
3. Labor Wages

Hiring skilled labor is harder than ever. There's a shortage of trained workers across the country.

• Rising living costs mean higher daily wages.
• Younger workers are choosing other sectors, making construction reliant on fewer hands.
• Inexperience can slow work, increasing costs and timelines.
4. Equipment and Machinery
• Fuel prices raise the cost of using heavy equipment.
• Older machines need more maintenance.
• Newer equipment is expensive to buy or lease.

This adds to overhead, especially when timelines stretch due to material delays or labor issues.

5. Financing and Borrowing Costs

Construction loans have become more expensive.

• In 2022, developers borrowed at around 5.8%.
• In 2025, the rate is closer to 7.5% on average.
• Some forecasts expect interest rates to dip later in 2025, but until then, financing adds pressure on margins.

What This Means for Property Prices

1. Prices of New Homes Go Up

When it costs more to build, developers pass that on to buyers. This is already visible:

• In Bangalore, average construction costs now make up 64% of home prices, up from 61% two years ago.
• Property prices in areas like Shettigere have gone up by 12–18% since early 2023.
2. Affordability Drops

Higher property prices combined with costlier home loans mean many buyers delay purchases or look for smaller homes. This slows demand, but not enough to cool prices in high-demand areas.

3. Supply Slows Down

Some developers pause new launches because it's harder to plan costs. This lowers supply, which can push prices up even more for ready homes.

4. Rental Prices Rise Too

Landlords adjust rent to match inflation. In popular locations with good connectivity—like around Godrej MSR City—rental yields have improved, attracting more investor interest.

How Developers Are Managing Inflation

1. Bulk Buying and Early Procurement

Smart developers buy materials in advance at locked-in prices. Godrej MSR City follows this approach to keep pricing stable for buyers.

2. Staged Construction and Phased Launches

Launching homes in phases lets developers adapt to changing prices. It also helps early buyers get better deals.

3. Redesigning for Efficiency

Using space-saving layouts, newer materials, or modular construction methods can reduce costs without lowering quality.

4. Using Technology

Building Information Modeling (BIM), supply chain software, and real-time cost monitoring are helping developers stay on track.

Tips for Buyers and Investors in 2025

• Book in Early Phases: Early pricing often reflects pre-inflation costs.
• Check for Escalation Clauses: Some agreements protect buyers from sudden price hikes.
• Compare Total Costs: Don't just look at base price—add GST, registration, interiors, and maintenance.
• Invest for the Long Term: Property values usually grow over time, even if inflation slows short-term demand.

Godrej MSR City in Shettigere is a good example of how branded, well-planned townships are managing inflation smartly while delivering value.

The Bigger Picture: Policy and Outlook

1. Monetary Policy

   Central banks are signaling possible rate cuts later in 2025, which could ease home loan rates and encourage more construction activity.

2. Government Spending

   Infrastructure spending—metro rail, highways, SEZs—supports property values in fringe areas. Shettigere, with its airport proximity, is directly benefiting.

3. Trade and Regulation

   Any shift in import duties or building codes can change material costs overnight. Developers need to stay alert.

Conclusion: Planning Ahead in an Inflationary Market

Inflation isn't going away anytime soon. But that doesn't mean you can't plan for it. Buyers, developers, and investors who understand how it works can make smarter decisions.

Look for:

• Projects with strong financial backing
• Locations with ongoing infrastructure development
• Builders who manage supply chains and pricing well

Godrej MSR City shows how the right project in the right place can still offer good value, even when the market is uncertain.