Mumbai's residential real estate market, traditionally supported by robust demand and escalating property prices, is currently exhibiting signs of structural strain. Recent research from the non-broking real estate analytics firm Liases Foras highlights a concerning disparity between housing supply and actual construction activity. This gap raises alarms that the sector may be entering a period of turbulence, characterized by delays in project execution, increasing costs, and an accumulation of unsold inventory.
As of March 2026, data shows that only 55% of India's marketable housing supply was under construction, a significant decrease from 75% reported in March 2017. Marketable supply refers to the total number of homes that developers have put on the market. In 2017, the eight largest urban housing markets in India offered 3,601 million square feet of marketable supply, with 2,700.75 million square feet actively under construction. For nearly four years, the gap between supply and construction held steady at around 25%. However, since March 2021, this divergence has widened dramatically. By 2026, the overall marketable supply increased to 4,010 million square feet, yet the volume of active construction plummeted to 2,205.5 million square feet, nearly 500 million square feet less than in 2017.
The growing gap indicates a concerning trend: between 2017 and 2026, while marketable supply expanded by 11%, the pace of construction declined by 20%. This slowdown is not attributed to external geopolitical factors, such as the ongoing conflict in West Asia, but rather to internal challenges within the industry, according to Pankaj Kapoor, founder and managing director of Liases Foras.
Further complicating the landscape is a sharp rise in construction costs, influenced by labor shortages, supply chain disruptions, and fluctuating commodity prices. JLL's latest Construction Cost Guide predicts that costs across various asset classes will increase by 3% to 5% in 2026. Despite a slight easing in the prices of cement, steel, and diesel in 2025, aluminum and copper costs have surged due to global demand pressures and persistent supply chain issues. Labor costs have also escalated, rising by 5% to 6% amid a shortage of skilled workers and heightened infrastructure needs. Some developers contend that the actual cost increases are even steeper than industry forecasts suggest. Purvesh Sarnaik, managing director at the Vihang Group's Vihang Recreation Club, noted that construction expenses have surged by approximately ₹250 per square foot, representing a 4% to 6% increase over the existing average cost of ₹4,000 to ₹6,000 per square foot.
Developers attribute some of these cost escalations to disruptions in raw material supply chains linked to the ongoing regional conflict, which are hindering project execution and inflating input costs. Kapoor emphasizes that the immediate challenge for the sector lies not in diminishing demand, but in effectively aligning supply growth with the industry's execution capabilities. Navigating emerging execution and inventory risks will require careful management, particularly as aggressive supply additions continue to outpace construction progress in several markets.