What was the impact on the cost due to the West Asia war, and which were the key contributors?

Post the beginning of the war at the end of February, costs of a lot of raw materials surged. For example, aluminium, which is a basic raw material, saw an increase of nearly 60 per cent, steel prices went up by 25-30 per cent and cement by 25-30 per cent. Overall, the cost of construction — and not the cost of the project — has an impact of 15-25 per cent at various places. Once the war ends, it will take some time to get the benefit of lower crude prices and when the fuel prices come down, it will take 1-2 months to see the impact. So, we expect the cost impact to continue till the end of August, provided the war ends now. If the situation remains normal in August and crude prices come below $80 a barrel and the supply chain continues, then I think the construction cost will start to be a little reasonable.

There is a compulsion in RERA that the units that you have already sold, you cannot increase the price. This means the loss that the developer will have to bear and part of that can be covered by increasing the price of new units. It comes in an increment of 2-5 per cent or 7 per cent.

You mentioned about the cost of construction, what was the impact on the cost of the project?

Every project is unique and so is its cost structure. For example, in an affordable housing project, on an average, shares of land, construction and margin are 30, 50 and 20 per cent respectively. As the construction cost is higher, then the impact there will be more. Now in the case of premium projects, on an average, shares of land, construction and margin are 50, 30 and 20 per cent respectively, so here the impact will be low. Considering all these and if the cost remains during the entire construction cycle, then the impact could be 5-10 per cent. However, if it is just for six months or so, then the impact could be very less or even lower in new projects.

If I understand correctly, the selling price of new projects could go up to 10 per cent, but if the situation improves, then the prices could see an increase of up to 5 per cent in the entire year. What do you have to say about unsold inventory?

In unsold inventory, the cost will not increase because construction is over, there could be some interest cost only for the developers. This means there is an opportunity for them and if there is demand, then they can sell the unsold inventory if they want to sell it at a reasonable rate.

Now we have another big problem regarding the monsoon. What kind of impact do you see?

When we talk about the monsoon, we only talk about the impact on the rural economy. But the impact is also on availability of water which impacts not just the rural economy or agriculture per se, but also the industry, so the impact would be everywhere.

Now, will this have impact on the demand projections?

According to the numbers of NHB, since 2021, the CAGR (Compounded Annual Growth Rate) has been 10-12 per cent in housing. At the same time, the outstanding loan book of housing, which is 11 per cent of GDP, has gone up from 3 per cent earlier. The outstanding loan book for housing is around ₹37 lakh crore. Still, there is scope for improvement in this too because the GDP to mortgage ratio is 22-23 per cent in China, around 20 per cent in other developing nations, while up to 40 per cent in the developed nations. Here people’s income is increasing and the demand for good and better houses is also increasing. The growth rate was around 10 per cent in FY26 and it is likely to be the same this year.

The impact of real estate touches 40-45 per cent of the GDP of the economy overall and its share in overall GDP is 8.4 per cent. In terms of the loan book of a bank, the share of housing is 18-20 per cent (not including developer funding).

Aluminium prices are set to stay elevated near-term as the West Asia outages persist into 2027, but stronger supply growth from Indonesia and China will push the market back into surplus next year, a research report by Goldman Sachs on commodities said.

It also noted that these factors combined would keep the brokerage maintain its bearish stance on the commodity over the medium term.

Goldman Sachs said that the West Asia supply losses will persist longer than initially assumed. “Since our last update, industry feedback and company announcements point to a slower recovery in the West Asia production than we had initially assumed,” the report said.

Even if the Strait of Hormuz reopens under the announced interim deal, smelters cannot immediately return to full capacity as damaged potlines need repairs and curtailed capacity must be restarted gradually.

The bank downgraded the West Asia output by 660kt in 2026 and 1Mt in 2027, assuming damaged capacity restarts in early 2027 rather than H2 2026. It now expects Bahrain output to return to pre-conflict levels by mid-2027 and the UAE by end-2027.

This near-term shock tightens the market balance. Goldman Sachs now expects the global aluminium market to post a 720kt deficit in 2026 and a 590kt surplus in 2027 versus a 570kt deficit/1.3Mt surplus prior.

“This is the tale of two supply shocks: a near-term West Asia shock that tightens the 2026/2027 balance and supports near-term prices, set against a structural China-backed supply wave, led by Indonesia, that increasingly offsets the disruption over time and keeps us bearish further out,” the bank said.

The global brokerage firm said Indonesia and China will drive the supply offset. Goldman Sachs raised its Indonesian primary aluminium production forecast to 1.7Mt in 2026 and 2.9Mt in 2027 from 1.6Mt and 2.5Mt previously, citing faster ramps at Adaro, Taijing Morowali and Juwan Weda Bay.

Indonesian output is already up around 89 per cent YoY YTD. For China, the bank raised its 2026/2027 production forecasts to 45.6Mt/46.3Mt as strong margins support restarts and overproduction above the 45Mt capacity cap.

On prices, Goldman Sachs nudged its Q3 2026/average 2027 higher LME aluminium forecasts to $3,300/$2,950/t from $3,200/$2,750/t, but remains below forwards at $3,400/$3,250/t.

The bank closed its short Dec-26 LME aluminium trade and rolled to a short Dec-27, “where our forecast sits furthest below the forward and best expresses our structural surplus view.”

Risks remain two-sided: a slower West Asia restart would keep 2027 fairly balanced around $3,250/t, while a faster restart could lift the surplus toward 1.2Mt and push prices closer to $2,750/t.

Published on June 21, 2026

Vessels in the Strait of Hormuz near the beach of Bandar Abbas, following the signing of the Islamabad Memorandum of Understanding between the United States and Iran, Iran, June 18, 2026.
| Photo Credit:
Reuters

Iran on Saturday said that it closed the Strait of Hormuz because of Israel’s attacks in Lebanon and warned that while negotiators were going to Switzerland for talks with the United States on their interim agreement, not much likely will happen if the fighting doesn’t stop.

US President Donald Trump, in response, threatened to impose US tolls in the crucial waterway if a final deal with Iran isn’t reached in 60 days, saying the money would be for “services rendered as the Guardian Angel to the countries of the Middle East”. His social media post underscored that the agreement calls for toll-free travel for 60 days.

The announcements indicated a rough start to technical-level US-Iran talks that key mediator Pakistan said will begin Sunday, with Qatari mediators also participating.

Iran’s joint military command said the strait was closed because of the US’ “clear breach of its commitments” by failing to end the war. The interim deal is meant to stop fighting on all fronts.

Shortly after that, Iran’s state broadcaster said that the negotiating team was leaving for Switzerland, a trip delayed from Friday.

State media said that the team includes parliamentary Speaker Mohammad Bagher Qalibaf, Foreign Minister Abbas Araghchi and central bank and oil officials, among others. The deal calls for Iran’s assets to be unfrozen.

The US disputed Iran’s announcement on the strait.

“Iran does not control the Strait of Hormuz. Traffic continues to flow, and US forces are monitoring the situation to ensure this remains the case,” said Capt Tim Hawkins, a spokesperson for US Central Command.

The military said that 55 merchant ships transited Saturday with more than 17 million barrels of oil.

Iran’s team departs for talks as uncertainty grows

Negotiations toward a final agreement will begin once key commitments are upheld, Iranian foreign ministry spokesperson Esmail Baghaei said. If they are not, “the memorandum of understanding as a whole will be jeopardised”.

US Vice President J D Vance confirmed that top negotiators Jared Kushner and Steve Witkoff were in Switzerland and working through technical details of anticipated negotiations on Iran’s nuclear programme. The interim deal gives negotiators 60 days to reach a nuclear agreement, but that can be extended.

Vance told Fox News that he expects to leave for Switzerland in “the next couple of days”.

As part of efforts to revive direct talks, Pakistani Interior Minister Mohsin Naqvi met with Araghchi in Tehran earlier Saturday, according to officials in Islamabad who spoke on condition of anonymity because of the sensitivity of the issue.

The global economy braced for more uncertainty.

Ships began transiting after the interim US-Iran agreement was signed earlier in the week, a milestone that left plenty of questions unanswered.

The US lifted its blockade of Iran’s ports and now allows Tehran to sell its oil freely – terms that have left some in US Congress asking whether the war was worth it.

Israeli attacks in Lebanon kill at least 16

A Hezbollah official told The Associated Press that Iran informed the militant group that Tehran won’t reopen the strait until Israel announces publicly that it will comply with a “comprehensive ceasefire” in Lebanon and an end to military operations there. The official spoke on condition of anonymity because he wasn’t authorised to speak publicly.

The official said that Hezbollah would commit to a ceasefire if Israel does.

An Israeli military official, speaking on condition of anonymity in line with regulations, later said that the military had received “updated directives from the political echelon to cease fire”.

The official said that the military is operating in a defensive manner in Lebanon, which includes the right to respond to Hezbollah attacks.

The official also said that five Israeli soldiers had been killed in the past 48 hours in southern Lebanon.

Earlier Saturday, Israeli strikes on southern Lebanon killed at least 16 people, including two children, hours after reports emerged of a ceasefire agreement there. Seven people were trapped under rubble after strikes hit the southern city of Nabatiyeh and nearby villages, Lebanon’s National News Agency said.

The death toll in the latest Israel-Hezbollah war has surpassed 4,000, Lebanon’s health ministry later announced.

An Israeli military official said that Hezbollah fired more than 50 projectiles at Israeli forces in southern Lebanon overnight. Israel’s army said that it struck dozens of Hezbollah targets and militants.

On Friday, the Israeli ambassador to Washington, Yechiel Leiter, said that Israel “remains firmly committed to an immediate ceasefire”, if Hezbollah honours the agreement and ceases hostilities.

Earlier Saturday, Hezbollah said it had committed to the ceasefire, but blamed Israel for violating it Friday night and said that it would repel attacks by Israeli troops. (AP) ARI ARI

Published on June 21, 2026