What happened
The war in Iran and the closure of the Strait of Hormuz have caused a significant increase in construction costs in Spain. According to ESPAÑOL, construction materials have risen between 9% and 12% in the last month alone, which is already affecting construction companies.
This price increase affects not only housing but also offices, retail parks and infrastructure. Economist Simon Lacoume, of Coface, notes that the escalation in the Middle East is hitting commodity markets hard.
The conflict has caused the cost of aluminum to rise 11.5% in March, according to Coface. In addition, BBVA Research warns that geopolitical tensions could negatively affect the sector's profitability, hampering the development of new projects.
Why it matters to a construction company
Small and mid-sized construction companies are especially exposed to these cost increases. Rising prices directly hit their profit margins and their ability to compete in the market.
The Spanish construction market already faces significant challenges, with housing prices per square meter up 7.4% year over year, according to Sociedad de Tasación. In this context, construction companies have to adjust their strategies to stay viable.
In practice, this means higher costs on ongoing projects and greater difficulty launching new developments. Construction companies must carefully assess their budgets and consider measures to mitigate these impacts.
What changes in day-to-day site work
Rising material costs force construction companies to review their workflows. Material purchasing has to be more strategic, considering not only price but also availability and delivery times.
Budgets and payment certificates are directly affected. Construction companies need to adjust their cost and schedule forecasts, which may require renegotiations with clients and subcontractors.
Site managers and purchasing managers will notice these changes first. They will have to pay closer attention to price fluctuations and market conditions to avoid cost surprises.
Specific cases
Suppose a construction company had a building project underway. With the new cost increases, it will likely have to renegotiate prices with its suppliers or look for cheaper alternatives.
Other companies are adopting strategies such as buying materials in large volumes to get discounts or looking for alternative suppliers in markets less affected by the crisis.
For these strategies to work, it is crucial that companies have good communication internally and with their suppliers. They must also have a management system that lets them adapt quickly to market changes.
Data and context
According to ESPAÑOL, the price per square meter of housing has reached 2,085 euros, the highest level since 2007. This figure reflects an upward trend that is expected to continue in the coming years.
The construction sector is facing growth that is insufficient to meet demand, with a 12.5% increase in new housing construction between this year and next. This is not enough for the 400,000 households that will be formed over the same period.
However, these figures do not fully capture the impact of the Iran crisis, which has not yet been incorporated into the forecasts of many analysts, adding uncertainty to the outlook.
Risks and limits
The main risk is rising costs, which may make some projects unviable. In addition, delivery times could lengthen because of material shortages.
In some cases, the cost increases do not justify the risk of continuing with certain projects. Construction companies must carefully evaluate each project to determine its economic viability.
There are also organizational risks, such as the need to adapt internal processes to better manage market changes. This may require investments in training and technology that not all companies are prepared to make.
What a company can do now
Construction companies can start by reviewing their current and future contracts to include clauses that allow them to adjust prices based on market fluctuations.
It is important to set clear criteria for decision-making, such as risk assessment and project prioritization. This will help companies adapt to a changing environment.
A realistic next step is to take part in free pilots of construction management software such as Bloqbase, which can help companies improve their efficiency and adapt to market changes.
Sources
ESPAÑOL: https://www.elespanol.com/invertia/observatorios/vivienda/20260331/guerra-iran-dispara-costes-construccion-agrava-crisis-precios-vivienda/1003744180892_0.html