Real estate projects face labour crunch
The real estate projects are facing shortage of both skilled and unskilled labour resulting in delay of launch of projects by up to one year. Moreover, it is involving additional cost from cash strapped property developers.
Ideally, a real estate project have to get 50-60 clearances from various authorities. Thus, the project can take as long as seven to eight years for completion.
Experts say that new launches can be delayed by nine to 12 months due to labour shortage. It may further get delayed by two to three years if the situation is not addressed and handled properly.
The industry has one million skilled professionals including planners, architects, surveyors, engineers and project managers against demand of four to five million. The situation of unskilled labour is even more worse.
There are around 50 million people employed in real estate, construction and infrastructure. It is found that out of these, only two million are professionally qualified. It is expected that the demand of qualified people would increase to 44 million by 2020.
Confederation of Real Estate Developers Associations of India (CREDAI), which represents the organised real estate developers and builders across the country estimates the overall labour shortage at about 40 percent.
The rapid urbanization of rural areas has been a major contributor to the shortage of construction labour in the cities. It has resulted in increased employment opportunities and slow seasonal migration of workers.
As per real estate consultants and developers, many workers are also sitting at home due to success of welfare scheme such as rural jobs-guarantee programme. This programme ensures 100 days of work in a year to a poor household.
Some say that literacy level among workers is motivating them to seek alternate job opportunities which are lesser labour-intensive. The increasing cost of living in big cities is also adding fuel to labour shortage.
On one hand, the construction labourers are expecting hike in their wages due to rising inflation and on the other hand, banks are lending money to the real estate sector very cautiously.
According to some developers, the construction workers in the other parts of the world are more productive than the domestic workers. For instance, construction workers in Mexico are six times as productive as Indian workers. It takes 1,000 workers in India to construct 1 million sq. ft of building while same building can be constructed with just 100 workers in Germany.
Experts defended the statements of developers by pointing out strong unions and better trained workers with all modern construction techniques in other parts of the country. The efficiency gap lies because developers are cost sensitive and does not prefer to use new technology and equipments.
As per a report prepared by McKinsey Global Institute (MGI), India’s urban population is set to reach 590 million by 2030. Thus, the industry has to build between 700 million square meters (7,543.7 sq. ft) and 900 million square meters (9,687.5 sq. ft) of residential and commercial space a year to meet the urban demand. MGI estimates that there would only 10,145 million sq. ft of real estate space in country by 2020. This space also includes pace for basic civic amenities in India.
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