Realty Sector Boom is Heading for a Best of Time for Civil Construction Contractors in India

Realty sector today

Housing affordability, liquidity conditions led by record-low interest rates and the desire amongst prospective home buyers have never been at the levels being witnessed at present across India. Right now, there is a lot of optimism in on the potential of housing and real estate sector in India. The Indian real estate market is on the cusp of a new growth cycle and it is important that all in the industry particularly the civil construction contractors in realty industry must make the best of it. In India, the inherent housing demand remains immense and concerted efforts have been made to ensure supply at the right price points to meet the needs of various income groups. The present housing boom is attributable to the measures of central and state governments’ efforts to focus on enabling policies for the housing sector including continued fiscal incentives, Pradhan Mantri AwasYojana, Credit Linked Subsidy Scheme (CLSS), concessional stamp duties, premium reductions, etc. In addition, RBI’s accommodative monetary policy and comfortable liquidity conditions has also helped significantly.


High input cost: a dampener

Domestic steel prices increased 70 % this year.In addition, other inputs such as land, diesel, cement, and labour costs have also increased across markets. Commercial vehicles rentals have increased by 15 to 20 percent in major markets. Industries are facing an acute shortage of labour. Thus labour shortage and input prices, especially commodity prices have moved up and if the supply bottlenecks are not unwound soon, it could be a dampener.

Need concerted efforts to meet housing needs

Inherent housing demand remains immense in India and concerted efforts have to be made to ensure supply at the right price points to meet the needs of various income groups. The low interest rates cannot last forever as higher inflation would set in if the energy prices continue to rise and trigger a change in monetary policy. While a calibrated increase in property prices can be easily absorbed, but the sharp increase cannot. However, all players in this sector must focus on execution and cost optimisation, and it is possible through effective utilisation of their resources like the civil construction contractors and should avoid over leveraging.In this high input cost regime, optimising productivity of civil construction contractors will surely give good result. Further, finding civil contractors from nearby the project site will reduce mobilisation cost and time, local or from nearby areas shall have an additional advantage that the civil contractors and their labours will not migrate back leaving the project site. Thus it is not a boom for the reality players only, civil construction contractors are also facing huge demand.  However, in the given scenario and ongoing pandemic, for timely completion of the reality projects, adequate welfare measures should be taken for the civil construction contractors & their labour at site. 

Read also: Civil Construction business is quickly picking up the pieces after the pandemic: NBCC Ltd

Comments

Post a Comment

Popular posts from this blog

Counter the Problem of Labour Crisis due to Reverse Migration in the Wake of 2nd Surge in COVID

Image
Due to imposition of partial lockdown in different parts of India in the wake of 2nd surge in COVID 19, several sectors of economy, specially construction and infrastructure sector are facing labour crisis due to ongoing reverse migration of the small contractors and their labours to their home state like Uttar Pradesh, Bihar, West Bengal etc. The Small contractors and their labour are afraid of even more stringent restrictions, which force them to leave the construction projects, sites for their homes. Sectors such as construction and real estate, manufacturing and industrial, healthcare and pharmaceuticals, power and energy are already gripped by another labour crisis.  Labour crisis due to Reverse Migration in the wake of surge in Covid 2nd wave  According to the studies by different agencies, already data show a labour shortage of 15 % in various skills like civil construction, Mechanical fabrication & erection, Piping, Welding including IBR Welders, Insulation works, ...
Read more

Infrastructure Push to Employment Creation & Problems Faced by Small Contractors

Image
Who are small contractors? A company delivering works & services in construction & manufacturing industry , with limited resources, usually as a sole proprietorship or simple partnership, the owner manages most of the company's key activities is a small contractor. A small contractor usually do not employ qualified personnel and the promoter is too busy with the problems of getting jobs, following up purchases of materials, supervising work on site, following up the processing of payments etc. Most small contractors prefer to maintain tight control of all aspects of the company’s operations, especially where this involves monetary transactions such as negotiating with potential clients or suppliers, or purchasing of materials.  Advantages of small contractors The construction industry is an important source of employment in India. It accounts for about 8 % of the total employment. Construction typically contributes 5 % to 9 % to GDP in India and provides backward and...
Read more

Advance Payouts and Flight Tickets to Get Migrant Labour Back to Construction Projects

Image
  Many EPC (Engineering, Procurement & Construction) Companies and contractors of different Construction Projects are offering incentives, paying in advance and booking flight tickets to get migrant Contractors and labourers back to work, in response to the shortage of workforce in the construction sector today post Covid 2 nd wave in India. This segment of economy was largely hit due to the Covid-19 induced lockdown/restrictions in different states with a huge number of migrant workers leaving the city for the fear of coronavirus 2 nd wave in April and May this year. Although many of them are returning to the projects now, but it is happening in a staggered manner. At many project site, the number of workers is near to what it was prior to the lockdown but at places construction work is going on with half the required labours. The work resumed in June after a gap of two months, with lesser number of workers. But the workforce is slowly getting back as the fear of the vir...
Read more