Construction as a tool for growth during challenging times often drives new economic activity. India’s construction sector has a vast untapped potential for the whole country, with a marketplace that is growing in competitiveness and is supported by developers that are more willing to transform the way things are done.
In 2019-20 the built environment was worth nearly $192 billion in India and it is growing at a rapid pace, with fresh demand generated by investments that have changed consumer’s daily lifestyles. These new trends have made it ever more important that stringent quality and transparency expectations are met, for the homes and infrastructure that are built by developers. Embracing change is something we cannot ignore if we are to deliver the levels of growth needed.
The pandemic, however, exposed the systemic weaknesses, such as an over-reliance on unskilled labour, as well as challenges to project and cost management that will need to be addressed if we are to regain the same momentum.
Unlocking new economic growth starts in construction and the journey ahead will encompass utilising new technology, finding private and public investment solutions and better education for a career in the built environment.
We have the third largest built environment sector after China and the United States, but probably the greatest number of market segments based on affordability in the residential real estate market. The minor changes in prices could upset the demand-supply balance and this varies both intra-city and inter-city. The greatest demand is in the affordable housing segment as defined by GoI and the government under its “Housing for All” scheme has set an ambitious target of providing 22 million houses by 2024 and through various schemes such as PMAY and credit subsidies.
This though caters to the demand; the supply side situation also needs some attention with reasonable encouragement for the builders and other suppliers (who have gone through the brunt of government policies of demonetisation and GST) for constructing and delivering affordable housing. Using internationally accepted investment tools, and the supply of capital at affordable costs could make challenging projects viable. RICS has long advocated promotion of efficiency measures and contract saving schemes that could deliver savings and build the scale to meet the “housing for all” vision.
Upcoming infrastructure schemes seek to create jobs and increase the quality of living in urban centres and increase income of the rural populace. Breaking ground on projects that contribute toward economic success, growth and quality of life, an investment of about $965 billion is expected by 2040 to realise this vision. The above initiatives are expected to boost the demand for real estate in residential, commercial, retail and warehousing sectors.
New technologies in the construction sector are delivering real results that benefit our recovery and tackle the weaknesses exposed by the pandemic. Last year the Global Housing Technology Challenge was launched by MHUA, to promote new R&D for the built environment. New ‘light house projects’ are being piloted from Rajkot to Agartala, providing thousands of new homes in under a year by prefabricated panelling systems or precast concrete that haven’t been deployed before. The innovation in technology is being used by developers to improve efficiencies and build scale.
Apart from using technology to meet demand, the government is working on ease of financing the projects. A ‘Special Window for Completion of Construction of Affordable and Mid-Income Housing Projects’ (SWAMIH) fund was set-up to complete stalled projects, providing relief to developers. Requiring transparency and professionalism to access these funds, a Valuers’ bill is expected to be tabled in parliament for regulating the important profession of valuation.
The key to delivering growth is about embracing change and new opportunities. By doing things differently the sector as a whole can unlock rewards through upskilling, funding affordable homes or pulling-in investors with new forms of financing to achieve the growth to rebound stronger.
The writer is a Governing Council member of the Royal Institution of Chartered Surveyors (RICS) and a Professional Valuer.
In March RICS launched a review into the way it works across the globe – including India – which aims to ensure its professionals can continue to shape the post-Covid economic recovery by developing skills, adopting new standards, and working closely with the government on the action needed.
