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Now, workforce a major bottleneck for realty development

Sunday August 05, 2012 12:43:10 PM, Vinod Behl, IANS

The Indian realty and construction sectors, which together contribute 17.5 percent to the country's gross domestic product (GDP) and growing at an enviable 35 percent per annum, now face a serious threat due to severe shortage of workforce.

Increasing urbanisation is generating unprecedented demand for real estate. Industry data show India needs to potentially build an average of 8.7 billion sq. ft. of real estate space every year, or whopping 95 billion by 2010-20. The annual requirement that stood at 7.3 billion sq. ft. in 2010 is projected to touch 10.15 billion by 2020.

As much as 85 percent of potential space requirement is in the housing sector, which faces a shortfall of 26 million units. India will have a cumulative demand of 2.3 million units in next five years, against supply of 1 million units.

This massive requirement for realty space results in huge demand for professionals to build and deliver. But there's an immense shortage of workforce at all levels - specialised professionals, including valuers, quantity surveyors, facility managers, core professionals, including engineers, architects and planners, non-core professionals, including lawyers and financial analysts, and workers including skilled and semi-skilled.

Considering the continuous shortfall in supply, coupled with increasing annual demand, the real estate and construction sector will be having a cumulative demand of nearly 45 million core professionals over the current decade (2010-20) with a cumulative demand-supply gap of 44 million core professionals.

We will be needing nearly four million civil engineers, 65,000 architects and 18,000 planners. Besides, the sector require about 35 million skilled and unskilled labourers but their availability is pegged at 25 million.

This severe shortage of workforce especially labour shortage has put a serious challenge to the timely completion of real estate projects. Industry statistics show that about 480,000 units could face delays during 2011-13 in top cities of Delhi-NCR, Mumbai, Bengaluru, Hyderabad, Chennai and Kolkata. Today over five dozen large residential projects accounting for over 40,000 units are delayed by over four years in National Capital Region.

This has serious implications for the real estate consumers in terms of extra financial burden, The shortage of labour and substantial increase in their salaries has considerably pushed up the cost of housing for the home buyers.

One major hurdle in tackling this serious problem of workforce shortage is the sheer lack of training. According to All India Council for Technical Eduction (AICTE), out of total workforce of about 440 million, only about 12.5 percent has received some kind of formal/non-formal vocational or education training. And compared to 12 million people entering the workforce every year, there is a capacity to train only 3.1 million workers. This has a lot to do with shortage of specialised courses and curriculum, besides professional faculty.

However, it is a welcome development that education qualification framework will come into force from 2012-13 academic session in polytechnics, engineering colleges and other colleges under the University system. It's equally heartening that the government is mulling a credit guarantee fund to create 26 crore skilled manpower by 2018. This fund will be used for extending loans for vocational programmes at a subsidised interest rate.

National Skill Development Corporation has also been actively engaged in ramping up its efforts to train workforce in the construction industry. But then the government effort alone will not be adequate to tackle this serious problem. The real estate and construction industry will have to make a substantial contribution in this regard to ensure that its high growth is sustained over the coming years.

(Vinod Behl is editor of Realty Plus, a real estate monthly. He can be reached at





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