The Biggest Challenges for Indian Real Estate
Looking at India’s current economic progress and infrastructure boost, the future of India’s real estate promises to scale new heights, as I mentioned in one of my earlier blogs. However, there are several aspects to how we are currently poised to accelerate real estate growth, and the challenges cannot be overlooked. Making heavy investments in infrastructure may have laid the foundation of a real estate boom, but there are several hurdles on the ground that will be tough to tackle. Here are some of the biggest challenges for Indian real estate that we will have to focus on an urgent basis to achieve the goals that we have set for ourselves.
The biggest challenges for Indian real estate
Growing costs of construction raw materials
While inflation in India is relatively under control, the growing inflation rates around the world have significantly raised raw material costs. While alternatives to lack of labour and skilling can be found, there are no alternatives for raw materials, which are needed to build modern infrastructure on a mass scale. The low availability of raw materials and the increased fuel costs are among the core factors behind this problem, as transportation of these materials accounts for a big portion of the overall costs.
There is a lot of scope for improvement in India’s logistics supply chains which further increases the costs of raw materials. While ports, rail, and road connectivity is being increased in every corner of the country, real estate will continue to struggle with high raw material costs until we truly have a powerful and well-coordinated logistics chain in the country.
Limited availability of modern construction machinery
There was a late realisation in our industry to make technical advancements and acquire the modern machinery which is required to build world-class buildings, roads, and other modern infrastructure that would lay the foundations of India’s economic growth. Because of this setback, we have been overly dependent on labour force even for the most complex projects since the very beginning, which has, in turn, led to other issues such as delayed work and sub-par execution.
There has to be focus in both importing and indigenously developing construction machines that make life easier for architects, engineers as well as construction workers. Even though India has an incredible labour force, the focus has to be given to technical developments and labour upskilling.
Lack of labour upskilling
As I mentioned earlier, there is absolutely no lack of labour in India, which will convincingly overtake China as the most populous country on earth. However, we are not prepared enough as far as labour skilling goes, as a majority of them are not trained enough to operate advanced machinery that is used for bigger projects. Skilled labour is the backbone of real estate, and now that we are aiming for a leap in this sector, we can’t afford to fall behind in this aspect.
It would not count for much even if we make big gains in manufacturing and set up hundreds of manufacturing units if we fail in labour upskilling. The same goes for real estate, except that labours of this field will need far more upskilling than in any other sector.
Reluctancy in approving funds
The Finance Ministry had made a 33% increase in the infrastructure budget this year, which came as promising news to one and all. While real estate is the root of every infrastructure, this field continues to face low availability of funds. It is no secret that any construction work needs lots of liquid capital and funds. Small and mid-scale contractors and project managers who approach banks and lenders are often denied funds, which are given after they meet a long list of requirements and follow complex due process. While banks rightfully uphold their financial security while providing funds, it is necessary to make the verification process easier for real estate professionals looking to rapidly launch and execute their projects.