Indian Real Estate Sector: Sees 8 per cent Job Cuts..

Indian real estate sector provides direct employment to 7 crore

Indian real estate sector has witnessed 7% to 8% job cuts over the last one year because of weakening sales &  tight liquidity, according to Lalit Kumar Jain, Chairman of Confederation of Real Estate Developers Association of India (CREDAI).

Effective job losses in the sector are higher. Slower pace of approvals has broken the cycle of sales &  cash flow, ultimately resulting in job losses.

Even the annual 10% to 12 % new recruitment has not taken place this year, effectively pushing job losses to 18% to 20 %, Mr. Jain said, adding that this estimate was based on his discussions with developers / promoters.

Mr. Jain said among the segments worst-affected were sales, administration &  management, which together witnessed 7% to 8 % of job losses.

Indian real estate sector provides direct employment to 7 crore people and 7% to 8 % of these jobs are for office staff,while majority is for labour and construction workers, Mr. Jain said.

The sector has been grappling with liquidity issues along with weak sales for about  two years now. While high prices continue to keep prospective homebuyers away from the market, developers have been citing higher costs and compressing margins for no major correction.

Lalit Kumar Jain, Chairman, CREDAI

According to Mr. Jain, there are about 48 no-objection certificates (NOCs) needed for a real estate project to commence work, adding that a single-window clearance policy can save up to 40 % of project costs.

CREDAI is the apex body of real estate developers, with more than 9,000 builder-members across 20 states.

For now, blue-collar jobs (construction workers) are unaffected but even they will face losses if the weaker scenario continues. Liquidity situation is worsening and the next  three (3) months will be very critical for the sector, Mr. Jain said.

Real estate sales have slipped 12 % to 40 % across India in the last one year. The National Capital Region (NCR), which comprises Delhi and neighbouring towns, has been affected the most, followed by Mumbai.

Although the property market in Bangalore has largely bucked the trend, other micro-markets in southern India are following the sluggish trend in sales,Mr. Jain said.He said in Mumbai alone, there was a 40 % drop in projects going for approvals during the first nine (9) months of 2013.

Developers have been raising the issue of slower pace of approvals including environmental clearance hitting supply for more than two (2) years. Real estate is one of the largest direct &  indirect job providing sectors.

However, the sector has faced huge job losses in the last one year.The sector needs immediate attention from government to avoid any further job losses, said Mr. Vimal Shah, President, Maharashtra Chamber of Housing Industry.

Share: