Gujarat realty sector faces 40% skilled labour crunch: Survey

Reeling under high input costs and 40 per cent labour shortage, the realty sector in Gujarat is witnessing construction projects getting either delayed, cancelled or halted in progress.

In a survey conducted by the Gujarat Council of the Associated Chambers of Commerce and Industry of India (ASSOCHAM), steep and steady rise in prices of cement, steel rods, bricks and other input materials have been troubling construction projects. Also, the realty sector is seeing severe shortage of about 40 per cent skilled construction workers.

For the survey, ASSOCHAM interacted with around 150 people from the industry across Gujarat including builders, contractors, developers, building material manufacturers, traders and real estate consultants to ascertain the impact of soaring construction prices and labour deficit on the state’s real estate and construction sector.

About half of the respondents said that upward spiralling costs of significant construction materials has been putting a great pressure on project execution as they find it difficult to keep their margins intact. Among inputs, steel, cement and labour are the key components and make for almost 75 per cent of overall construction cost.

"Construction material manufacturers and traders are not only coping with eroding profit margins but reportedly their stocks have also lost the market capitalisation by 15 to 20 per cent over the period of last four to five months,” the ASSOCHAM survey highlighted.

As per the survey, over 30 per cent of respondents said that labour crunch is the biggest hurdle in their development as they are grappling with shortage of skilled labour since, various government projects like Jawaharlal Nehru National Urban Renewal Mission (JNNURM) and the National Rural Employment Guarantee Scheme (NREGS) are encouraging migrant labourers from states like Uttar Pradesh, Bihar, Madhya Pradesh, Rajasthan to shift from private employment.

"Introduction of technology like pre-fabricated buildings, brickless technology is a feasible solution to aid faster construction and counter the labour crunch faced by the industry, considering the labour intensive nature of the construction practices across India," said DS Rawat, secretary general of ASSOCHAM.

About 55 per cent of respondents representing the real estate firms said that access to capital is getting difficult by the day as banks have reduced lending to realty players forcing them to take money from expensive sources. Almost all the associates, builders and developers interviewed by ASSOCHAM said that it is a double whammy as their current projects are getting delayed by 12 to 18 months and are witnessing slowing sales as their losses rise. The survey foresees revival of real estate projects across India with onset of the annual festive season during September-October.