Real estate slump puts architects in a bind

The slump in the real estate sector has not only spooked the developers, but also architects. Representatives of the community said that more than 20 per cent of professional architects will be out of work if the slump continued for another six to eight months.

According to estimates of the Indian Institute of Architects (IIA), more than 90 per cent of the professional architects are directly dependent on real ty projects. The slowdown would directly or indirectly affect them post-June 2009. While the exact number of professional architects is not known, IIA has over 15,000 architects registered with it. These architects jointly employ more than five to seven lakh professionals.

IIA’s newly-elected national president Vinay Parulekar said, “Although, there is a feeling of insecurity within the community, there have been no cases of heavy job cuts so far. But, a large number of projects have come to a halt, which is an alarming signal for our fraternity.”

Major architecture companies, on an average, draw 8-10 per cent of the total project cost as fees from the developer. Following heavy cost escalation and project delays, developers are asking the architects to lower the fees.

“It’s purely a business aspect and the per cent of fees charged are different by different architects. The slowdown, however, might help Indian architects as large developers are not keen on paying foreign architects henceforth,” added Parulekar, who is based in Mumbai.

Smaller firms find it more difficult to survive as they have fewer projects on hand and are in a bind when the payments from developers do not come through.

IIA’s Maharashtra (chapter) Chairman Hemant Gandhe said, “When projects suddenly get postponed or new ones are not launched, smaller companies find it difficult to make money and pay salaries to its employees. Hence, a large number of smaller firms appoint professionals and avoid “employee” status so as to minimise the responsibilities of the firm.”

“There have been a large number of job cuts in this industry. But since many architects do not have the “employee status”, the job cuts remain unnoticed,” said a prominent architect in Mumbai.

A professional working with Delhi’s top architect mentioned, “A number of architects working in my firm have no work and hence might lose job soon.”

“Things would be really difficult if the slowdown continues for another six months. Architects, who have been employed by real estate developers have already lost jobs and the time is tough for professional architects,” said Ajit Bhagat, IIA’s Pune unit chief.