Delay in construction and delivery of projects, is the biggest challenge that the real estate industry faces. This is a direct by-product, of the shortage of skilled manpower to execute the projects and streamline organisational processes.
According to a study by RICS, by 2020, the Indian realty sector will face an 85% shortage of skilled manpower, across various professional categories. A shortfall of about 44 million core qualified professionals, is likely to affect the execution capabilities of Indian developers. By 2020, the sector will require 5 million civil engineers, architects and planners, as against the expected supply of less than a million of these professionals. The RICS study estimates that by 2020, the urban population will increase by 123 million. Consequently, the demand for real estate is likely to touch 95 billion sq ft, across residential, retail, commercial, industrial and civil amenities, during 2010-20. This translates to an average demand of 8.7 billion sq ft, every year. A shortage of professionals could, therefore, lead to higher costs for these professionals and delays in project deliveries, thereby, denting profitability as well. Real estate sector faces a skill challenge.
The real estate and construction sector employs 50 million people, of which, only 2 million are professionally qualified. While the Indian real estate sector offers one of the best pay packages in the corporate world, it continues to face high attrition rates, owing to job dissatisfaction and lack of career growth. Even though the sector has succeeded in poaching professionals from other sectors like IT/ITeS, banking, finance, telecom, etc., the retention of these professionals remains a challenge, as this young and qualified work force often return to their core sectors, even at the expense of a salary cut. Sachin Sandhir, managing director – emerging business, RICS, laments that the lack of quality talent has significantly affected the image of the sector. “There is a pressing need to adapt and learn new ways to do business, which in turn, will aid all stakeholders to stay abreast of the knowledge curve and strengthen their ability to survive the paradigm shift that is taking place in global realty markets,” says Sandhir.
According to a study by Track2Realty, the median age of professionals in the Indian real estate is 45 years, meaning that about half of all realty professionals are older than 45. It is in contrast to the median age of 25 years in the IT/ITeS sector or 30 years in the Banking, Financial Services and Insurance (BFSI) sector. Low retention “A real estate professional, right out of high school or college, is not all that common in India,” points out Nikhil Hawelia, managing director of the Hawelia Group. “People often come on board, after working in many other sectors. Unfortunately, it is the money alone that brings them to the real estate job. The kind of energy, commitment and time that it takes to build a career in real estate, today’s young lot are non-committal for that,” he admits. Critics often argue that the bar to entry, in real estate, is too low. Whoever, while it may be easy to join the sector, it takes a lot to stay in real estate. Developers’ primary concerns also revolve on selling their inventory. Considering the fact that there are more real estate brokers than needed, there is little incentive for builders to inculcate a work culture that encourages young professionals. Nevertheless, this lack of skilled and qualified professionals, has started affecting developers and the sector, now.
Source: Money Control