Poor sales, squeezed cashflows force developers to cut jobs2 min read . Updated: 04 Dec 2013, 12:03 AM IST
According to Credai, the industry has seen a 20% cut in jobs between January and September
Mumbai: Job losses are growing in the real estate sector, the second largest employer in India after agriculture, as poor sales and squeezed cashflows force developers to cut down the workforce.
According to builders’ lobby Confederation of Real Estate Developers’ Associations of India (Credai), the industry has seen a 20% cut in jobs between January and September.
Around 8% of white collar real estate jobs have been shed between January and September and blue collar workers who have been untouched so far may start to feel the heat, according to Credai.
“The new recruitments have completely stopped. If the sentiments do not improve in the next four-five months, the situation will worsen to that of the market crash of 2008, where 30% of the work force lost jobs," said Lalit Kumar Jain, chairman of Credai and chairman and managing director of Kumar Urban Development Ltd.
As per Credai’s estimates, real estate directly employs 70 million people. The Royal Institution of Chartered Surveyors (RICS)—a qualification and standards body for the real estate and construction sector—estimates 50 million people work in the industry.
Tough liquidity conditions and regulatory environment are forcing developers to cut down on new launches and the impact is being felt on the work force, analysts said.
“There used to be a time when developers used to throw money to get experienced talent. This has stopped. Even the fresh recruitments are almost nil." said Aditya Narayan Mishra, president- staffing, at human resource consulting firm Randstad India.
“The demand for surveyors, site engineers, project supervisors are severely impacted." Mishra added.
But, according to some sector experts, the downturn is temporary. “Notwithstanding the current slowdown, there is a fundamental need for better quality workforce as the demand for housing is still there." said Sachin Sandhir, managing director (South Asia) at RICS.
According to RICS, the real estate industry needs four to five million skilled workers such as planners, architects, surveyors, engineers and project managers a year and 44 million unskilled labourers by 2020.
Jain of Credai said sales have dropped by 12-40% across the country in the last nine months. Credai estimates that the total number of launches has dropped between 40-70% across India while manpower costs have risen 40% between January and September.
According to a recent report by real estate consultant Knight Frank India, almost 45% of the under-construction and unsold inventories in Mumbai were unsold during the January-September period. The pan-India inventory of residential stock is now well above the comfort level of 14-15 months, says a September report by real estate consultant Jones Lang LaSalle India (JLL).