BackReal estate construction faces delays again
The pace of construction is getting affected by shortage of labour and raw material supply amid fresh curbs
PremiumBENGALURU: The second wave of covid-19 has yet again disrupted construction activities at real estate project sites due to shortage of labour, just when the housing sector was recovering from the impact of the pandemic in 2020.
The pace of construction is a critical index for housing projects, as revenue booking and loan disbursal, among other factors, are linked to it.
The effect of the fresh lockdown restrictions has been felt in Mumbai and Pune, and is now expected to impact Delhi, where a week-long curfew has been imposed. Amid the sharp rise in covid cases, the Maharashtra government said construction will be allowed only at sites with residential facilities for workers. Movement from the sites will also be restricted, except for transporting construction material.
“I think around 30-40% project sites are operational in Mumbai and Pune. A large chunk of labourers in these sites are under 45 years and below the vaccination age. As lockdown rules intensify, raw material supply is getting affected. If the situation doesn’t improve in the next 2-3 weeks, more workers may leave," said Prashant Thakur, director, and head-research, Anarock Property Consultants.
Over 100,000 construction workers are employed in real estate projects in Maharashtra, primarily Mumbai and Pune, 80% of whom are migrants. According to Thakur, work is on in 50-60 construction sites.
In Maharashtra, low-skilled construction workers are primarily from Odisha, Jharkhand, Bihar and Uttar Pradesh, while skilled labour, such as laying of tiles, are sourced from Rajasthan.
Pankaj Kapoor, managing director, Liases Foras Real Estate Rating and Research, said a few large developers can afford to continue work on their sites in this scenario. In fact, even after the lockdown restrictions were lifted last year, smaller developers could not resume work immediately as they were unable to pay contractors. “After the earlier lockdown, work had started by the large developers. Work before the second wave was at 60-65% of pre-covid levels. It is now at 20-25% of pre-covid levels. So there has been a big impact. Construction is a very important factor and delays will cause cash flow problems among others in the long run for developers," Kapoor said.
According to analyst estimates, 400,000 housing units across the top seven cities were scheduled to be completed this year. “If construction is stopped even for a month, it takes 2-3 months to revive it. This time even Tier 2 cities may also see some impact," Anarock’s Thakur said, adding that the new supply will be impacted.
“If construction is stopped even for a month, it takes 2-3 months to revive it. This time even Tier 2 cities may also see some impact," he said.
Mumbai-based real estate firm Hiranandani Group has four active sites in the region and it has arranged for construction workers to stay on the site.
Managing director Niranjan Hiranandani said any developer, large or mid-sized, who can't keep labour on the sites will face difficulty.
“Last time, 75-80% of labourers went away. I feel this time, it’s much less. So far, around 20% of the work has got affected," he said.
Ashok Mohanani, president, National Real Estate Development Council, Maharashtra said mid-sized and small-sized developers who don’t have the provision of in-situ labour will be impacted a lot.
“Government is very clear about the measures that need to be taken so there is no compromise on that front. We have a lot of labourers coming from other states and we are getting antigen tests. Last time, work had stopped for several months. This time, only some people are going back," he said.
Down south, in Bengaluru, while restrictions are not as strict as Mumbai, cases continue to be on the rise.
Vinod Menon, director and CEO of Citrus Ventures said there has been an impact on skilled labour in the last two weeks. In north Bengaluru, an emerging and busy real estate development corridor, not many project sites seem to be active, he said.
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