If industries ranging from information technology and business process outsourcing (BPO) to pharmaceutical and retail are generating jobs for youngsters, a large part of the incomes they earn is spent on homes and at malls. At the same time, their employers are looking for space to house offices or set up shops to sell the goods and services. Thus offices, apartments, malls and multiplexes are driving an urban real estate boom around the country — a trend that has spread to suburbs and smaller towns as well.
Ramkrishna Sharma, executive-vice-president at leading developer Unitech, says, “India’s high savings propensity has helped. This is further supported by an easier availability of loans. And all this has resulted in high demand for residential, recreational and retail spaces. India’s large, educated, English-speaking middle class has made its name in the field of software and IT-enabled services, thereby fuelling demand for about 40 million square feet annually in IT and ITES office space.”
<b1>The evolving nature of the real estate industry is reflected in its growing popularity on the stockmarkets. From little in 2005, the sector has grown to capture a market capitalisation of Rs 2,00,000 crore at present. According to JP Morgan, this is just ‘the foothills of a sustained structural growth period’. The investment bank’s latest sectoral report states: “We forecast the industry to grow from $50 billion in 2007-08 to $90 billion by 2011-2012, an annual growth of 13 per cent. Demand for real estate is backed by improving demographics, a healthy macro environment, growth of the service industry, and notification of city development plans.”
As with several other industries, one of the biggest challenges in front of this growth machine is in executing projects, a capability that needs skilled human resources. A Citigroup report on the sector states: “We foresee sizeable execution and cost overrun risks.”
Already one of the largest employers in the combined organised and unorganised job market, conservative estimates put the real estate industry’s direct employment potential at more than 500,000 people within three years — a scale that is second only to the IT sector.
Sanjay Chandra, Unitech’s managing director, says, “We are looking to hire everyone from IIT-ians to graduates from the topline management schools such as IIM Ahmedabad to mid-rank B-schools.”
The first priority on hiring line is for civil engineers. In any realty company that executes projects, civil engineers who deal in design and onsite execution account for over half of the organised workforce in the industry.
“With the sudden jump in demand for people, the sector is witnessing a huge churn. Around 30-35 per cent people leave their organisation for better salary or a better brand,” says the CEO of a mid-level real estate company. “Even a diploma holder manages to earn more than twice within a one-year period after hopping once or twice,” he added.
The other jobs that are on offer in large numbers include those for project supervisors, inventory managers, building maintenance experts and civil engineers. In the extended framework, real estate developers also induce demand for other jobs such as those of property brokers, valuers, interior designers, architects and facilities managers. Such jobs require different skills, attitudes and aptitudes.
It’s not as if all segments of the industry are witnessing similar paces of growth. Industry experts believe that the residential sector is poised for continued strong growth over the next 5-10 years and tax concessions for homebuilders will possibly enhance the rate.
Experts believe the growth in IT and IT-enabled services would translate into commercial real estate demand of another 400-700 million square feet. If you add the demand from other sectors like manufacturing, banking and insurance, the total commercial real estate demand is estimated at 450-530 million square feet by 2011.
The industry is no longer perceived as a shady business controlled by dalals (middlemen). The neighbourly property ‘broker’ has been replaced by the sophisticated real estate ‘consultant’ flashing Blackberrys and laptops.
Several foreign investors with deep pockets such as Emaar of Dubai and MPC Synergy Real Estate of Germany have also taken substantial financial exposures in Indian realty. Money is not the problem, execution is — and for that, human resources are vital.