The pandemic and subsequent lockdown had brought the construction sector to a screeching halt. While the onsite work stopped immediately, the problems kept multiplying. Apart from the most staring problem of migrant labor exodus, the sector was facing several additional challenges like supply chain disruption, lack of liquidity, project delays, and declining consumer demand.
While everything was kept on hold at construction sites, the world as we knew it, transformed completely. Most companies resorted to working from home and succeeded in being productive. With no clear timelines for a vaccine in view, it is obvious that businesses will stick to the remote working model more permanently. Industry leaders expect this development to be a driving pattern changer for the real estate sector.
To combat all these problems, major structural shifts in the construction eco-system are expected. Technology as a savior will be a key trend in the coming days. Construction is a rather technology behind the sector, but the pandemic is going to change that. Like all other sectors, technology will be institutionalized and speedily adopted by many large players followed by smaller ones, provided the credibility is established.
The focus will shift to sustainable construction and new materials will be used in order to reduce carbon emission and biohazards, even if it means paying a higher price. Drone technology, Augmented Reality, Virtual Reality will be used to speed up construction and reduce obstacles and hassles. AI guided material and construction methodology selection will be adopted. There will be a surge in 3D printing companies as well.
Many companies are anticipating a huge labor cost increase as now they would need to maintain quarantine facilities for the returning migrant laborers and also provide them with better health, hygiene, and safety facilities. In order to reduce this cost, they have to reduce the number of onsite laborers.
Thus, largescale offsite construction factories will come up where various construction components will be built. The onsite will then function as a well-organized and well-sequenced production unit to enable hassle-free and speedy construction. These changes would create a lot of opportunities for smaller contractors, partners, consultants, start-ups, and SMEs who will inject efficiency, speed, and innovation into the sector.
The current crisis has resulted in demand pattern shifts in the real estate sector. In the residential sphere, people are looking for larger houses with an in-built office space. The commercial space requirement per employee has also risen from 50 – 60 sq. ft. to 100 – 125 sq. ft. due to the new social distancing norms. Due to remote working, demand for co-living spaces in large cities is on the decline, while in smaller cities residential spaces offering superior lifestyle facilities are experiencing a demand surge.
Due to the slowing down of the economy, purchasing power has gone down to some extent, however, the psychological need to live in one’s own house is at an all-time high and expected to negate the former problem. Considering the monumental role the construction sector plays in the Indian economy, industry leaders, are hoping for short term policy interventions from the government to help them deal with the liquidity issue. To drive consumer demand, there is an ask of reduction in home-loan interest rates to 6%.
In conclusion, it can be said that despite the difficulties, the general sentiment of the construction sector is quite positive as they brace for a monumental shift from the earlier statuesque with the expectation of creating a new and more efficient, sustainable eco-system.
The views expressed above has been gathered from a panel discussion held at GBS Reimagining Business Series 2.0, as spoken by Nejeeb Khan, Country Head, Katerra; Vipul Roongta, Managing Director & CEO, HDFC Capital Advisors; Sriram Natarajan, Senior Director – Construction Management, Project Development Services, Cushman and Wakefield; Harsh Binani, Co-Founder, Smartworks; Santhosh Kumar, Vice Chairman, Anarock Property Consultants; Nandu K. Belani, MD, Belani Group. The session was moderated by Gaurav Karnik, India Real Estate National Leader and Tax Partner, EY.
