Despite a slowing economy, building and construction professionals in India remain confident of their near-term growth prospects amid strong workload expectations.
However, challenges remain ahead, including a shortage of labour and significant concerns over planning and regulation.
The latest Construction Industry Market Survey published by the Royal Institute of Chartered Surveyors in India indicates that activity throughout the country continues to rise. The number of firms reporting an increase in workloads outweighed those reporting a decrease in all sectors except energy and gas. Output remained particularly strong in housing, infrastructure, commercial and industrial building.
Moreover, near term confidence remains buoyant. Almost 70 per cent of firms surveyed expect a rise in workloads over the next 12 months while the number of firms anticipating an increase in terms of both employment and profits exceeds the number of firms anticipating decreases in these areas.
Promising though the readings are, however, clouds loom on the horizon.
First, while the economy is currently growing at a reasonably healthy rate of 5.5 per cent, there are fears of a slowdown on the horizon amid weakening levels of consumer spending. That, in turn, could affect demand for construction industry services.
Second, the industry suffers from a chronic shortage of labour as well as challenges associated with excessive regulation, tough competition and financial constraints. Almost 90 per cent of firms surveyed cite a shortage of labour as a significant constraint on activity, with extreme shortages of carpenters/joiners and substantial shortages of quantity surveyors, bricklayers, plasterers, plumbers and electricians.
Finally, despite the relatively positive demand implied by the survey, profit margins are under pressure amid reports suggesting that firms are struggling to increase prices by enough to offset rising input costs.
Still, the general degree of optimism implied by the survey results is encouraging.
India’s economy may be slowing, but for now at least, conditions in its construction industry are reasonable strong.