Building a home can be expensive. The demand for quality home construction in urban areas had witnessed a rise, prior to the pandemic outbreak. The accelerated urban development and ‘smart cities’ projects tempted construction firms and homeowners alike. The construction industry in India employs over 4 crore people including 80 lakh+ workers in the home construction sector. However, the pandemic brought the Indian construction industry to almost a complete halt. The home construction sector was suspended during the lockdown, there was large-scale labor migration as well as a complete disruption of the raw material supply chains.
The second quarter of 2020 saw an unprecedented 50.3% drop in demand and the overall impact is likely to shrink the industry by 14.9% in 2020 as compared to 2019. In the home construction sector, the biggest challenge today is the shortage of labor caused by the pandemic. Even now, when construction activities have been partially allowed, there are challenges due to the lack of mobility and restrictions on the number of personnel allowed to work at any given site.
However, the industry is all set to bounce back strongly. The pandemic has only created a construction bottleneck which is leading to the accumulation of demand. This pent up demand is expected to drive market growth in 2021. The reduction in base unit costs will also drive more people towards buying homes in the years ahead. The prevailing labor and material shortage is expected to ease in 2021 with a complete unlock on material transportation and the inevitable of international supply chains.
The biggest boost to the sector is expected to come from government initiatives and the mega investments lined up in the National Infrastructure Plan plus the recently announced Affordable Rental Housing Complex (ARHC) scheme which is a component of the Pradhan Mantri Aawas Yojna – Urban (PMAY-U). The scheme will boost construction of affordable housing on vacant government lands in and around the industrial areas which will provide quality,budget housing to the laborers and help in boosting the overall economic growth in the country. Further, as envisaged in the Economic Survey of India, the country will need to spend close to 4.5 trillion dollars on infrastructure by 2040. The housing construction industry will attract a sizeable portion of government investment.
These factors amply prove that there is no lack of opportunity or decline of demand anticipated in the years ahead. However, there will be one major pandemic induced change which will transform the way the construction industry functioned prior to the outbreak. Technology is now going to be an integral part of the entire construction lifecycle. Even when the workforce becomes available in adequate numbers, there will be efforts to minimize human effort in areas where technology can take care of the needs. We will see the rise of formal construction companies in this segment. The commercial and large scale construction is already witnessing these changes, but, it was the individual home construction segment which has so far remained mostly unorganized. Such digital technology integration will provide greater sense of safety and reduce the risk of COVID-19 exposure to all stakeholders. Technology will also bring in greater efficiency and transparency as one is able to make and track payments, material consumption, and monitor the progress of work remotely through digital tools like CCTV cameras connected to smartphone apps and online payment options. Further, as a home owner, one can share design inputs with the construction team online and any additions or alterations to the design can also be made digitally.
This ability to carry out efficient and speedy home construction activities by integration of digital technology will lead to a rise in the private sector construction projects, and there is every reason to believe that the temporary gloom is going to turn into a construction boom within the next few quarters!
