Dj vu 2008: Slowdown-hit real estate stares at huge job cuts

Slowdown is biting the real estate sector hard and at stake are jobs. Over the last nine months, when sales weakened and liquidity tightened, 8 percent white-collar jobs like architects, sales personnel, designers and engineers, were cut, said Lalit Kumar Jain, chairman of Confederation of Real Estate Developers’ Association of India (CREDAI).

According to him, 18-20 white-collar jobs are under threat and with developers defer project launches,cuts loom in the blue collar jobs as well.

Until now, the worst affected have been sales, administration and management, while labours remained unaffected.

The next three months will be “critical”, because if the situation does not improve, the pain will extend to the larger majority of blue-collar workers hired by the sector, said Lalit.

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There have not been any new recruitments and if sentiment does not improve in the next four-five months, the situation will be as bad as the market crash of 2008, when 30% of the work force lost jobs, he added.

“Slower pace of approvals has broken the cycle of sales and cash flow, ultimately resulting in job losses. Even the annual 10-12% new recruitment has not taken place this year, effectively pushing job losses to 18-20%,” Jain said.

This estimate has been based on on his discussions with developers over the past few months.

The real estate sector directly employs seven crore people in India, he said. Of this, 7-8% (between 50 lakh and 56 lakh) are in white-collar positions and the remaining blue-collar. Sluggish sales, liquidity crunch, complicated project approval system and piling inventory continues to haunt realty players in the country.

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Jain said sales have dropped by 12-40% across the country in the last nine months. Credai estimates that the total number of launches has dropped between 40-70% across India while manpower costs have risen 40% between January and September. Sales in NCR have been the worst affectedfollowed by Mumbai. Although the property market in Bangalore has largely bucked the trend, other micro-markets in southern India are following the sluggish trend in sales, Jain said.

Jain said that the situation is turning serious and the sector needs government support in terms of efficient functioning.

“Inefficiency on the part of the government is hurting consumers. There is lack of conviction at the helm. If industry suggestions are incorporated and government becomes more efficient we can increase real estate contribution to GDP to 12%,” he added.

He said the biggest hurdle in the growth of the sector was delayed clearances and approvals.He added that in Mumbai alone, there was a 40 percent drop in projects that applied for approvals during the first nine months of 2013.

A white paper by CREDAI will be unveiled at the National Conclave 2013 on December 13-14, 2013, which will emphasise on how the potential of the housing sector can be maximised to ensure its contribution to its best capabilities towards the country’s economic growth. The conclave will bring together the stalwarts of the industry to ideate on the pressing issue - that is project clearances in India.