MUMBAI: The country's real estate sector saw 18-20% job losses over the last one year because of weakening sales and tight liquidity, according to Lalit Kumar Jain, chairman of Confederation of Real Estate Developers' Association of India (CREDAI).
"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, adding that this estimate was based on his discussions with developers over the past few months.
Jain said among the segments worst affected were sales, administration and management, which together witnessed 7-8% of job losses.
"Real estate sector provides direct employment to nearly 7 crore people and around 7-8% of these jobs are for office staff, while majority is for labour and construction workers," Jain said.
The sector has been grappling with liquidity issues along with weak sales for nearly two years now. While unaffordable prices continue to keep prospective homebuyers away from the market, developers have been citing higher costs and compressing margins for no major correction.
According to Jain, there are around 48 no-objection certificates (NOCs) needed for a realty project to commence work, adding that a single-window clearance policy can save up to 40% of project costs.
CREDAI is the apex body of real estate developers, with more than 9,000 builder-members across 20 states.
"For now, blue collar jobs (construction workers) are unaffected but even they will face losses if the weaker scenario continues. Liquidity situation is worsening and the next three months will be very critical for the sector," Jain said.
Real estate sales have slipped 12-40% across the country in the last one year. The National Capital Region, which comprises Delhi and neighbouring towns, has been affected the most, followed 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.
He said in Mumbai alone, there was a 40% drop in projects going for approvals during the first nine months of 2013. Developers have been raising the issue of slower pace of approvals including environmental clearance hitting supply for more than two years and have been urging the government to support the sector in increasing the supply.
"Real estate is one of the largest direct and indirect job providing sectors. However, the sector has faced huge job losses in the last one year. The sector needs immediate attention from government to avoid any further job losses," urged Vimal Shah, president of Maharashtra Chamber of Housing Industry (MCHI-CREDAI).