Development activity in India is at an all time high and is only expected to increase further, given the rate of urbanisation and expansion of satellite cities.
With over 600 million people expected to inhabit Indian cities by 2030, the shift to cities and urban agglomerations implies potential demand for quality real estate and extensive supporting infrastructure services in urban areas.
Despite this huge demand, with real estate being the second largest employer in the country, the sector continues to be characterised by lack of regulation, transparency and a high degree of fragmentation. The scarcity of standardisation of real estate practices has resulted in diverse approaches and processes to exist.
As a result, the sector continues to grapple with numerous other challenges such as financial and liquidity constraints, loopholes in contract procurement and processing mechanisms, cost overruns, antiquated laws and policies, lack of enforcement and implementation of reforms etc.
These aspects have collectively affected the ability of the sector to keep up with the evolving quality and complexity of real estate and infrastructure which has been advancing at a fairly rapid rate.
Therefore, the beginning of an image makeover lies in increased professionalism. There is a pressing need to adapt and learn new ways to do business, which in turn will aide all practitioners involved throughout the development process to stay abreast of the knowledge curve and strengthen their ability to survive the paradigm shift taking place in global realty markets.
However, the sector has been lacking quality talent, which stems from the absence of specialised real estate education, resulting in the absence of much needed fresh skilled manpower entering the sector. A recent RICS study establishes the demand-supply gap at 44 million core professionals by 2020.
In fact, of the approximate 50 million people employed in real estate, construction and infrastructure, only 2 million are professionally qualified, while the remaining are unskilled and semi-skilled workers.
The current supply of core professionals comprising of architects, engineers and planners is in excessive shortfall in comparison to their demand. As of 2010 the cumulative demand for such professionals was 4.38 million with a supply of merely 5,69,000, translating to a shortage of approximately 87 per cent professionals.
By 2015 this demand-supply gap will reduce only marginally to 85 per cent, with the demand pegged at 4.73 million and the supply accounting for 7,25,000 professionals.
NEED FOR TRANSPARENCY
The shortage of such skilled resources has been responsible for slowing down construction activity by an average of 6 months to a year and increasing the project costs.
Also, increasingly, global investors are more cautious of investing in markets that lack global standards. Transparency is therefore a necessity for real estate practice. Not only does transparency serve as an essential tool for investors seeking international diversification of real estate assets, but also helps decrease some level of volatility in realty markets. The failure of creating ‘transparency’ thus far has damaged the development prospects of the industry and needs to be introduced on several fronts to have a holistic mpact on all facets of real estate business and stakeholders.
It is also imperative to build consumer and investor confidence, through the creation of a healthy, transparent, efficient and competitive real estate sector. To this end, there is a need to establish an effective regulatory mechanism which can address and curb malpractices and safeguard consumer interests in the country.
Therefore, it is widely felt that awareness and introduction of internationally recognised and locally relevant best practices can contribute towards uniform practices and lend quality assurance and credibility to the sector.
—The author is MD RICS- South Asia