Despite slowdown, construction sector shows positive growth, says survey

A recent survey has indicated that despite the economic slowdown and a modest pace of growth in construction output as indicated by official data, the sentiment in the construction industry is relatively positive with workloads for most parts of the industry continuing to rise.

The RICS India Construction Market Survey for second quarter of 2012 was designed to capture the sentiment of professionals working in the sector. The survey not only highlight current trends but also signals at an early stage any significant change that is taking place in the construction sector. Responses to the survey from professionals working within the private housing arena were particularly upbeat; they were also relatively encouraging in the infrastructure space, private industrial and private commercial sectors. New enquiries surrounding infrastructure projects and pipelines were also noticeably strong.

Significantly, the concerns over the macro picture in the country do not appear to be adversely impacting construction prospects. Workload expectations over the next 12 months indicate a remarkable degree of resilience; however, there are concerns with respect to increasing profitability over the period. The survey also suggests that the construction sector is currently struggling to push up output prices sufficiently in order to offset rising input costs that the industry is continuing to grapple with.Lack of demand, planning, regulatory issues and access to finance are other key factors highlighted as inhibiting construction output. Shortage of labour has been sighted as the most critical constraint.

Commenting on the current and expected market environment in India, RICS members said: “Construction industry is poised for growth in the real estate and infrastructure sectors in second half of this fiscal. Housing, retail, healthcare, roads, power and transportation segments are expected to have 10 to 15 per cent growth over the first half with construction spends of the order $75 billion. The construction costs have shown a clear 15 per cent increase with input costs of materials and workforce.”

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