Real-Estate and construction sector to generate 75 million jobs by 2022: NAREDCO-KPMG

A background paper, by KPMG in India and the National Real Estate Development Council (NAREDCO) provides an overview of the key programmes launched by the central government in the recent past to address the key challenges in urbanisation and the real estate sector, and throws light on the policy reforms undertaken by government to address these concerns.

The paper highlights that India’s urban population is forecasted to increase by about 40 per cent from 420 million in 2015 to over 580 million by 2030.

The government has launched several large programmes (such as Smart Cities, Housing for All, AMRUT, HRIDAY etc.) along with policy support (Real Estate Act, REITs, GST etc.) to accommodate such a vast population base. According to the paper, nearly 110 million houses would be required by 2022 alone in urban as well as rural India to provide housing to all citizens. This includes the current shortage of over 60 million houses, out of which around 20 million exist in urban areas.

As per the paper, there are a number of solid infrastructure projects in the pipeline. These include 432 projects worth INR6.5 trillion for roads, more than 400 projects worth INR6 trillion in railways, 70 projects worth INR670 billion for the development of airports and 75 projects worth INR551 billion for the ports.

The paper attempts to analyse the construction development sector as a whole. The sector has attracted over USD 24 Billion Foreign Direct Investment (FDI) between 2000 and 2015. The Housing for All initiative requires an investment of USD2 trillion by 2022. Also, the potential value of REITable commercial office assets is more than 400 million sq ft which is worth over USD 50 billion.

“With every 6th person getting urbanized globally being an Indian, the real estate and construction sector holds significant opportunity for both global and domestic companies engaged across the value chain (design, development, construction, finance etc.). To meet this requirement India will need to construct 43,000 houses every day until 2022 to achieve the vision of Housing for All by 2022, hundreds of new cities need to be developed over the next decade. This has the potential for catapulting India to 3rd largest construction market globally. The sector is expected to contribute 15 per cent to the Indian economy by 2030, become the largest employer by 2022 – employing about 75 million people or more than 13 per cent of the total estimated workforce of India, remain the largest contributor to the state exchequer and will consume almost a quarter of India’s total electricity need by 2030," said Neeraj Bansal, Partner and Head, Building, Construction and Real Estate Sector – KPMG in India.

"The recent policy reforms such as the Real Estate Act, GST, REITs, steps to reduce approval delays etc. are only going to strengthen the real estate and construction sector. The sector players now more than ever need to develop a global mindset towards quality, project delivery, work culture and governance. Strong steps are required to provide faster approvals, serviceable and clear title of land, long term finance and skilled workforce.” said Neeraj Bansal.

According to Mr Rajeev Talwar, Chairman, NAREDCO, “The Hon’ble Prime Minister has laid the road map for making India into a 10 Trillion US$ economy. We are excited about the next ‘Decade belonging to India’ - as Real Estate is going to be a catalyst and major economic driver in the process. The Government has paved the way with introduction of GST, Real Estate Act; Relaxation in investment norms for REITs, direct and indirect tax incentives on housing development. The Convention is an opportunity for us as an Industry to deliberate about the challenges that we are likely to face in coming years. We now take upon ourselves to implement strategies for fulfilling his vision.”