Construction, as an industry, has always been fascinating and volatile in equal proportions. It is exciting to witness the metamorphosis from scribbles on a drawing board to a full-fledged constructed project. The current turbulent times have magnified the volatility across all industries and brought it to the fore, but specific to our industry, we are no strangers to the ebbs and tides.
Specific to these current times, we have noticed the following challenges leading up to the completion of projects:
- Meteoric rise in the demand for residential developments specially villas: This market curve is both a boon and a bane for us. Boon because we now have a higher influx of villa projects and bane because this seems to be the only sector where investors seem to have confidence in.In some cases, this has resulted in redirection of commercial project capital towards private residential investments thus resulting in delay until a new influx of capital comes in. If there was ever a time when homes were perceived as the safest haven in true sense of the word, it is probably now. With many businesses moving off-site towards home offices, there seems to a strong inclination and renewed unprecedented interest to invest in either upgrading current homes or building new ones.
- Inability to detect light at the end of the tunnel: With regards to current times, at least for now, there seems to be no finite end to the situation, with new curveballs emerging every now and then. Financially, the inability to accurately formulate projections seems to translate into a higher degree of cognisance towards investments. This uncertainty seems to be directly proportional to the decision making viz-a-viz under construction projects and reluctance to start new projects. Again, directly impacting project completion and indirectly impacting the growth of the construction footprint.
- Oversupply of real estate from pre-COVID-19 times: We are seeing an increased spotlighted interest in considering existing built real estate options and customising it towards internal requirements. For some investors where time equals money, this seems to be a viable opportunity wherein they have readily available options at possibly subsidised rates due to the oversupply and current times. It seems to be an acceptable trade off to compromise on not having a tailormade facility but having a ready unit with acceptable level of customization.
- Increased costs of building materials, specially, steel: Steel, as a key construction material specially in this part of the world, recently saw a huge jump in price. This has caused some sort of a disproportionate balance in the project costings either from the investors’ side or contractors’ side or both. Moreover, prices have increased to such an extent that it is creating pressure on pre-existing contracts with steel rates locked in at earlier prices. In the pandemic world where most have been affected financially, this increase has been challenging to absorb.
In view of the above, there is a challenge completing projects in current times with almost everything boiling down to two commodities: money & time.