An economic survey forecast the real estate and construction to generate more than three million jobs annually in the next five years. The sectors maybe facing challenges like reluctance of banks to provide credit but it will have a strong impact on job creation.
The report stated that the sector is the second largest employment provider in the country after agriculture and has employed more than 40 million people. It is slated to employ 67 million by 2022. This shows that the sector will generate more than 15 million jobs over the next five years which would translate to about three million jobs annually.
The sector has added more than 80 percent of the employment which constitutes minimally skilled workforce. The skilled workforce account for over 9 percent share and the rest is spread across work classes like technicians, engineers and clerical. The survey pointed out that the share of lending to the real estate sector has significantly fallen over the years. This is because the lenders are reluctant to provide credit to the industry due to increasing bad loans and lower profit in the business. The survey expressed concern over the increasing non-performing assets of an individual housing loan portfolio of the public sector banks.
Nevertheless, financial institutions like pension funds and sovereign wealth funds as well as private equity funds have replaced banks as the largest source of sector. PE funds have been the highest source of funding which accounted for 57 percent of the share followed by 34 percent in bank lending and 9 percent was funded through FDI inflows. The growth of the sector has decelerated over the years which is due to the decline in the growth of ownership of dwelling segment. The survey mentioned that the residential launches across 14 top cities in India fell to the lowest in the last five years which is about 58,000 units as per National Real Estate Development Council. The housing sales fell to the lowest in the last five years to about 1,01,850 units during the period.