India's construction sector is poised for transformative growth.

How do you compare the latest construction market trends in India vis-à-vis global market?

Peter Trollope: Comparing the latest construction market trends in India to the global market reveals distinct dynamics and challenges. Globally, the construction industry has faced soaring costs since the pandemic due to supply chain disruptions, material shortages, and a tight labour market, which is driving up wages. The US market has seen unprecedented construction activity, further straining resources and labour. The global sector is also contending with new environmental regulations and fluctuating fuel costs, impacting overall expenses.

In contrast, India’s construction industry has demonstrated remarkable resilience and adaptability, with significant investments in infrastructure and government initiatives driving growth. Projected to reach $1.4 trillion by 2025, the Indian market is capitalizing on technological advancements and improved supply chain efficiencies. While labour costs have risen, India's strategic focus on operational efficiencies and skill development positions it well for future trends.

Overall, while the global market navigates cost escalations and regulatory changes, India's construction sector is poised for transformative growth through innovation, sustainability, and proactive alignment with future demands.

How do you view the emerging trends in the Indian construction landscape?

Gurjot Bhatia: India's construction industry is a key pillar of the nation's economic landscape, demonstrating remarkable resilience and adaptability in recent years. As the sector evolves, it addresses labour costs through strategic enhancements in operational efficiencies, technological advancements, and skill development. This proactive shift towards technology, innovation, and sustainability aligns with future needs and sets the stage for transformative trends.

Technological integration: The adoption of Artificial Intelligence (AI) is reshaping traditional practices in India's construction sector. AI enhances project management, optimizes resource allocation, and minimizes delays, leading to improved project outcomes. The integration of robotics and automation streamlines construction processes, from bricklaying to repetitive tasks, enhancing efficiency and reducing labour costs. These technological advancements are revolutionizing the construction landscape, fostering better project outcomes, cost-effectiveness, and stakeholders’ collaboration.

Skilled workforce development: The industry faces significant challenges related to the availability of skilled labour, which is crucial for ongoing infrastructure projects and expansive real estate developments. To address this issue, employers are adopting innovative recruitment strategies by collaborating with vocational training institutions and educational partners to promote career prospects in the construction industry. Additionally, companies are increasing wages, benefits, and incentives, resulting in higher average hiring costs for skilled, semi-skilled, and unskilled labour. These forward-thinking initiatives are fuelling the growth of the real estate industry while paving the way for increased employment opportunities and skill development.

What are the perceptible changes visible in the real estate and construction sector?

Gurjot Bhatia: The Indian construction industry is a crucial component of the nation's economy, demonstrating remarkable resilience in recent years. It has adeptly navigated post-pandemic challenges, showcasing adaptability and innovation in response to changing circumstances. Industry estimates indicate that the construction sector is on an upward trajectory, projected to reach $1.4 trillion by 2025. This growth is driven by government initiatives, evolving consumer preferences, and significant technological advancements.

In the past two years, India has significantly improved its supply-chain efficiency, effectively adapting to global disruptions and diverse regulatory environments. While global raw materials prices have generally decreased, leading to lower input costs, there has been a slight increase in labour costs. The rise in construction expenses can be attributed to several factors, including the escalating cost of goods and services, higher wages to offset rising consumer goods prices, and increased labour wages necessitating changes in existing project models. Additionally, higher fuel prices have reduced production of key building materials like steel, aluminium, and cement, resulting in higher costs for contractors due to supply-demand imbalances.

As the construction industry evolves, addressing labour costs through strategic improvements in operational efficiencies, technological advancements, and skill development, it sets the stage for the next wave of transformative trends. This shift towards technology, innovation, and sustainability is not just a response to immediate challenges but a proactive alignment with future demands. In this context, the industry’s digital transformation and technological integration gain momentum, marking a pivotal turn towards leveraging technology to redefine construction processes and outcomes.

What is the importance of health & safety and ESG in the current construction practices?

Peter Trollope: The concept of safety culture has become increasingly important in today’s complex and dynamic work environments. This shift originated in response to industrial disasters of the 20th Century, which highlighted that technical and regulatory measures alone were insufficient to prevent major accidents. The COVID-19 pandemic further emphasized the need for robust safety measures within the construction industry, focusing on protecting worker health and preventing virus spread. These efforts have led to a safer work environment, with benefits that extend beyond the pandemic and enhance overall industry productivity.

A CBRE report analysing nearly 380,000 incidents across various real estate sectors over the past five years reveals a notable trend: negligence, human error, and lack of awareness are the primary factors in over 90% of these incidents. In the construction sector, a strong safety culture is essential for ensuring employee safety, reducing hazards, complying with legal requirements, and minimizing financial risks.

The importance of safety culture in achieving ESG goals is particularly significant in the real estate sector. The increasing adoption of ESG principles naturally drives safety improvements, as companies recognize the strong connection between safety, social well-being, environmental protection, and good governance. A robust safety culture ensures that environmental protection measures prevent accidents that could cause spills or pollution, thus addressing all three aspects of ESG. Additionally, ESG principles emphasize transparency and open communication, fostering a safety culture where concerns are encouraged, near misses are reported, and lessons learned are openly shared. This collaborative environment ensures everyone plays a role in maintaining safety.

As investors increasingly prioritize ESG parameters, companies with strong safety cultures gain a competitive advantage, encouraging continuous improvement in safety practices. Aligning ESG goals with safety best practices not only enhances workplace safety, but also contributes to a more sustainable future for both the workforce and the environment.

What is your outlook on the Indian construction sector as one of the fastest growing markets globally?

Peter Trollope: As the demand for residential, commercial, and industrial properties continues to grow, developers will launch new construction projects to meet this demand. This will likely result in increased construction activities across various real estate sectors, including housing, office spaces, retail centers, and infrastructure projects. By 2026, the total stock across commercial, residential, and industrial sectors is expected to surpass 1,540 million square feet, with the residential sector alone projected to exceed 5,300 million square feet.

The expansion of the real estate sector is also expected to lead to ancillary construction activities such as infrastructure development, including roads, bridges, utilities, and transportation networks, to support the newly developed properties. Additionally, this growth will create employment opportunities for skilled workers, engineers, architects, and other professionals in the sector. The increased construction activity is anticipated to stimulate economic growth, contribute to the country's GDP, and attract more investments in the industry.

Moreover, the construction industry in India is adopting innovative solutions and streamlined processes, paving the way for standardized and manageable costs. Government support through incentives for sustainable building materials and streamlined permitting processes is likely to create a favourable environment, tempering overall costs.

Overall, the combination of market dynamics, industry adaptations, technological advancements, and supportive policies is expected to contribute to the normalization of construction costs going forward. This will allow for better cost predictability and improved planning for construction projects.