Post globalisation era in greater mumbai june 2006 efi – solar foundation mumbai
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- (Source: The ET Knowledge Series) Industry Perspective
- Shapoorji Pallonji Co.
- Hindustan Construction Co. Ltd.
- 7.1.3 Housing Construction Sector Macro Scenario
- Industry Perspective
- The Maharashtra Chambers of Housing Industry
- Evershine and RNA
- 7.2 CONSTRUCTION SECTOR IN MUMBAI (Over last decade) Macro Scenario
Table: 7.1.2Projected infrastructure spending for India (figures in Rs. crore)
(Source: The ET Knowledge Series) Industry Perspective Against this backdrop of bullish sentiments, Gammon India expresses the concern that companies are yet to meet emerging challenges like adopting best international practices, expert project management, adoption of state-of-the-art equipment, better utilisation of material and resources, etc. so as to make the most of the opportunities. On the issue of growth of the sector, Gammon is of the opinion that the sub sector has grown by 35-40 per cent over the last five years. However, Shapoorji Pallonji & Co. believes that growth has been around 25 per cent in the last two years. The company feels that the above growth has been largely on account of MNCs setting up shops in India, good economy, FDI, political stability, government policies changes in housing and construction. Hindustan Construction Co. Ltd. (HCC) pegs the growth at an average of 10 per cent during the last four years. It expects high growth in infrastructure construction sub sectors over the next five years, as it feels that the infrastructure construction has seen many decades of neglect, and large investments would require to be made to get it back in shape. Both HCC and Shapoorji shared the view that the last decade saw several policy initiatives in the area of infrastructure development by state and central governments, however the effect of liberalisation was visible only after the year 2000. 7.1.3 Housing Construction Sector Macro Scenario The fiscal incentives introduced by the government three-years ago have unleashed market forces. A research conducted by CRIS-INFAC predicts the sub sector to grow at an average rate of 24 per cent between 2003-07. This is however against the high growth rate of 36 per cent achieved in 2000-01, 35 per cent in 2001-02 and 33 per cent in 2002-03. The present growth in real estate sub sector is largely influenced by developments in retail (e.g. malls and super stores), hospitality and entertainment industry (e.g. hotels, resorts, cinema theatres), basic infrastructure (e.g. hospitals, schools) and IT & IT-enabled services (e.g. call centres) to name some. The extent of the growth of the housing construction sub sector can be gauged from the fact that it grew from Rs. 12,000 crore in 1998-99 to Rs. 62,000 crore in 2002-03, an amazing jump of 416 per cent. Industry Perspective HCC claims that in metro cities several real estate companies registered double and triple growth rate in turnover during the last few years. It credits this growth to banks and financial institutions that made available easy and low interest loans to retail customers. The Maharashtra Chambers of Housing & Industry (MCHI) also airs a similar view and claims that except for the slowdown that began in 1996-97 and lasted till 2000, the housing sub sector has performed exceptionally well over the last decade. Currently, the association pegs the total shortage of housing units in the country at 320 lakh and forecasts that the sub sector needs to build approximately 2 lakh houses per year to bridge the widening gap. Evershine and RNA blame the crash of stock market for the slump in housing sub sector between 1995-2000. They agree that since then the sub sector has grown phenomenally on account of the customer-friendly approach by banks and the government's decision to allow 100 per cent FDI. Evershine pegs the growth rate during the last 3-4 years at 40 per cent and claims that it has been largely due to change in customer profile - 'investor' to 'real user'. 7.2 CONSTRUCTION SECTOR IN MUMBAI (Over last decade) Macro Scenario 7.2.1 Infrastructure construction sub sector Recently, Maharashtra’s Chief Minister, Vilasrao Deshmukh submitted an ambitious four-year, $800 crore plans for modernising Mumbai, including new roads, slum clearance, underground subway system and massive public-housing project. Prime Minister Manmohan Singh has committed Federal Funds to cover 20 per cent of the plan. With population multiplying manifolds in the 437 square-kilometres Mumbai city, the land usage is a sensitive issue. This would require moving of millions of people from the slums to the outskirts of the city, thus making room for sidewalks, roads, and parks. According to McKinsey report, transforming Mumbai could cost the city upwards of $ 4000 crore over the next decade. Informally, the World Bank has agreed to lend the city $ 100 crore and guarantee public and private loans for its infrastructure programs. Recently, a seven-member World Bank (WB) mission completed its seven-day visit to Mumbai after endorsing the Maharashtra government's aspirations to transform Mumbai into a world-class megapolis. The mission has asked for the inclusion of representatives of the Thane and Navi Mumbai municipal councils on the task force that will work out the business plan for the city. 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