Safe as houses: it's the fundamentals that matter and India has got them right
[videoplayer main_style="style-1" video_link="https://www.youtube.com/watch?time_continue=2&v=XChotXfap9A" title_font_options="tag:div" subtitle_font_options="tag:div" title="Meeting Need with Speed: Modular Construction as a key innovator"][dfd_heading content_alignment="text-left" delimiter_margin="margin-top:10px;" style="style_01" title_font_options="tag:h2|color:%23dcdb22" subtitle_font_options="tag:h3" heading_margin="margin-top:30px;"]Why donald trump’s twitters mean more infrastructure investment in india… and soon[/dfd_heading]Safe as Houses? Not quite.Even without the market shredding impact of America’s Sub Prime crisis of the last decade, house prices had fallen in the United Kingdom by 18% between 1989 and 1995 (in London the fall was closer to 37%), and in Japan prices fell by more than 60% between 1990 and 2000: between 1987 and 2007, the S&P Index in the States rose by more than 500%, compared with a 200% growth in US real estate. And of course, the seemingly overwhelming case for equities over bricks and mortar during this turbulent twenty-year period wasn’t hard to explain. The United States, in common with most western economies, was riding high(ish) on a tide of acronyms, CDOs and CDSs, not to mention the sliced and diced (and dodgy) mortgage portfolios taken to market with a guaranteed AAA rating.
It’s a problem, because coming the other way down India’s infrastructure and logistics superhighway is an unprecedented surge in demand for urban housing, fuelled by an increasingly urbanised population projected to become the biggest on the planet by 2022. India’s National Skill Development Council predicts that by then the real estate and construction sector will require a workforce of more than 66 Million, so without any obvious core of skilled workers currently able to sustain anything like growth it’s no wonder the sector is starting to show signs of stress.
Of course all this was supposed to be addressed by 2016’s Real Estate (Regulation and Development) Act which was intended to act as a platform for local, State driven planning capable of creating an appropriate environment for improved training and regulatory structures, but so far six States out of 29 have failed to produce any plans at all under the legislation which means finding workers with the right skills in the right place will continue to be a source of real concern.
Billionaire developer Niranjan Hiranandani, head of Hiranandani Construction, has a simple enough solution: just pay unskilled workers less and reap the savings while you can. But that’s not a particularly attractive solution for anyone buying one of his apartments 76 floors up in the Mumbai skyline where quality assurance is far from being a dispensable extra. The behemoth that is Hindustan Construction Company perhaps takes a slightly more realistic approach, going on record last week to say that skills shortages have become a huge problem for the sector: 50% of its workforce needs advanced training just to use the complex machinery now prevalent on most modern building sites. With a heavy tone of understatement a spokesman for the company announced grandly that given these skilled workers are not available, “the only option is to train them”.
Well, it’s not quite the only option…
With no actual shortage of workers seeking employment in India’s urban conurbations, particularly in the light of a seemingly inexorable drift of former agricultural workers from country to town, what if the physical construction process itself could be de-skilled? Why not make a virtue of necessity and draw on this pool of former agricultural labourers to release the margins of between 20% to 70% that Deloitte India predict would follow from a wholesale deskilling initiative? These savings would go straight to the bottom line without endangering the quality and safety of the finished building. Skilled construction workers earn Rs 1,000 a day as opposed to their unskilled counterparts who earn an average of Rs 200.
And there is just such a business model on the market right now, a model with the potential to uncouple construction projects from a seemingly insoluble skills conundrum: it’s called Modular Construction.
Modern Modular technologies allow all of the building’s key components to be put together off site by specialist workers and then assembled locally at the same time as the site works are completed, not only reducing overall completion schedules by as much as 50% but also significantly reducing the need for skilled workers in the construction phase. All of the design and engineering disciplines are instead concentrated at the offsite manufacturing facility leading to labour, financing and supervision costs. Which will all be music to Mr Hiranandani’s ears…
Modulex Construction is the World’s largest and India’s first Steel Modular Construction Company, meeting the challenges of the subcontinent’s current urban housing shortages in a practical and focused manner. The company was founded by Red Ribbon as part of an innovative project to harness the potential of India’s dynamic and evolving real estate markets whilst at the same time delivering opportunities for investors through Red Ribbon platform. Because, when it comes to investing on the subcontinent, nobody knows India’s markets better than Red Ribbon.[dfd_button button_text="Learn More about Modulex" alignment="text-left" buttom_link_src="url:https%3A%2F%2Fmodulex.in||target:%20_blank|rel:nofollow" hover_text_color="#000000" hover_background="#dcdb22" border="border-style:none;|border-width:1px;border-radius:2px;|border-color:#1b1b1b;" hover_border="border-style:none;|border-width:1px;border-radius:2px;|border-color:#c39f76;" style="style_1" padding_left="20" padding_right="20" box_shadow="box_shadow_enable:disable|shadow_horizontal:0|shadow_vertical:15|shadow_blur:50|shadow_spread:0|box_shadow_color:rgba(0%2C0%2C0%2C0.35)" hover_box_shadow="box_shadow_enable:disable|shadow_horizontal:0|shadow_vertical:15|shadow_blur:50|shadow_spread:0|box_shadow_color:rgba(0%2C0%2C0%2C0.35)" mobile_center="yes" title_font_options="font_size:13|line_height:49"][dfd_heading content_alignment="text-left" delimiter_margin="margin-top:10px;margin-bottom:10px;margin-left:20px;" style="style_01" title_font_options="tag:div|font_size:12|line_height:14" subtitle_font_options="tag:h3"]< Back to the News[/dfd_heading][dfd_logo_carousel enable_slides="slides" list_fields="%5B%7B%22icon_image_id%22%3A%222988%22%2C%22description%22%3A%22Image%20short%20description%20which%20will%20be%20visible%20on%20the%20back%20side.%20%22%7D%2C%7B%22icon_image_id%22%3A%222990%22%2C%22description%22%3A%22Image%20short%20description%20which%20will%20be%20visible%20on%20the%20back%20side.%20%22%7D%2C%7B%22icon_image_id%22%3A%222988%22%2C%22description%22%3A%22Image%20short%20description%20which%20will%20be%20visible%20on%20the%20back%20side.%20%22%7D%2C%7B%22icon_image_id%22%3A%222990%22%2C%22description%22%3A%22Image%20short%20description%20which%20will%20be%20visible%20on%20the%20back%20side.%20%22%7D%5D" slides_to_show="3" slides_to_scroll="1" slideshow_speed="3000" main_style="style-1" auto_slideshow="auto_slid"]