Global supply chain shortages impeding Indian construction activity despite strength in workloads

There’s continued strong activity across the Indian construction market despite rising concerns over the cost and availability of materials, says a latest report.

According to RICS Global Construction Monitor for Q1 2022, at the all-sector level, over 38% of respondents reported a rise in workloads this quarter, up from +29% in Q4 2021. Workloads are mainly being driven by a continued focus on infrastructure projects, as 55% more respondents reported a rise. Respondents also cited a firm commitment to transport infrastructure as almost half (44%) reported a rise in workloads in this subsector.

However, despite the strength in current workloads, the impact of global supply chain shortages is impeding activity across India. According to a statement, this quarter over 92% of respondents reported that material costs are a major constraint to current activity, equal to the global average. Also, financial constraints are reported to be an issue by almost three-quarters (73%) of respondents.

Elsewhere, labour shortages and access to the right skills doesn’t seem to be improving. As nearly two-thirds of respondents continue to report this as an issue slowing down activity. Interestingly, this quarter only 20% of respondents highlighted the impact that more extreme weather conditions are having on the sector, a fall from 53% in Q4 2021 and one of the lowest returns since the survey records began.

Despite the current challenges, respondents still remain optimistic for the coming year ahead, and are one of the few countries monitored by the survey to raise their expectations for profit margins. The net balance this quarter increased to +21% up from +13% in Q4 2021. The current infrastructure projects and pipeline is set to sustain the Indian construction sector as 64% more contributors anticipate a rise in workloads for the year ahead.

“The good news in the latest report is that the industry remains positive about the outlook for activity and that the generally upbeat mood can be seen not just in regard to infrastructure and housing development but also in the commercial sector. However, it is clear that the sector faces significant challenges which have been reflected in recent official data showing a sharp rise in vacancies across the construction industry. RICS numbers demonstrate these shortages are pretty much across the board including quantity surveyors and project managers as well as both skilled trades and more general labour. This, combined with problems around accessing building materials in the current environment, is exerting significant upward pressure on construction costs at the present time,” said RICS Chief Economist, Simon Rubinsohn, in a statement.

Source link

Spread the word!

Leave a Comment

Your email address will not be published. Required fields are marked *