Why are Indian property stocks falling?

Indian property stocks are falling due to a construction slowdown, missed sales forecasts, and declining operating margins, leading to decreased investor confidence.

What is the main problem for Indian real estate developers?

The primary issue is a significant slowdown in construction completion rates, meaning developers are failing to deliver sold properties on time, impacting revenue and increasing risk.

How is the gig economy affecting Indian construction?

Skilled workers like plumbers and electricians are earning more in the gig economy, leading to a shortage of labor for real estate projects.

Home / Business and Economy / Indian Real Estate: The Construction Slowdown Crisis

Indian Real Estate: The Construction Slowdown Crisis

23 Jan

•

Summary

Property stocks have fallen over 30% since June 2024.
Developers completed 57% of new supply last year, down from 74%.
Skilled labor is moving to gig economy jobs, impacting construction.

Indian Real Estate: The Construction Slowdown Crisis

Indian real estate developers are facing a significant downturn, with property stocks dropping over 30% from their June 2024 peak. The industry's drive to launch new projects has not translated into sufficient economic activity, leading to widespread pessimism.

Construction efficiency has notably declined. Last year, developers completed only 57% of new supply, a sharp decrease from the 74% completion rate seen in 2017. This slowdown in construction translates to delayed revenue recognition and increased execution risks for builders.

Several factors are exacerbating the situation. Skilled construction workers are increasingly opting for better-paying opportunities in the gig economy. Furthermore, the affordability concerns for the middle class, combined with potential impacts from AI and geopolitical uncertainty, are affecting demand.