Firms in the Rs 65,000-crore Indian real estate segment, including DLF, Hiranandani Constructions and Kalpataru, are resorting to lay-offs as liquidity crunch, uncertainty in the markets, and slackening demand take its toll on these companies. Top industry executives say as many as 10 lakh people, mostly contract workers, project technicians and other associated staff, are likely to go jobless, as companies shy away from undertaking new projects and focus on completing just the ongoing ones.
Top builders in Mumbai and Delhi are charting out plans to prune 25-30% employees, apart from discontinuing contractors? workers as no new real estate projects would be started by the builders despite new land acquisitions. Meanwhile, small and medium sized builders are looking at providing low increments to their employees, over the previous corresponding period.
The demand slump has forced realty leader DLF to fire some employees, put a number of hotel and housing projects on hold and yearn for 7% home loan rates. ?We must have laid off some employees somewhere,? DLF chairman KP Singh told reporters on the sidelines of India Economic Summit in New Delhi, but did not give the number of job cuts. The company has also deferred some of its projects due to poor demand. Lower demand will have a cascading effect on the economy, he said, adding that the government should give taxation benefits to the buyer.
In Mumbai, Niranjan Hiranandani, managing director, Hiranandani Constructions told FE, ?We will lay off about 2,000 to 3,000 contractors? workers during the first three months of 2009 once our ongoing realty projects are completed. We are not planning to start any new real estate projects after that. We have completely stopped recruitments.? According to Mufatraj Munot, chairman, Kalpataru Properties, ?Real estate industry, like various other industries, is currently going through a bad phase. Like other developers, we too are planning to lay off some staff apart from contractors? workers, once the ongoing projects are completed. We have completely stopped recruitments within our organisation.? According to sources, the firm is likely to lay off 25% of its employees.
Says Pujit Agarwal, managing director, Orbit Corporation, ?We are continuing with our 11 realty projects with over 4,000 sub-contractors. Although we are in the process of acquisitions of 40 projects, we will not immediately start constructing them. As a result, many subcontractors would be discontinued which were earlier targeted to set up 40 projects.?
Sanjay Dutt, CEO – business, Jones Lang LaSalle Meghraj (JLLM) comments, ?The currently prevailing drop in demand for real estate projects could be quantified differently from the end user and investor perspective. In both cases, it would again vary in terms of location. However, there has been an overall drop in demand to the tune of between 45-50%. We expect these figures to reflect a more positive scenario by next Diwali, when the national and global economic situation will have resolved itself at various levels.?