Reasons to Invest in Construction Industry

In the 12th Plan, it is estimated that infrastructure industry requires an investment of $1 trillion during in order to take economic growth to double digit on a sustained basis.

Around 40 percent of these investments are projected to come from private players.Now, 45 percent of this infrastructure investment will be channelled into construction activity and 20 per cent set to modernise the construction industry.

  • The government has undertaken a number of measures to ease access to funding for the sector.

  • The construction industry in has seen sustained demand from the industrial and real estate sector.

  • An estimated $650 billion will be required for urban infrastructure over the next 20 years.

Construction Analysis

The construction industry has been witness to a strong growth wave powered by large spends on housing, road, ports, water supply and airport development.

The construction sector has registered double digit growth during the last few years and its share as a percentage of GDP has increased considerably as compared to the last decade.

The real estate industry comprising of construction and development of properties has grown from family based entities with focus on single products and having one market presence into corporate entities with multi-city presence having differentiated products.

The industry has witnessed considerable shift from traditional financing methods and limited debt support to an era of structured finance, private equity and public offering.

The construction sector is a major employment driver, being the second largest employer in the country, next only to agriculture.

This is because of the chain of backward and forward linkages that the sector has with other sectors of the economy.

About 250 ancillary industries such as cement, steel, brick, timber and building material are dependent on the construction industry.

A unit increase in expenditure in this sector has a multiplier effect and the capacity to generate income as high as five times.