Services >> Construction & Real Estate >> Key Challenges
Understanding of the Industry & Key Challenges
Property development has many characteristics in common with both manufacture and service industries. As in manufacturing, there are physical products produced that often have high cost, size, and complexity. On the other hand, construction is like the service industry for the reason that it does not accumulate a large amount of capital like manufacturing industries.
A recent trend in the industry is that construction companies do not only see themselves as producers of products (i.e. houses, bridges etc.), but as providers of the service related to the product’s whole life cycle.
The property development sector in India looks set to grow at steadily accelerating growth rates in the next five years. The future success of the regional leaders will depend on their ability to escape their fluctuations in the national economy and at the same time maintaining their reputation for high quality.
Key Challenges facing the Industry
The property development industry in India is unstructured, fragmented and characterized by numerous small developers, hoping to ride the wave of current growth in the sector.
Government has decided to open up the infrastructure sector – on one hand that means immense opportunities for everyone, but also stiff competition that threatens to knock out the unfit from the race (since land acquisition costs are so high, that companies with bad project management skills can end up either delivering late / shoddy, thereby tarnishing their reputation and foregoing the huge opportunities).
Further, the number of acquisitions and mergers that have been taking place would also change the equation in the long run.
The Key USP of successful companies therefore are short lead times, and tight project management
