India’s real estate and infrastructure sectors face a critical shortage of skilled workers, a challenge compounded by the increasing difficulty of providing affordable housing, says NAREDCO Chairman Niranjan Hiranandani.
India’s Growing Skill Gap
Niranjan Hiranandani, chairman of the Hiranandani Group and NAREDCO, warns that the real estate and infrastructure sectors are currently short of 20 lakh skilled workers. This significant gap could skyrocket to 50 lakh (5 million) over the next five years if not addressed effectively.
Speaking at a National Real Estate Development Council (NAREDCO) event, Hiranandani highlighted a concerning paradox: “On one side we have unemployment, on the other side we have no skilled workers.” This shortage is a major concern, especially with the anticipated growth in both real estate and infrastructure.
He described the situation as a “disaster,” noting that neither the private sector nor the government has been able to meet the rising demand for skilled labor. This sentiment was also echoed by Larsen & Toubro (L&T) chairman S.N. Subrahmanyan, who reported a shortage of 25,000-30,000 laborers in his company’s construction business earlier this year.
The Affordable Housing Hurdle
Despite an optimistic outlook on the overall real estate sector, Hiranandani pointed out a worrying trend in affordable housing. For the first time in his 45-year career, sales in the affordable housing segment have dipped by 15% nationwide.
The primary culprit, according to Hiranandani, is the soaring cost of land, especially near city centers where most employment opportunities are found. Developers find it nearly impossible to build homes priced affordably when land prices are so high, compounded by inflation in construction costs and various taxes like stamp duty, GST, and local authority rates.
He stressed that it’s simply “not possible today” to build affordable housing close to city centers under current cost structures. This creates a significant barrier for many looking for homes in convenient locations.
The Shift Towards Premium Homes
Since 2020, the Indian real estate market has seen a notable shift towards premium and luxury housing. The supply of homes priced below Rs 40 lakh has shrunk considerably across major cities.
Conversely, most new launches are now priced above Rs 80 lakh, with a strong demand specifically for luxury homes exceeding Rs 1.5 crore. This trend highlights a growing disparity in the market, favoring higher-end properties.
What Can Be Done?
While initiatives like the PM Awas Yojana 2.0 aim to provide interest subsidies for 1 crore urban homes, Hiranandani emphasized the need for more direct intervention. He called for the government and local authorities to step in and address the high land costs and tax burdens that make affordable housing unfeasible near job hubs.
Creating a more favorable and supportive environment is crucial to bridge this housing gap and ensure that affordable options are available where they are most needed.
An Overall Positive Outlook?
Despite the challenges in affordable housing, Hiranandani remains bullish on the broader real estate sector. He stated that pan-India housing growth exceeded 10% in 2024-25 and is projected to climb over 15% this fiscal year, potentially making it one of the highest growth years ever.
However, data from property consultancy Anarock shows a slightly different picture for India’s top seven residential markets, with overall sales dropping 3.5% year-on-year in 2024 and 24.3% in the first half of 2025. This suggests a nuanced market, with strong performance in some segments potentially balancing out struggles in others.
- India’s real estate and infrastructure sectors face a 20 lakh skilled worker shortage, potentially rising to 50 lakh in five years.
- Affordable housing sales have dropped by 15% nationwide, largely due to high land costs and taxes near city centers.
- The market is seeing a premiumization trend, with luxury homes in high demand.
- Government intervention is urged to address land costs and tax structures for affordable housing.
- While affordable housing struggles, the overall real estate sector shows strong growth, according to NAREDCO Chairman Niranjan Hiranandani.
Addressing these critical issues will be vital for India’s urban development and ensuring housing access for all segments of the population.
