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‘Construction sector already downsizing’

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Business

Construction Industry veteran Eng. Nissanka Wijeratne noted that the sector was already downsizing on a lack of payment, difficulty in estimating prices, and a lack of raw materials. The sector is estimated to have already shed 50,000 jobs with many firms currently facing insolvency. Leading players have already cancelled projects and are facing serious issues with related industries like property development.

Wijeratne was speaking on the sidelines of a Joint Chamber Forum on the issues currently faced on March 7 at the Taj Samudra.

He noted that even reputable players like Sanken had to cancel a property development project due to difficulty in deciding on pricing. In that instance the prospective buyers had been issued refunds. Wijeratne noted that unlike in other countries there existed huge issues with the management of funds for property development. He further opined that there was a huge glut of high end apartments already with multiple developments going to hit the market in the near future. This issue was further compounded by a steep rise in prices.

Wijeratne noted that historically it was estimated that a square foot of apartment space would cost Rs 12,000 to construct but in recent times it was estimated that the cost was closer to Rs 15,000 to Rs 20,000. He further agreed that the glut of high-end apartments with little use case would cause negative impacts on existing lower end housing stock.

The industry is currently facing huge raw material shortages and Wijeratne expected the government to have to cancel most planned projects due to the financial situation. He said that the lack of certainty in future projects caused further problems for the sector.

 

Friday, March 11, 2022 – 01:00











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