Demand for Semi Luxury Real Estate in India May Stall

The demand for much of the middle premium range of real estate in India may fall in the coming few months thanks to the layoffs of middle management employees. Over the past month, IT industry leaders have expressed that to remain globally competitive will require them to hire employees overseas rather than from India.

Outsourcing Jobs to India

Over the past two decades, Indian IT companies grew rapidly on the back of a large and well trained workforce. Such a workforce could be deployed for work at client’s site overseas at a fraction of the cost the client would have to pay to hire workers onshore. The term offshoring became a buzzword that was heard usually in the context of India.

Well trained Indian engineers would usually work at a fraction of the cost of foreign workers. Outsourcing became such a concern among educated American and European techies that they told the generation still in school not to pursue a technical degree because in all likelihood, their job would be done by an Indian at a fraction of what they would have to be paid.  properties websites in india

Indian Techies Living Large

Many mid-level Indian techies earn between 20 to 60 lakhs per annum and make up a significant bulk of buyers of semi luxury properties in India. Most such working professionals are between the ages of 30 to 40. Because such workers earn a large income at a relatively young age, they make up the biggest segment of buyers of flats priced between 4,000 to 7,500 rupees per square foot.

Risks Looming Large

In addition to the protectionist policies of important foreign markets which are harming Indian IT companies; Indian IT companies are also suffering due to a large number of jobs being automated and by the advent of Artificial Intelligence.

Cities such as Pune and Bangalore depend on mid-level technology workers for job creation and to spur demand for office and residential real estate. This makes such cities especially sensitive to layoffs of mid-level IT workers.

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There are nearly 16,000 Indian IT companies that employ close to forty lakh tech workers. Today middle management is such companies is particularly at risk of layoffs because many in this working segment have skills that are less irrelevant today. Employing workers in this segment is also more expensive for IT companies who require the skill sets of fresh graduates yet may be able to do without such a large middle management.

Impact Upon Real Estate

If there is a meltdown in the Indian IT sector, then many in the middle management may be the first to go. This would lead to a fall in the demand for semi luxury and even luxury properties in the country. According to this property site, there is a significant possibility that a recovery in the mid premium real estate sector will be delayed.

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