Mumbai: The growth of the construction sector in India is
heralding wider opportunities for the Mechanical-Electrical-Plumbing (MEP)
services market.
Increasing investments from commercial (IT and retail),
industries, residential, hotels, and hospitals, etc. have given the required
impetus to the growth of this market. The value of Indian real estate projects
that touched US $100 billion in 2010 is expected to touch $265 billion in 2020.
According to analysis from Frost & Sullivan, if the total
construction projects are valued at $265 billion, then at least 25 per cent of them
can be attributed to MEP design and works. This represents a potential
opportunity of $67 billion in the next 10 years. The market is witnessing a
growth rate of around 9 percent in 2013.
The commercial segment, particularly office and mall space, has remained flat and
showed signs of slowdown in the recent past; however, new office space, malls,
hospitals, hotels, and construction projects are expected to be back on track
once credit rates and inflation lessens.
According to industry sources, the area for the commercial
building sector in India is expected to reach 1.9 billion square feet by 2030,
as against the present 659 million square feet. Of the real estate projects,
about 75 per cent of the value is contributed by the residential segment, which
include not only single homes, ground (G)+2/3/4 floors, but also taller and
increasingly complex structures touching up to 30-40 storeys.
“Current MEP projects are not only large in size but are
also complex. Complexity arises due to revisions or amendments in building
codes that call for mandatory installation of certain products and systems.
Apart from standard services like plumbing and heating, ventilation, air
conditioning and refrigeration (HVAC&R), the Indian construction industry
is undergoing a sea change with respect to the installation and usage of
extra-low voltage/low voltage (ELV/LV) systems, keeping in mind the design and
safety aspects of the electrical equipment,” says Sasidhar Chidanamarri,
Industry Manager, Environment & Building Technologies Practice, Frost &
Sullivan
Increasing penetration of green buildings is also creating a
requirement for high quality and reliable MEP work because of the complexity of
designing and constructing a green building. Presence of multiple unorganized
participants who cater to small, commercial, and residential buildings, make
the market highly cost competitive.
This along with low awareness about integrated MEP
offerings, shortage of qualified, skilled, and competent manpower serves as
challenges for the growth of this sector. At the same time, absence of codes
and standards for MEP works in India allows easy entry for the participants,
but it creates an environment where quality is often neglected for sub-standard
work. Globally and in India, there are an increasing number of smart city
initiatives that are witnessing more usage of information technology (IT) in
buildings, transforming them into smart buildings.
This will be a trend in the real estate and construction
sector in the coming years. The study finds that with the advent of convergence
of technologies, such as pre-casting, building automation, energy management,
etc., MEP players will be dealing with a whole new competitive environment and
may have to partner with companies from different industry verticals as never
before.
“MEP players have to adapt business models and value
creation to work with other industry sectors. There is also a strong
possibility that MEP players will find new verticals (end-user segments) and
markets that were never before part of their strategy. As a result, they have
to bring in new competencies, new products, and solutions to reach out to the
rapidly evolving needs of the future customer,” notes Chidanamarri.
By 2030, it is expected that the competitive landscape will
become more organized and large MEP players will seek out new and
technologically complex opportunities.
About Frost & Sullivan
Frost & Sullivan, the growth partnership company, works
in collaboration with clients to leverage visionary innovation that addresses
the global challenges and related growth opportunities that will make or break
today's market participants.
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