Analysis of the design market in India
The relevance of research
Building design is understood as the process of creating (development) a project of a real estate object and designing a construction task. The result of the design is a set of documentation intended for the implementation of capital construction, reconstruction, expansion, restoration of any real estate object. During the design process, engineering calculations are made, schemes are created, options for technical solutions are developed, specifications and estimates are drawn up
Purpose of the study
Analysis of the state of the building design market, assessment of the market size, analysis of competitors, as well as identification of factors affecting the market for design services
Content
Part 1. Overview of the building design market
1.1. Definition of the Indian Construction Engineering Market
1.2. Characteristics of the Indian Building Engineering Market
1.3. Market Size, Market Size and Dynamics of the Indian Building Engineering Market
1.4. Structure of the building design market in India
1.5. Assessment of current trends and development prospects of the studied market
1.6. Problems and ways to solve them in the Indian construction services market
1.7. Analysis of sectoral indicators of financial and economic activity
Part 2: Competitive Analysis in the Building Design Market in India
2.1. The largest players in the market, positions in ratings, market shares
2.2. Main competing companies providing services
Part 3. Analysis of service consumption. Identification of potential clients interested in building design services
3.1. Market Saturation and Estimated Market Potential in India
3.2. TOP potential customers, 2017 - 2018
3.3. Description of consumer preferences
3.4. Criteria for choosing a supplier from the main consumers
3.5. Growth prospects for key consumer sectors
Part 4. Analysis of government programs in the building design market
Part 5. Recommendations and conclusions
5.1. Macroeconomic Factors Affecting the Engineering Services Market in India
5.2. Conclusions on the prospects for the development of enterprises providing services in the field of building design in India
Research excerpt
Part 1. Overview of the building design market
1.1. Definition of the Indian Construction Engineering Market
Building design is understood as the process of creating (development) a project of a real estate object and designing a construction task. The result of the design is a set of documentation intended for the implementation of capital construction, reconstruction, expansion, restoration of any real estate object. During the design process, engineering calculations are made, schemes are created, options for technical solutions are developed, specifications and estimates are compiled.
Architectural and building design is part of the building engineering process, which implies the implementation of construction activities from project development to the complete completion of the facility. Stages of architectural and construction design:
Design stages and types of drawings
The design of industrial and civil buildings is usually carried out in two stages:
a) technical design based on the approved design task
b) working drawings.
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The technical project, in comparison with the design assignment, provides a more in-depth and comprehensive development of architectural and structural solutions, more specified volumes and cost of construction.
Working drawings clarify and detail the architectural solutions provided for by the technical project, make the final calculation of the structure of the object, perform calculations and drawings for special work. Working drawings are performed in the following composition: master plan drawings, general architectural and construction drawings, special work drawings, assembly and procurement drawings.
Executive drawings record all changes and additions that were made to the working drawings during the construction process.
Thus, Indian Structural Engineering is a highly experienced industry. Its functionality provides for the preparation of the main set of design documents, but recently it has often been expanded, capturing the stages of pre-project activities and some activities from the construction stage. In general, this is a harmonious, logical, legally regulated system for the development of construction documentation. Of course, there are some inconsistencies and failures in the interaction of the design phase with the project implementation phase, for example, but the industry community understands these problems and is looking for solutions.
1.2. Characteristics of the Indian Building Engineering Market
New technologies, work methods, materials, machinery and equipment have appeared, and regulatory documents have been updated. … Among the main features of the Indian building design industry are:
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Consider an integrated list of innovative barriers identified in housing construction:
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The industry is characterized by a significant proportion of small businesses. Their activities are characterized by simplicity in organization and accounting, work on the local market, flexibility, low management costs, increased capital turnover rate, the interest of each employee in the final results of labor and other factors that ensure competitiveness. But at the same time, small enterprises are less protected from the influence of external factors.
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1.3. Market Size, Market Size and Dynamics of the Indian Building Engineering Market
Construction market volume
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Diagram 2. The dynamics of the development of the construction industry in India. Total revenue from construction and investments in fixed assets, 2007-2018, billion Rs.
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For a visual assessment of the stability of the situation, let's consider the dynamics of the revenue indicators of the construction industry over the past decade in Diagram 3.
Chart 3. Dynamics of annual growth/decline in construction industry revenue in India, 2007-2018, % to the previous year
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To analyze the volume of the Indian market for design services, consider the following indicators:
one). Revenue (net) from the provision of services in the field of OKVED 1 (2) ""Activities in the field of architecture"".
2). For 2016 inclusive - revenue (net) from the provision of services in the OKVED 2 (71.11.1) ""Activities in the field of architecture related to buildings and structures"".
3). Since 2017, in connection with the change in OKVED codes, we will consider the dynamics of revenue for two OKVED codes 2 - 71.1 Activities in the field of architecture, engineering surveys and the provision of technical advice in these areas. Since 2017, it has included the volumes of code 71.11 and code 71.12 - Activities in the field of engineering surveys, engineering design, construction project management, construction control and architectural supervision, the provision of technical advice in these areas.
According to item 1). In Diagram 4, let's consider the industry's revenue (OKVED2 - 71.11) ""Activities in the field of architecture"", evaluate its volume, growth / fall dynamics, identify dynamics and stability.
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Let's analyze the indicators of the industry in the context of federal districts.
Diagram 5. The structure of revenue from the sale of services ""Activities in the field of architecture"" in the Union Territories, 2018, shares in % of volumes in monetary termsи
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According to item 2). In Diagram 6, let's consider the industry's revenue (OKVED2 - 71.11.1) ""Activities in the field of architecture related to the creation of an architectural object"" (buildings, structures), evaluate its volumes, growth / decline dynamics, identify the dynamics and stability of dynamics through 2016 inclusive . Starting from 2017, we will form a forecast for the share of volumes of this type of activity based on the available statistics.
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When forming the assessment, the data of Table 2 were used.
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Let's analyze the indicators of the industry ""Activities in the field of architecture related to buildings, structures"", in the context of federal districts, identify leaders in terms of revenue in Diagram 7.
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1.4. Structure of the building design market in India
The construction design market can be structured according to several criteria, consider the options:
By size of enterprises
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According to customer's ownership
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By type of services provided (profile)
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There are four main types of services in the construction design market:
design of roads and engineering structures;
landscape design;
design of elevated construction;
special design.
Each type of design is carried out by specialized specialists in a particular area.
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But in reality, for Indian practice, design activity remains the most characteristic, mainly intersecting only with pre-project activities: performing pre-project studies, designing construction projects and exercising field supervision over the implementation of design solutions.
By type of consumer / type of service consumed
Consider the structure of the market for building design services by type of service consumers:
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By purpose of design objects (by industry).
Housing construction objects
Objects of social sphere
Objects of the cultural sphere
Commercial real estate: retail, warehouse, office real estate, industrial facilities, which in turn are classified by industry (for example, the production of building materials, automotive, light, food, woodworking, etc.).
In addition to new construction, the reconstruction of buildings and facilities already erected in Soviet times is popular, because it is faster and cheaper to transform what has already been built than to create assets from scratch.
In the context of analyzing the structure of the building design market and the prospects for the development of its segments, it is interesting to consider the importance (weight of the share) of design among the services provided by engineering organizations in India.
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1.5. Assessment of current trends and development prospects of the studied market
Let's identify the main trends in the building design market, which ... affect its prospects, progressive development and growth in volumes.
Opportunities and prospects for expanding the competencies of design organizations
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Prospects for export-import of design and engineering services
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Innovative activity in design
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1.6. Problems and ways to solve them in the Indian construction services market
Consider the existing problems in the construction services market in India. As the market saturates, these problems become more acute, requiring from operators not an extensive, but an intensive approach to the organization of work.
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At present, the following factors influence the ... construction services industries:
Reducing consumer demand in the construction market as a whole, which reduces demand in the market for building design services; growth in the share of insolvency among
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Reduction of sources and volumes of financing; growth in the cost of bank loans for the implementation of construction work; problems with access to credit resources.
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Shortage of qualified personnel (unattractive image of the industry, unstable and relatively low income).
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Low labor productivity, which leads to a decrease in the competitiveness of industry operators.
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The inertia of the construction industry, which hinders the introduction of modern technologies, materials, etc.
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A contradictory system of laws, regulations, standards.
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High taxes in the construction industry.
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Low competitiveness of specialized organizations providing design services in comparison with organizations providing complex services (“turnkey”).
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1.7. Analysis of sectoral indicators of financial and economic activity
Consider the financial and economic indicators of the OKVED 2 (71.11.1) “Architecture activities related to buildings and structures” industry, compare them with the situation in the Indian economy (with dynamics in all industries).
Profitability:…
Current liquidity: …
The performance of the industry is comparable to the liquidity indicators of the Indian economy as a whole.
PMI: …
Financial stability: …
Profit from the sale of services: …
To assess the dynamics for the analyzed period, we will additionally consider the situation in industry 71.11 ""Activities in the field of architecture"" as a whole.
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Gross margin is gross profit divided by sales revenue (excluding excise taxes and VAT). Gross margin shows how much gross profit falls on a unit of revenue. Gross profitability serves as an assessment of the economic efficiency of an enterprise, which reflects the rational use of labor, material, monetary and other resources.
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Absolute liquidity is a ratio showing how much of short-term debt can be repaid immediately.
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Part 2: Competitive Analysis in the Building Design Market in India
2.1. The largest players in the market, positions in ratings, market shares
As noted earlier, it is extremely difficult to determine the specific scope of the engineering, design, architectural and construction market and sort out companies that provide a clearly limited list of services related to the field of design. The higher the degree of development of the industry as a whole, the more integration and intersection of the areas of activity of certain companies occurs, and the less organizations with a narrow profile of activity remain.
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According to the results of the competition, which is held by the Ministry of Construction of India together with the Indian Union of Builders and the Trade Union of Construction Workers and the Building Materials Industry of India in order to identify the most efficient organizations and enterprises in the construction complex, promote and disseminate best practices in the field of construction and the building materials industry, the following have been determined: winners of the rating in several categories (Table 8):
The criteria by which the winners of the competition were selected: production indicators, financial, economic and social results, labor protection, quality.
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It should also be noted that, despite the fact that India has many of its own design organizations, there are also foreign engineering companies on the market. Their share in the execution of orders is insignificant, but the projects they work on are quite large.
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Thus, the largest companies in the construction design market in India belong to the representatives of the industrial segment: ...
2.2. Main competing companies providing services
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Part 3. Analysis of service consumption, identification of potential customers interested in building design services
3.1. Market Saturation and Estimated Market Potential in India
The design market, like the construction industry as a whole, is extremely heterogeneous. …
A consulting engineer is a broader specialist who combines an understanding of economic factors with knowledge of design and construction technology, which helps the investor to correctly and comprehensively assess the feasibility of investing in a particular object, determine risks, time costs, and costs. As the project deepens, the role of the consultant intensifies, and at the final stage he can turn into a designer, a construction supervisor, and an accompanying commissioning.
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The engineering situation that is taking place in India is not unique, many countries have faced similar problems…
Demand prospects for design services
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3.2. TOP potential customers, 2017 - 2018
When identifying the most attractive potential customers, it is important to take into account that a significant part of large construction and development companies have their own design departments or permanent partners in this area.
On the market, the orders of state-owned companies and companies with state participation are mainly “played out”, which, under federal law, are required to choose a project contractor on an alternative competitive basis.
To identify potential customers, Table 9 was formed based on data from open sources, with a list of potential customers, the price of the order and a description of the required services based on information from tenders announced for the analyzed period and having an initial amount higher than ... .
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Thus, during the analyzed period, most of the large orders that go through tenders are placed by government agencies and enterprises with a share of state property, whose activities are housing construction, transport and utility infrastructure facilities.
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3.3. Description of consumer preferences
Currently, there is an interest in complex turnkey project implementation services, including the design phase. Customers have become more demanding in terms of the choice of technologies and equipment - modern, energy-efficient, reliable solutions are requested.
Approaches to the choice of a designer and the basis of the criteria for such a choice are closely related to the concepts of having special skills and the amount of remuneration for work. These two basic criteria - (quality and price) - remain the main parameters of the design services market. The quality of the project is a multifaceted concept, it includes experience, qualifications of personnel, development time, methods and quality of work, the fundamental ability to develop a particular technical solution, and much more.
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Today we understand that the potential consumers of the goods are construction companies, the vast majority of which are in rather cramped economic conditions, which seriously affects the picture of consumer preferences.
Diagram 13. Matrix of consumer preferences, %
Consider indicators of consumer preferences:
Price, participation in project financing…
The quality of the project...
Terms of payment …
Business culture and reputation of the project executor…
Availability of additional services…
Order Lead Time…
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3.4. Criteria for choosing a supplier from the main consumers
As for the approaches of customers to the procedures for selecting design organizations ...
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The most important criteria are cost, time of work, availability of modern software, staff qualifications, availability of additional services.
3.5. Growth prospects for key consumer sectors
Forecasting the development of design services in India is impossible without understanding the economic situation in the country and the prospects for the construction industry. Trends in demand for design services are largely determined by the state and trends of the construction market.
The economic situation creates the following problems in the construction industry: ...
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The Indian commercial construction market can be divided into two main geographical segments: metropolitan and regional. At the same time, in some segments, even capital markets can, in principle, be called “provincial”.
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Let us consider the forecasts for the development of the main consumption segments of the commercial real estate construction industry.
Office real estate segment
Retail segment
Warehouse segment
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Part 4. Analysis of government programs in the building design market
Among the state programs implemented in the building design market, first of all, it is necessary to bring the state concept for the development of the building design industry until 2020. General provisions:
1.1. The concept of development of the building design industry until 2020 determines the directions for the development of engineering in the context of self-regulation of construction activities, ensuring the urban planning policy of India, the competitiveness of domestic manufacturers of survey products in an open market and the adjustment of structural relations between authorities and national associations.
1.2. The strategic goal of the development of engineering is the formation of a highly efficient, innovation-oriented construction industry that ensures the sustainable development of the territory of India.
1.3. The concept of development of the design industry is intended for the integrated implementation of the overall development strategy of India ""Strategy 2020"".
The main tasks of the design industry for the implementation of the ""Strategy 2020"" are:
provision of territorial planning documents in India, states of India, municipalities with information on existing and predicted natural and techno-natural conditions for the development of territories;
providing the construction industry with information about the natural conditions of sites for construction development and operation of existing facilities;
minimization of negative impacts on the environment in the course of urban planning activities and ensuring the safety of buildings and structures.
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A sufficiently large number of targeted programs implemented in the construction industry creates demand from government customers for design services. Let's take a closer look at some of the programs...
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At the same time, the transparency of the choice of the project executing organization in India is not yet sufficiently transparent, the existing mechanism for conducting competitive and tender procedures is not perfect, which hinders the development of fair competition in the market of project services. The priority is still the price of the service, and not the quality of design, which, unfortunately, is quite difficult to assess at the stage of competitive procedures.
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Part 5. Recommendations and conclusions
5.1. Macroeconomic Factors Affecting the Engineering Services Market in India
Forecasting the development of the design services market in India is impossible without understanding the economic situation in the country and the prospects for the construction industry.
GDP is a macroeconomic indicator that reflects the market value of all final goods and services (that is, those intended for direct consumption) produced per year in all sectors of the economy on the territory of the state for consumption, export and accumulation, regardless of the nationality of the factors of production used.
GDP is the main, most complete official indicator of social welfare. The absolute and relative values of GDP give an idea of the general material well-being of the nation and the dynamics of its growth / decrease, since the higher the level of production, the higher the welfare of the country.
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The industrial production index shows the total volume of all industrial production, utilities, etc. in terms of money.
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The exchange rate is a significant factor for the Indian market, as a significant share of imported equipment and software is acquired, and the increase in the cost of equipment slows down the expansion and updating of the main and information tools of the industry.
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Decreased investment in fixed assets…
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Decreased investment in residential and commercial real estate … . Let's consider the situation in more detail.
Diagram 18. The volume and structure of investments in commercial real estate by sources of financing, 2011-2018, $ billion
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Consider the structure of investments by regions of India.
Diagram 19. Distribution of investments in commercial real estate by regions in 2017-2018
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The level of real incomes of the population (the factor characterizes effective demand)
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Social (demographic) factors
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Thus, the macroeconomic factors affecting the building design market indicate the need for hard work and a balanced market behavior policy in order to retain existing partners and attract new ones, maintain a positive balance and existing assets.
Consider the technological factors affecting the market of building design and engineering
Among the technological factors hindering the development of engineering services in India, one can single out the low technological level of production and the unpreparedness of companies for technical re-equipment, modernization and the introduction of high-tech innovative technologies. Outdated material and technical base for R & D, lack or lack of experience in the full design cycle among customer companies.
The principles for the implementation of design and engineering activities in Indian and foreign practice are seriously different both from the regulatory point of view and from the standpoint of the structure and activity model of engineering companies historically established in our country.
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Designing in the world is based on special software, becoming automated in this respect. Individual software components are brought together into global ""software platforms"". They have already formed, the supplier market is consolidated.
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It can be noted that the existing prospects in the development of the building design industry, formed taking into account global trends, are inextricably linked with a comprehensive offer of building engineering services.
5.2. Conclusions on the prospects for the development of enterprises providing services in the field of building design in India
Architectural and building design is part of the process of building engineering, which implies the implementation of construction activities from project development to the complete completion of the facility.
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To recap the prospects for the building design market in India…
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Diagrams
Diagram 1. Stages of the life cycle of a building object
Diagram 2. The dynamics of the construction industry in India. Total revenue from construction and investments in fixed assets, 2007-2018, billion Rs.
Diagram 3. Dynamics of annual growth/decline in construction industry revenue in India, 2007-2018, % to the previous year
Diagram 4. Dynamics of annual growth / decline of the industry ""Activities in the field of architecture"", (revenue from the sale of services), India, 2009-2018, billion Rs.,%
5 Chart. The structure of revenue from the sale of services ""Activities in the field of architecture"" in the Union Territories, 2018, shares in % of volumes in monetary terms
Diagram 6. Dynamics of growth / decline of the industry ""Activities in the field of architecture related to buildings and structures"", (revenue from the sale of services), India, 2009-2016, 2017-2018 estimate, billion Rs., %
Diagram 7. The structure of revenue from the sale of services ""Activities in the field of architecture related to buildings, structures"" in the Union Territories, 2018, shares in % of volumes in monetary terms
Diagram 8. The prevalence of services within the framework of construction engineering
Diagram 9. Profitability of profit before tax (profit of the reporting period), by industry 71.11.1, for 2009-2018, %
Diagram 10. Current liquidity (total coverage), by industry 71.11.1 for 2009-2018, times
Diagram 11. Business activity (Average period of receivables turnover), by industry 71.11.1, for 2009-2018, days
Diagram 12. Financial stability (Security with own working capital), by industry 71.11.1, for 2009-2018, %
Diagram 13. Matrix of consumer preferences, %
Diagram 14. The share of free space in shopping centers depending on the area of the building
Diagram 15. Distribution of transactions with warehouse real estate by tenant/buyer profile, 2018
Diagram 16. Dynamics of GDP growth in India, 2003-2018, forecast for 2030
Diagram 17. Dynamics of the US dollar exchange rate, 2014 - 2018, Rs. for 1 US dollar
Diagram 18. The volume and structure of investments in commercial real estate by sources of financing, 2011-2018, $ billion
Diagram 19. Distribution of investments in commercial real estate by region in 2017-2018
Diagram 20. Distribution of investments by segments of commercial real estate, 2018
Diagram 21. Dynamics of real income of the population of India, 2010-2018
Diagram 22. Dynamics of retail trade turnover, growth, % to the previous year
Diagram 23. Population change in India, 2009-2018
Diagram 24. Status of design organizations in India, 2018
Diagram 25. Forecast of the dynamics of revenue (net) from the sale of goods, products, works, services (net of VAT, excises and other similar payments) in the construction design industry, 2019-2023
Tables
Table 1. Trends in the commissioning of housing construction areas in India and by key states, 2013-2018, thousand m2
Table 2. Revenue from the sale of services, billion Rs., 2017 - 2018
Table 3. Profit (loss) from the sale of services of the industry ""Activities in the field of architecture related to buildings and structures"", 2009-2018, billion Rs.
Table 4. Profit (loss) from the sale of services in the industry ""Activities in the field of architecture"", 2012-2018, billion Rs.
Table 5. Gross margin, industries ""Activities in the field of architecture related to buildings and structures"", 2009-2018, %
Table 6. Absolute liquidity of the industry ""Activities in the field of architecture related to buildings and structures"", 2009-2018, times
Table 7. The main companies participating in the market of services in the field of structural design of buildings and structures in India, 2014 - 2017, 2018 (forecast)
Table 8. The best large design, survey and other organizations of a similar profile of the construction complex according to the results of the XIV All-India competition for 2017, revenue 2016-2018 (forecast)
Table 9. Estimation of the market share from the amount of revenue in monetary terms of the main companies-competitors of the construction design market
Table 10. TOP potential customers in 2017-2018 and 1 sq. 2019, contract price over Rs 1 billion.
Table 11. Factors influencing the choice of supplier in terms of significance
Table 12. Indian Industrial Production Index (% of previous year), 2008-2018
Table 13. Investments in fixed capital of the industry ""Construction of residential and non-residential buildings"", ""Construction"" by types of sources, billion Rs., 2015 - 2018
Table 14. India's position in the global engineering services market and potential participation in development programs
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