BCQS International recently published the first edition of its Market Trend on Caribbean construction covering the period last quarter 2009/first quarter 2010. Business Editor Lindsey Turnbull finds out what the latest trends are and reports. First in a two-part article.
Located in the Bahamas, Barbados, the British Virgin Islands, the Cayman Islands, St Lucia and Turks and Caicos, BCQS International provides the Caribbean construction industry with cost and value expertise, having been a part of the property industry for over forty years.
This first in its kind report was created to provide the industry with a guide to construction costs and their variances throughout the region, through the company’s findings among its offices in the six Caribbean countries within which it is located, as well as gleaning information from experts at its associated company in Jamaica.
The report gives a broad perspective as to the economic situation of the countries on which it focuses, namely the Bahamas, Turks and Caicos, the Cayman Islands, Jamaica, the British Virgin Islands, St Martin/St Maarten, St Lucia, Barbados, Trinidad and Tobago and Curacao.
The report highlights the unsurprising fact that many projects in the Caribbean were put on hold or written off during 2009 due to the harsh economic climate. In particular, it discusses how a down turn in tourism across the region has had a knock-on effect on construction. “GDP within the English and Dutch speaking Caribbean has fallen by 1.2 per cent over 2009, partly due to the reliance on tourism in most jurisdictions,” the report states.
That said, the report does emphasise that some jurisdictions are coping with the downturn better than others. Well administered established markets are able to continue to keep moving forward, though at a slower pace where capital has been injected into the industry via government-funded and utility projects. Those same jurisdictions are, according to the report, those that have sustainable tourism development which does not rely on economic upturn.
“Those markets that seem to have suffered the most are those that have experienced expeditious growth in boom years and now find that the goal of realising values enjoyed by their neighbours are unachievable,” the report states.
A good example of a jurisdiction which has have suffered less than others is the Dominican Republic, according to the report, because of its diversified tourism product which caters to charters as well as high end tourism. It has a “plethora of attractions for all types of tourist and investors.”
The report says that Guyana and Trinidad lead the region in terms of prospective economic growth this year, perhaps due to the fact that neither country relies heavily on tourism for its economy.
Costs are stable but labour rates not reduced
Construction costs have stabalised and lower commodity prices have resulted in a lower cost of some core materials such as copper and aluminium as well as aggregate and sand, leading to an overall reduction in construction costs. Even though construction projects have greatly reduced, the report states that labour costs have not necessarily come down even though there are fewer construction employment opportunities.
The report says that Cayman has faired similarly to the majority of jurisdictions in the region, having seen a significant reduction in major construction projects, particularly in the private sector. It highlights the government schools and admin building projects as those still underway, as well as the slated plans for the new cruise berthing facility, the redevelopment of Owen Roberts international airport and the new hospital construction project.
The rest of the region
As the Bahamas traditionally relies upon the US for its tourism industry the report says this country has been particularly hard hit by the recession. The Bahamian government has continued to stimulate its economy with a deep water harbour construction project in Nassau for larger cruise ships.
The Turks and Caicos have suffered their fair share of problems of late, including two severe hurricanes and a suspension of its government. The report anticipates a recovery period through tourism.
Work continues to get underway in Jamaica, including the north-coast highway project and an extensive bridge project set to create 80 bridges in the next three years. The National Housing Trust is also set on an ambitious project to create the current housing stock by over 22000 units by 2012.
The BVI is focusing its efforts on building a heritage-based tourism product, so restoration projects such as a copper mine on Virgin Gorda, the Callwood Distillery and the Lower Estates Sugar Works are currently underway.
Tourism has flourished in recent years in St Maarten yet the Marriott and Hyatt hotel projects have stalled due to the economic condition. St Lucia’s construction industry has suffered in 2009 leaving many projects on the drawing board, however the report sees a return of confidence with a government holding high expectations that many will soon return.
The same can be said for Barbados, which is looking at a number of promising projects in the future, including the Four Seasons Development & Marina at St Peters Bay.
Although the economic downturn has affected by the public and private sectors in Trinidad, construction continues, perhaps due to the government’s Vision 2020 development plan which the report says allows for a steady flow of construction throughout the twin nation.
Curacao suffered less than most due to the geographic diversity of its tourism product attracting visitors from South America and Europe and not relying so heavily on the US market. Two major hotel developments, namely the Renaissance Hotel and retail mall and cinema and the 350 room Hyatt Hotel, have supported the construction industry there.
Read more next month.