The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

New construction starts will take a 40-60 percent hit, a former Bahamian Contractors Association (BCA) president predicted yesterday, with the industry unlikely to rebound until near year-end.

Leonard Sands, pictured, told Tribune Business that while projects underway were still likely to proceed despite the coronavirus pandemic, developers and financiers were likely to postpone or delay those in the investment pipeline.

Warning that the construction industry is not a sector where investors “can just jump up and start again”, Mr Sands forecast that the “long lead times” involved in acquiring the necessary materials and hiring contractors meant “normalcy” was unlikely to return until the end of the 2020 third quarter or beginning of the fourth at earliest.

He suggested that many in the industry might find themselves out of work for at least a 60-90 day period, and urged the Government to “right away” initiate multiple civil engineering and outdoor related capital works - such as roadworks - to help support the construction sector and wider economy as the COVID-19 fall-out continues to deepen.

“Let’s accept the impact will be felt across all sectors,” Mr Sands told this newspaper. “Some things will remain in construction. Construction projects that are underway and funded by the bank have to continue and have to mature. Banks have to complete the mortgage process before they get their money back.

“The most influential and greatest impact to the Bahamian construction industry will be felt by new projects not going forward because of this pandemic. Monies will not be outlayed because of the uncertainty in the market, so I think new construction starts will be impacted but construction projects underway have to be completed.

“I think we can realistically expect new construction starts to take at least a 40 percent to 60 percent hit. If you have two persons, and each one of them is thinking of starting something or holding off, one out of the two will hold off.”

Mr Sands, whose sector is one that will be allowed to open to customers between 6am to 7pm under the Government’s new emergency COVID-19 order, said he had already experienced this trend. “A project I was supposed to start this week Monday was suspended for 30 to 60 days because of the uncertainty,” he added.

“But a project I was already working on, the client said: ‘Carry on, I still have to move into my house whether impacted by the virus or not’. He said I cannot stop working on it.”

But while ongoing projects will likely be seen through to completion, Mr Sands warned: “We’re going to see more and more tightening of the market. A lot of people will be out of work for 60 days, but if they can hold on for 60-90 days they will be OK.

“I think we’re looking at three to four months before everything settles down, bottoms out and starts again. I think it will be in the mid-third quarter before we see normalcy again. The middle of the the third quarter. We’re only at the beginning of the second. It will be the end of the third quarter, beginning of the fourth quarter, before it starts to level out and returns to normal.”

Mr Sands added that “anyone who says it will be anything earlier than that is not reflecting the dynamics of the construction industry”. He explained that it would take several months for construction materials supply chains to resume their smooth functioning, especially since key resources often had to be sourced from the most impacted markets such as China and Italy.

“You’re not going to be able to jump up and start again,” he told Tribune Business. “I think this is really going to impact us, but if we’re smart about it we can use this time for planning properly and making adjustments to the business model for future hit, and come out smarter, better than what we went in.”

The former BCA chief said major foreign direct investment (FDI) projects, such as the $300m Grand Lucayan redevelopment and Disney’s Lighthouse Point plans were likely to proceed once the pandemic had passed.

He urged the Government to put Bahamian contractors to work on projects such as the Post Office demolition, roadworks and post-Dorian reconstruction as a means to shield the construction industry from the pandemic’s worst effects and keep money circulating in the economy.