The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamian construction industry is “just getting into the meat of what it can do” after the value of new building permits issued during the 2024 first quarter near-tripled year-over-year.

Leonard Sands, the Bahamian Contractors Association’s (BCA) president, told Tribune Business it was “absolutely positive and encouraging” that the total value of all permits granted during the three months to end-March 20204 had increased by $210m to $318.232m when compared to the same period in the prior year.

This was despite the actual number of permits issued increasing by only 20, according to the quarterly Building Construction Statistics released by the Bahamas National Statistical Institute (BNSI). The report also revealed that, while construction completions actually fell in number during the 2024 first quarter, they, too, tripled in value through increasing by $105m to $157.759m.

Mr Sands told this newspaper that, despite the impressive performance, “the number one challenge” facing the Bahamian construction industry is that work is “increasingly being” divided up between new market entrants as opposed to long-standing contractors who have been industry stalwarts for the better part of two decades.

Declining to call names, he said these newcomers have established “formidable businesses” in sectors such as landscaping and heavy equipment because they have been able to access cheaper foreign currency financing outside The Bahamas’ borders.

And the BCA chief also cautioned against reading too much into the data, adding that the increased value of new permits and completions is not necessarily a sign that more contractors are seeing both an increase in the volume and value of their work. He said some of the increases could result from large, multi-million dollar contracts being awarded to just one contractor.

Nevertheless, Mr Sands added of the numbers disclosed in the BNSI report: “That’s encouraging. There’s a fair amount of work going on. There’s a lot of projects starting to get more investment, dollars flowing through. We’re really seeing the economy try to stabilise post-COVID and post the hurricane, and we’re just getting into the meat of what the construction industry can do.

“It’s absolutely positive and encouraging when we see an increasing number of permits and increases in their value. The overarching message is we are certainly encouraged. It means more activity, but the number one challenge is that the work being done is increasingly being shared up by new entrants to the sector who are not necessarily persons in the field for the last 15-20 years.

“We have new money coming into the country, looking at ways to make some income and make some more profits, and construction is one where they can make increased profits if they manage their companies well. Local contractors domiciled in The Bahamas are facing an unfair disadvantage. The sector is one you have to monitor and see if there are ways to level the playing field.”

Asked to explain this further, Mr Sands said the influx of new construction industry players has been “steadily noticed”. He added: “It’s not been overnight; it’s been over years. Some are in landscaping, some are in heavy equipment, some are in services.

“They have access to capital that enables them to set up formidable businesses, get direct to the customer and gain an advantage. That’s what happens when you have access to funding outside the borders. It makes access to funding easier.”

The BCA president also cautioned that, while “statistics are statistics”, there may be segments of the construction industry, as well as groups of contractors and tradesmen, that are not feeling the increased value of new building permits. 

“You could have four major developments between three islands that are worth hundreds of millions of dollars, but it doesn’t mean that contractors have hundreds of thousands or millions of dollars or work,” Mr Sands explained. “One contractor could be doing a road for one of those developments that’s $60m. That’s not 20 contractors.

“That’s why you cannot always look at the numbers and say everyone is doing well. Numbers are very deceptive, and don’t tell the story enough. There could be $100m and one contractor doing the work. That’s not the same as $50m being split between 30 contractors. What someone feels on their end has to be related to the marketplace.

“There are hundreds of millions being spent on infrastructure projects. That’s the leading sector right now. The infrastructure space is doing incredibly well.” The BNSI, meanwhile, said its report was based on data provided by the Ministry of Works, the Department of Local Government, Family Island administrators and the Grand Bahama Port Authority (GBPA).

While the number of new building permits issued during the 2024 first quarter increased by 20 to 348, the real jump was in the value. “During that same period, the value of permits issued also increased by $210m. The private/residential sector value increased by $80m, the commercial/industrial sector by $102m, and the public sector by approximately $28m,” the BNSI said.

The construction industry’s performance is usually one of the bellwether indicators for how an economy is faring. Mr Sands described the residential segment, where new permits more than doubled in value to $154.006m compared to $73.993m in the 2023 first quarter, as the industry’s “main bread and butter” and suggested the numbers showed “things are looking up and the economy is faring pretty well”.

The value of newly-issued commercial permits, meanwhile, rose more than four-fold year-over-year from $32.902m to $134.554m. Total public sector new permits increased in value from a negligible $1.73m the year before. As for 2024 first quarter new construction starts, these increased by just two to 124 compared to the same period in 2023.

“The value also increased by $19m over the same period in 2023,” the BNSI report said. “The private/residential sector and the public sector both had decreases in value of $1m and $0.1m respectively. Conversely, the commercial/industry sector had an increase of approximately $21m” to $31.615m. The total value of private residential housing starts was $41.013m.

As for construction completions, they actually dropped in volume by seven to 173 during the 2024 first quarter. “The value, however, increased by approximately $105m in the first quarter of 2024 compared to the same period of 2023,” the BNSI report said.

“The private/residential sector value increased by $100m, while the commercial/industry sector construction completions value increased by $4m. The public sector completions recorded one project in the first quarter of 2024 valued at $0.06m.” The total value of residential housing completions more than tripled year-over-year, jumping from $48.102m to $148.303m.

As for the remainder of 2024 and moving into 2025, Mr Sands said: “We’re seeing even stronger indications from people making further inquiries about projects in 2025.”