With just three commercial mortgage commitments for new construction projects in the entire Bahamas in the first nine months of this year, valued at $417,000, the head of a prominent local construction company yesterday claimed that there is "absolutely no local investment" in construction in The Bahamas anymore, and mortgages for commercial construction in particular appear to have "fallen by the wayside".
"The construction industry is completely disintegrated and defunct," said the contractor, who declined to speak on the record.
His comments are reflected in newly-released statistics from The Central Bank of The Bahamas which show that in the four years from 2009 to 2012, there were 47 percent fewer commercial mortgage commitments for new construction than in 2008 alone, in which 123 such commitments were made for a value of $28.8 million.
In value, the mortgage commitments over this four-year period from 2009 to 2012 - which numbered 66 in total - were valued at $14.8 million.
Of the three commercial mortgage commitments for new construction in the first nine months of 2013, two were disbursed in the first quarter, one in the second, while none came to fruition in the third quarter, indicating a gradual slowing of this already moribund sector across the year.
A similar story can be seen in the area of residential construction-related mortgage commitments. Having amounted to 1,304 in number in 2006 ($136.9 million), residential mortgage commitments for new construction fell by 15 per cent to 1,109 in 2009 ($119 million), and by 13.5 per cent to 959 in 2010 ($86,5 million), falling again by 21 per cent to 756 in 2011 ($75.2 million), and by 46 per cent to 405 in 2012 ($43.15 million).
According to the central bank statistics in the Quarterly Statistical Digest for November 2013, the first three quarters of 2013 saw 278 mortgage commitments for residential construction ($34 million).
The figures were gathered from insurance companies, commercial banks, the Bahamas Mortgage Corporation and other local financial institutions.
"There are some high-end construction projects going on in some of the gated communities which don't reflect mortgage requirements or financing requirements, and which generally involve foreign contractors and management teams, but from what I can see there is absolutely no local Bahamian investment at all. There are no new office buildings, no extensions going on, no expansion of anything local," said the contractor of the current environment in the construction sector.
Where there is some activity, suggested the businessman, it has related to the contraction of businesses, not growth.
"There is a contraction of overseas banks and businesses. As various offshore businesses contract they need to have their offices made smaller, so you take a 5,000-square-foot area and reduce it to 2,500, but what it does is it leaves half of that particular space unrented."
The contractor said it appears commercial bank lending for construction activity appears to be "over".
"It's history. Commercial mortgages may have gone by the wayside."
Significant projects in 2012, such as the completion of the Nassau Container Port and some of the Baha Mar works related to the movement of commercial buildings along West Bay Street, have now come to an end.
The top contractor's comments shed some light on the high and growing unemployment levels in the economy, given the significant contribution traditionally made by construction to the employment of Bahamians.
Asked what he would suggest could be done to spur more construction activity in 2014, the contractor was pessimistic, at first declaring that "nothing can be done" given the government's commitment to appeasing institutions such as the international credit ratings agencies, the IMF and others, in order to avoid further credit downgrades.
Such commitments involve fiscal consolidation which would rule out significant additional capital expenditure, for example.
"The only thing that I think will stir this into action is unfortunately foreign investment and if the government can do anything at all, it would be simply to try to spur foreign investment. If that happens then maybe some local contractors will get some work, and something is spurred on by something happening.
"It could also help a bit by getting the local contractors association registered, which would then have some impetus to help distribute the work a bit better. The government cannot demand a multimillionaire investor gives contracts to Joe Schmo."
The Contractor's Bill would ensure the licensing, regulation and control of the construction industry, helping qualified contractors prove that they can perform at a given standard.
The bill has been in the works for several years.
In July, President of the Bahamian Contractors Association Godfrey Forbes called on the government to limit the number of foreign contractors participating in the high-end real estate construction sector, suggesting that until this happens The Bahamas will be "spinning its wheels" economically, not gaining as much as it might from attracting foreign direct investment.
He also suggested that the passage of the Contractors Bill would assist in cutting down on the level of foreign participation in the industry. In July he said some issues were still being ironed out in regards to the scope of the bill, but that it was hoped it could move forward within weeks.
Guardian Business was unable to ascertain the status of the bill yesterday; it has yet to be tabled in Parliament.

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