Some signs of resurgence in commercial building
The Cayman Islands construction industry, particularly in the residential housing market, took a nose dive in 2010 and judging from planning approvals the industry looks to be continuing its decline during the next year at least.
However, figures contained in the government’s Annual Economic Report for 2010 show at least a temporary resurgence in planning approvals for commercial and government projects, which means there will likely be more work in those sectors during the next six to 12 months, if the projects which received approvals are carried out.
The overall value of building permits awarded in Cayman dropped to its lowest level since Hurricane Ivan devastated the Islands in 2004. Some CI $205.6 million worth of projects were awarded in 2010, a 42 per cent fall off from 2009 and less than half of the $502.3 million in building permits that were awarded in 2008.
The housing sector crumbled with just $49.4 million in building permits for apartments approved and $93.1 million in permits for stand alone houses. The drop in permits for apartment construction represented close to a 50 per cent drop from the year before.
“Underpinning the industry’s poor performance was the strong fall-off in demand, particularly from the residential sector, a traditional robust source,” the Economics and Statistics Office noted in its Annual Economic Report. “In the apartment/condominium category, the fall-off was more severe as the challenging economic conditions suppressed pre-sales and foreign investors’ interest.”
The only construction category that grew in 2010 was industrial projects, and that growth was slight, roughly a $600,000 increase in project value.
There were also fewer planning approvals in terms of project value granted in 2010, according to the statistics office report. Again, the residential housing sector plummeted.
“In a reversal of the growth recorded a year ago, project approvals in the houses and apartment/condominium categories declined at double-digit rates,” the annual report noted.
The fall off in planning approvals for apartments represented a 79 per cent decline in planning approvals – just $36.3 million in projects received those approvals last year compared to 170.9 million that received approvals in 2009.
Just because a project receives planning approval doesn’t always mean it is carried through to completion, however planning grants are used to measure “construction intentions” by the statistics office.
The main bright spot in the gloomy construction industry report was the Dart group of companies.
Value for commercial projects which received planning approvals in 2010 tripled to $93.7 million – up from $30.1 million in approvals awarded in 2009.
The resurgence in commercial projects was largely because of four large projects with a combined value of $64.8 million.
“Notable projects include the National Gallery and the planned expansion of Camana Bay which sees the erection of a 196,361 square foot mixed-use building,” the annual report stated.
Government projects also received planning approvals for $12.7 million worth of building, mostly for the expansion of the government’s primary school buildings. A significant portion of that expansion is being funded by the Dart group.