One developer is predicting a boom in construction over the next 12 to 24 months which could result in Barbados having to import labour.
That assessment has come from James Edghill, co-founder of construction development firm One Builders, who pointed to several planned projects, a low employment rate and continued economic growth as contributing to his forecast.
He indicated that a major uptick in the construction industry will require some level of creativity, given that the Guyanese who were once filling the labour in that industry here were unlikely to return.
“Things are about to get busier,” declared Edghill, as he gave his outlook on the sector while speaking as a panellist on day one of the 10th Caribbean Valuation and Construction Conference at the Hilton Barbados Resort on Thursday.
“I think in 2024 there is going to be a lot of demand for talent. We are price takers on everything. We import everything. The only local input is the labour . . . . On the labour side, there has been a slight increase, not compared to what I have seen in North America and bigger markets. I think that may come in 2024 and 2025. To mitigate that if things get very busy here we are going to have to import labour.
“The same thing happened in Barbados in 2006 when we had [an estimated] 20 000 or 30 000 Guyanese working here. They are not coming back now because they have more opportunities back [home] than they know what to do with. So we need to be creative in terms of where we look for labour. If we get to that stage, I do believe it will come over the next 12 to 24 months,” he said.
Speaking on the topic A View from the Boardroom – Bankers and Developers, Edghill said that given the number of projects in the pipeline, “on the hospitality side, we are looking pretty good”.
“On the retail side, that is going to be a function of employment and growth in the economy, which is looking pretty good. So short-term, I think we are in a good place. Medium to longer term, it all depends on the capacity of the banking system and at what kind of favourable rates they want to lend to people like myself,” he said.
The developer said while freight costs have stabilised and largely returned to pre-COVID-19 rates or just slightly above, the delay in shipping of some equipment, especially electrical material, remained a concern.
He said developers have to be smarter in how they source materials, including buying in bulk directly from larger suppliers.
Edghill said while there has been some jump in the price for land and property over the last 24 months, he foresaw prices remaining stable in the short to medium term.
He also indicated that “a lot of people” believed the completion of the South Coast road repairs would serve as a catalyst for further investment along that part of the island.
Also sharing their views were panellists Corey Knight, manager of Corporate Credit at Republic Bank (Barbados), and Isabela de Caires, director of Investment Banking at CIBC.
Knight told the packed room that with the number of projects in the pipeline, coupled with “strong economic growth”, he believed over the next two to three years the real estate market should remain steady.
“Over the next five years, on the large commercial side, I believe this is going to taper off a little bit, given the nature of the sector,” he said. “On the real estate side, I see in the short-term and the long-term, this is going to be buoyant. We have a favourable employment rate and we also have favourable interest rates.”
In relation to the hospitality sector, Knight said with pending hotel projects slated to start in Barbados in the coming months, “I do believe that this sector is poised to take off”.
He added that he was confident the sector was being complemented with the airlift required.
“So, I do believe in the short-term it is strong,” he said.
Speaking more regionally, de Caires pointed out that there have been a number of acquisitions in the hospitality sector during the COVID-19 period, with a lot of the investment coming from the United States.
“Overall, we are seeing a ton of demand from investors looking to deploy capital within the Caribbean . . . so in terms of attracting foreign investment, it is very positive,” she said.
The bankers identified several risks including the inability of developers to complete projects on time, the impact of high or rising interest rates in the US, supply chain delays, cost overruns and a weak project team.
“Insurance has also been a challenge in some countries more so than others, and the ability to even obtain insurance, full maximum coverage for facilities when it comes to wind storms, flooding and so on. That is an area we are going to be paying more attention to,” added de Caires. (MM)