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Thursday, July 19, 2007

Drop in Building Construction and Outlook in the Industry

There has been a 21% drop in buidling construction in Fiji in the first quarter of 2007 according to the Bureau of Statistics.

The Bureau said that of the F$59 million total construction projects, F$45 million was for the private sector while F$14 million related to the public sector.

F$43 million was for work done on new buildings and capital repairs.

The downturn in the building and construction industry may be attributed to high interest rates that were prevalent towards the end of 2006 and the beginning of 2007.

With interest rates beginning to fall again, we might expect some bottoming out of construction data over the next few months.

In the meantime, construction in Suva continues with work progressing on the Morris Hedstrom Towers, the Tappoo City project, the Great Council of Chiefs Building and Kadavu House. The completion of these large commercial projects would see a huge increase in commercial floor space over the next few months.

Whether there would be demand for such space is yet to be seen but given the current state of the economy, I would expect such demand to be low. This would mean a reduction of office rental rates over coming months.

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