BCQS

C A R I B B E A N C O N S T R U C T I O N

4Q 2009 - 1Q 2010

market trendREPORT 2010

MARKET TREND2

REPORT

BCQS

MARKET TREND4

REPORT

International has been an established cost and value

consultant in the Caribbean construction and property industry for over forty years, during which time we have built on our reputation as the leading independent consultant of our kind in the region. With an ever increasing and diver-sifying Client base, and with a wealth of regional in-house knowledge, this report offers a guide to construction costs and variances throughout the region. Going forward, we intend to update our on-going cost research on a quarterly basis, releas-

ing our findings in an annual published report, which we believe will be a valuable initial source to fellow construction professionals, builders, es-tablished and first time developers, lending insti-tutions, and indeed, anyone who has an interest in, or reason to follow, the construction industry in the Caribbean. In time, the information within this report will enable the reader to analyse mar-ket trends, and give some indication of specific as well as general cost patterns and nuances within the region. In order to keep our information accurate, succinct, and possible to update quarterly, we have chosen to research ten jurisdictions with-in the region, which, in our opinion, are repre-sentative of the English and Dutch-speaking Caribbean. Knowledge captured from our six regional offices, namely the Bahamas, Barba-dos, British Virgin Islands, Cayman Islands, St. Lu-cia and the Turks and Caicos Islands has been supplemented by on the ground expertise from fellow professionals in our associated office in Jamaica. This report does not attempt to com-ment on markets such as Puerto Rico, the French West Indies, Cuba or Haiti, which have special-ised construction markets which are not neces-

Foreword:

BCQS

WELCOME TO THE FIRST PUBLISHED EDITION of our Caribbean Construction Market Trend Report which covers the fourth quarter 2009 to the first quarter 2010.

BCQSsarily reflective of the remainder of the region, be they tied directly to other markets or have a constitution otherwise not reflective of the re-gional market. However we are mindful of other relevant economies such as The Dominican Re-public and Guyana, which we intend to include within our next report. The indices contained herein not only show escalation costs for building materials, plant and labour, which reflect market trends, but also con-solidate useful information on general costs per square foot of various types of construction as well as local and regional sales and rental rates. We have also researched each jurisdiction in or-der to provide useful information regarding gen-eral statistics, government and GDP information, cost of living types as well as tourism types and numbers. We believe that this supplementary in-formation helps to form a clearer picture of the countries involved . While there is various information available to the market, BCQS has identified a need for consolidated, accurate and concise presenta-tion of construction costs in order that existing and potential clients may make informed de-cisions at the feasibility stage of their projects.

This is fundamental to our approach to project delivery and whilst this report is not intended to replace the requirement for cost control services after project inception, by presenting the indi-ces contained herein, we hope to encourage informed development within the region and to foster new relationships. We further hope that this report will be of benefit to the English and Dutch-speaking Caribbean construction industry as a whole. Whatever your role or position in the construc-tion and property industry, we hope that you find our first Caribbean Market Trend Report of interest and that the information presented is of value to you. In order to continuously improve our service to our Clients, we would welcome any constructive comments which will help us to ensure that our report remains of maximum value to those who read it.

BCQS InternationalSt Lucia, March 2010

MARKET TREND6

REPORT

of 2009 will not be remem-bered favourably in terms

of roll-out of successful construction projects. Indeed, globally, and the Caribbean is no ex-ception, the tightening of finance has resulted in many projects being put ‘on-hold’ or in some cases, written off as unviable in the short term. Even experts in economics, property, housing and finance have been cautious in their pre-dictions for the short and long term economic well being of the global economy. This uncer-tainty, in turn, is reflected in the property and construction industry in particular, which tra-ditionally, is a leading proponent, and major economic indicator. The Caribbean cannot and does not ex-pect to be an exception to this global rule. A large proportion of revenue comes directly from

tourism related developments. In 2009, tourism provided the region with 10% of government revenues, 14.5% of GDP and 12% of regional employment. A reduction in tourist numbers has seen a knock-on effect in construction, primar-ily in tourism related developments, but there is also concern that the impact of reduced gov-ernmental revenue will further affect investment in public projects. GDP within the English and Dutch speaking Caribbean has fallen by 1.2% over 2009, partly due to the reliance on tour-ism in most jurisdictions. Those countries such as Trinidad which also rely on natural resources are generally more affected by commodity prices than tourism numbers. Notwithstanding this, some jurisdictions are coping better than others. Well administrated established markets are able to keep moving, albeit at a slower pace, where capital has been introduced to the market in terms of governmen-tal and public utilities projects. The same markets also tend to have sustainable tourism develop-ment which does not rely on an economic up-turn. Those markets that seem to have suffered the most, are those that have experienced ex-peditious growth in the boom years, and now

The year

Market Overview:

BCQSfind that the goal of realising values enjoyed by their neighbours are unachievable, at least in the short term. A general pattern emerges, that the second home market from North America and Western Europe has reduced significantly, leaving a number of developers competing with each other in appealing to a dwindling demo-graphic. However, a confidence remains in projected tourism figures, and there is a belief, at least in most jurisdictions, that things will return to a sem-blance of ‘normality’ towards the end of 2010. As such, a lot of sellers and developers are still holding on and following sales markets closely. One thing is for certain, however, and that is the impact to the region has, in the least, been tan-gible, and the effects are continuing to be felt throughout 4Q 2009 as well as into 1Q 2010. A cautious buying market is now also seemingly wary of the condo/hotel business model of pay-ing for the financing of construction projects through pre-sales and stage payments. This should change the pattern of development in years to come. Markets such as the Dominican Republic have suffered less than other markets due to the

diversified tourism industry, ranging from charter to high end, with a varied landscape and a plethora of attractions for all types of tourists and investors. Current economic indicators predict that those countries which can look forward to real growth in 2010 are led by Guyana and Trinidad & Toba-go. Interestingly, neither of these countries rely on tourism as their primary income, and their natu-ral resources and commodity based economies would suggest that those other countries which rely on tourism may have a longer recovery pe-riod before positive economic growth is experi-enced in their own jurisdictions. Construction costs have stabilised in contrast to recently experienced expeditious growth. Our findings further show that lower commodity prices have resulted in the reduction of first cost prices of some core materials such as copper and aluminium as well as aggregate and sand in some areas. This leads to an overall reduction in construction costs. Whilst construction activ-ity is much reduced, our findings show that la-bour rates have only reduced slightly throughout 2009, even though there are fewer construction employment opportunities. We will monitor this trend through our quarterly research.

MARKET TREND8

REPORT

What has become clear is that there is a great variance between our

ten chosen jurisdictions in terms of construc-tion costs and subsequent rental and sales values. A pattern emerges generally in that the higher a country’s GDP/ head, the higher the construction cost, and in turn the higher the rental or sales value upon completion. An exception to this rule is the Turks and Caicos Islands, where the GDP is amongst the low-est, whereas construction costs are gener-ally amongst the highest. This suggests a wide gulf between the country’s lowest and high-est earners, and indicates that a high income minority are involved in the development and subsequent sales and rental of domestic, hotel and commercial property. Throughout the region, of all the types of

Summarised Findings:

construction, office buildings show the greatest variance in terms of cost/square foot, although high quality residential also varies greatly region to region. Whilst labour and material costs are a major factor, this may also be dependent on levels of finishes, millwork etc. chosen by the in-dividual client. Commercial developments in the Cayman Islands are noticeably higher as a comparable percentage to other construction costs. This is due to client driven demand for greater hur-ricane protection following Hurricane Ivan in 2004, which has resulted in stricter building stan-dards for such buildings and therefore increased construction cost. Our findings demonstrate individual vagaries regarding specific building materials. For ex-ample sand is found to be expensive in the BVI, while this is true of paint in the Turks and Caicos Islands. Such items would suggest that the sup-pliers of these items have little business competi-tion so therefore do not have to be competitive in a market which would otherwise demand commercially priced materials. Raw materials such as aggregate and sand are a lot cheaper as a percentage of total build cost in Jamaica

BCQSagainst other building materials, which points to the fact that these raw materials can be pro-duced on island, whilst finishes materials need to be imported. In Trinidad, the same is true of similar products, as well as steel. Those smaller islands which manufacture little or no raw or fin-ishing building materials, need to import all their goods, which in turn attracts greater costs in the form of shipping, brokerage, and duty. Luxury items (some finishes, specialist millwork, applianc-es etc.) are taxed heavily in most jurisdictions, the cost of which filters directly through to the con-sumers of the construction market. Labour costs demonstrate a significant vari-ance, country to country. For example, a la-bourer in BVI can expect to earn six times as much as a labourer in Jamaica, whilst a plumber in Barbados earns half that of a plumber in Cay-man. Construction equipment costs are gener-ally more in line on a country by country basis than other construction elements. In countries such as the Turks and Caicos Is-lands or the Bahamas, construction costs can vary island to island, with more remote islands attracting higher costs due to transportation of labour, plant, material and accommodation for

labour. Even where the country consists of a sole island, such as St. Lucia, costs can vary depend-ing on a number of factors, including geograph-ic location, accessibility of the site and proximity to ports. Natural disasters such as hurricanes or earth-quakes can have an immediate effect on con-struction prices, even if the disaster did not occur in that particular jurisdiction. During the highly ac-tive hurricane season of 2005, for example, build-ing materials such as plywood and roof finishing materials increased in price and therefore direct-ly affected neighbouring countries relying on the same supply chain. World economics also plays a leading role, for example the price of oil falling from US$150/ barrel to US$50/ barrel in a matter of months over the last two quarters of 2008. 2009 has seen an overall reduction in con-struction costs, partly due to reduced commod-ity prices. Another main factor is due to the com-petition for work which has forced contractors to take a more commercial approach in their pricing of bid documents. Reduced profit allow-ances and minimised labour day rates make a contractor more likely to win work and therefore better positioned to keep a positive cashflow.

MARKET TREND10

REPORT

Note: In researching the above statistics, we have found that various governmental and private sources differ from each other to a lesser or greater degree. In the

interests of ongoing consistency, we have largely relied upon information issued by The Caribbean Community (Caricom) Regional Statistics Secretariat (2008).

* Netherlands Antilles = source U.S Department of State http://www.state.gov/r/pa/ei/bgn/22528.htm;

CIA World Fact Book https://www.cia.gov/library/publications/the-world-factbook/geos/nt.html

General and Government Statistics:

COUNTRY LOCAL CURRENCY

EXCHANGE RATE

TO US$1.00

LAND AREA CAPITAL CITY POPULATION NR. PERSONS

EMPLOYED

GDP

(MILLIONS),

2008

GDP/

CAPITA (US$),

2008

KEY INDUSTRIES

(EXC. CONSTRUCTION)

BAHAMAS BSD 1.00 10,010 Sq. KM Nassau 309,156 191,595 9,228 27,394 Tourism, Finance, Cement

TURKS AND CAICOS USD 1.00 948 Sq. KM Cockburn Town 36,605 12,000 845 6,400 Tourism, Finance

CAYMAN KYD 0.82 264 Sq. KM Georgetown 49,035 23,450 1,939 43,800 Tourism, Finance, Insurance

JAMAICA JMD 88.55 10,831 Sq. KM Kingston 2,825,928 1,304,000 20,958 7,766 Tourism, Bauxite/ Aluminium, Agro-processing

BVI USD 1.00 151 Sq. KM Road Town 24,000 12,770 840 38,500 Tourism, Finance

ST. MARTIN EUR 0.69 (Fr.) 53 Sq. KM Marigot 29,820See

CuracaoSee

CuracaoSee

Curacao

Tourism, Light Industrial/

Manufacturing, Heavy IndustryST. MAARTEN* ANG 1.79 (Neth.) 34 Sq. KM Philipsburg 43,072

ST. LUCIA XCD 2.71 606 Sq. KM Castries 160,765 79,700 1,830 10,819 Tourism, Manufacturing, Agriculture

BARBADOS BDS 2.00 430 Sq. KM Bridgetown 279,000 175,000 5,244 19,026 Tourism, Sugar, Light Manufacturing

TRINIDAD & TOBAGO TTD 6.33 5,128 Sq. KM Port of Spain 1,305,000 624,320 27,038 20,723 Petroleum, Chemicals, Food Processing

CURACAO (Neth. Antilles)* ANG 1.79 444 Sq. KM Willemstad 140,796 91,470 2,800 16,000 Tourism, Petroleum Refinement, Petrol’ transhipment

BCQSCost of living indicators:

ITEM DESCRIPTION UNIT BAHAMAS TURKS &

CAICOS

CAYMAN JAMAICA BVI ST.

MAARTEN

ST LUCIA B’BADOS TRINIDAD CURACAO AVERAGE

1 City Water $/gallon 0.012 0.034 0.019 0.005 0.012 0.013 0.010 0.010 0.020 0.031 0.020

2 Electricity $/kwh 0.15 0.36 0.33 0.29 0.25 0.31 0.32 0.11 0.34 0.40 0.29

3 Gasoline $/gallon 3.95 4.25 4.76 3.41 3.45 1.85 3.70 3.00 2.86 4.85 3.34

4 Income tax, personal %/income 0.0% 0.0% 0.0% 33.0% 14.0% 24.0% 30.0% 27.5% 25.0% 25.0% 18.0%

5 Income tax, corporate %/income 0.0% 0.0% 0.0% 33.0% 0.0% 25.0% 33.3% 25.0% 35.0% 34.5% 19.0%

6 Import duty on building materials/ essential % (average) 30.0% 48.0% 20.0% 40.0% 12.5% 0.0% 30.0% 20.0% 20.0% 15.5% 24.0%

7 Import duty on luxury goods % (average) 42.0% 60.0% 40.0% 43.0% 20.0% 0.0% 75.0% 62.5% 20.0% 32.0% 39.0%

8 Stamp duty on property transfer % 10.0% 9.8% 7.5% 3.0% 8.0% 3.0% 0.0% 1.0% 7.5% 4.0% 5.0%

9 Real estate commission on property sale % 10.0% 8.0% 6.0% 6.0% 7.0% 7.0% 5.0% 4.0% 5.0% 2.5% 6.0%

10 Vendors tax on property transfer % (average) 0.0% 0.0% 0.0% 3.0% 0.0% 0.0% 7.5% 2.5% 5.0% 0.0% 2.0%

11 Lawyers fees on property sale % 2.5% 1.0% 0.50% 4.0% 1.5% 2.0% 1.0% 2.0% 1.5% 1.5% 2.0%

Note: Indicators such as water, electricity and especially gasoline are all subject to fluctuations but are indicators of cost levels at the time of writing. Where figures vary depending on value or type of goods

or services, such as import duty on building materials, or stamp duty on property transfer, then a medium average has been calculated.

MARKET TREND12

REPORT

BAHAMAS

The Bahamas traditionally relies on US tourism and trade to sustain its econo-

my. As such, the economic recession in the USA has had a significant effect on the Bahamas since last quarter 2008. The Bahamian Govern-ment has continued to stimulate the economy through capital investment, and the comple-tion of the deep water harbour in Nassau has enabled an increase in the size and volume of visiting cruise ships to New Providence. The ex-pansion work at Lyndon Pindling International Airport is continuing as is the development of the new National Sports Stadium. Regeneration of the Bay Street area in downtown Nassau has seen the commencement of the Straw Market and the planned re-location of the commercial port facilities away from Bay Street to Arawak Cay. The recent re-branding of the Emerald Bay Resort by Sandals will provide much need-ed stimulus to the Exuma Islands.

Country byCountry Guide:

LOCAL KNOWLEDGE : GLOBAL EXPERIENCE Bahamas, Turks and Caicos, Cayman Islands,

Jamaica, BVI, St Maarten, St Lucia, Barbados, Trinidad and Tobago, Curacao

BCQS

As well as the decrease in numbers of sec-ond home buyers, TCI has suffered from

other factors as well. The week-long presence of Hurricanes Hannah and Ike resulted in severe flood-ing and loss of property, particularly in the nation’s capital, Grand Turk. This was exacerbated by the suspension of the government, some months after-wards, due to serious allegations of corruption. Af-ter an unprecedented boom period, during which time, many high quality resorts and homes were built, the TCI looks set for a correctional period as a number of abandoned building sites dominate otherwise outstandingly beautiful beachfront. This natural commodity is extensive in TCI, and the economy will look to recover through tourism and related industries. Two hospitals have been fin-ished in early 2010 under the first PFI project in the region. It is further hoped that the proposed airport runway and terminal expansion in Providenciales will provide a major boost to the tourism industry.

TURKS AND CAICOS

Cayman, like the majority of jurisdic-tions in the region has experienced a

significant reduction in major construction proj-ects, particularly in the private sector. Currently, the only major projects underway are the two Government high schools and the Government office accommodation project. The recently elected Government has announced plans for three new major projects, a cruise ship berth-ing facility in George Town, a new cargo facility at the east end of the island and the redevel-opment of Owen Roberts International Airport. Plans have also been announced for the de-velopment of a major healthcare facility and an oil refinery, both in the eastern districts. Ad-ditionally, private sector development is set to pick up this year with the Seven Mile Beach Watercolours condominium development and further commercial retail/office space due to commence at Camana Bay.

CAYMAN ISLANDS

MARKET TREND14

REPORT

Although still in recovery mode, the government continues to enhance

the public infrastructure through both civil and residential projects across the island. Works continue on the North-coast highway project and The R. A. Murray and Mabey & Johnson Priority Bridge Programmes deliver-ing 80 bridges in the next three years. The National Housing Trust is working to start construction on a number of housing solu-tions across the island increasing the cur-rent housing stock by in excess of 2,000 units by 2012. Projected growth in GDP coupled with a reduction in interest rates through the new Jamaica Debt Exchange programme, should stimulate activity in the private and real estate sectors by providing investors with a more viable form of investment through construction and real estate activity.

The BVI government is initiating a change to a greater emphasis on

heritage based tourism, resulting in plans for restoring local points of interest includ-ing the Copper Mine in Virgin Gorda, the Callwood Distillery and the Lower Estate Sugar Works. Having encouraged organic tourism growth as a matter of policy, the BVI has suffered less than its neighbours and continues to host a healthy and sus-tainable construction environment. Con-struction projects which have either been completed or are scheduled to be com-pleted in 2010 include Oil Nut Bay, which opened in 2009, Scrub Island and the An-egada Water Project. Ongoing works in-clude a new hospital, and improvement works to Virgin Gorda Airport. To date, the BVI has fared the recession well.

BVIJAMAICA

BCQS

Following a growing confidence in in-vestment leading up to the downturn

in 2008, St. Lucia’s construction sector has un-doubtedly suffered in 2009, meaning a lot of in-tended projects have remained on the drawing board. A number of projects under construction have also slowed down or been halted due to funding constraints. However, confidence seems to be returning as a number of tourism re-lated sales have gone through towards the end of 2009 and into 2010. A government with high expectations has indicated the recommence-ment of Le Paradis, the ongoing development of Point Hardy, Cotton Bay Resorts and L’Avant Mer. New projects include commencement of works at Hotel Chocolat and improvement of in-frastructure and services at the International Air-port. The new national hospital, which is under construction, adds to this impressive portfolio.

Being divided between French and Dutch speaking sides, the island of St

Maarten has seen tourism related growth over the past decade in terms of hotel beds and airlift. Both sides of the island enjoy the ben-efits of cultural diversity in their tourism-relat-ed industries. However, two high profile hotel construction projects have been stalled due to global economic constraints, namely The JW Marriott and The Hyatt. Whilst this shows that construction activity in St Maarten has in-evitably slowed down in line with worldwide events, the islands high profile and diverse tourism market enables it to position itself well in the regions forecast upturn in trade and tourism. St. Maarten’s geographical location further enhances this potential by being within close proximity to many of the regions wealthier islands.

ST MAARTEN ST LUCIA

MARKET TREND16

REPORT

Up until the fourth quarter 2009, a number of tourism-related con-

struction projects were put on standstill due to the global recession. Over the last quarter of 2009 some developments showed signs of starting in 2010/2011. There are a number of promising projects for the next two to three years which with the aid of overseas funding should help boost the economy of Barbados. Amongst these are the completion of the Four Sea-sons Development & Marina works at St. Peter’s Bay, which is scheduled for com-pletion early 2011, and the Beachlands development, with an anticipated start date of mid-2010. Established projects such as the Villas at Royal Westmoreland are ongoing.

The global economic downturn af-fected both the public and private

sectors in Trinidad and Tobago, but con-struction works have continued. This may be attributable to the extensive develop-ment plan set out by the Government of Trinidad and Tobago named “Vision 2020” encompassing a number of construction projects which aim to allow for a steady flow of construction throughout the twin nation. Projects underway include, the Academy for Per forming Arts, and the upgrades of both Maracas Beach Facility and Scarborough Hospital. In the private sector, the Carlton Savannah Hotel was completed during the fourth quarter 2009 and the Star Hotel is scheduled to open in October 2010.

TRINIDAD AND TOBAGOBARBADOS

BCQS

Curacao suffered less than most of the region in 2009, in part due to the geo-

graphical diversity of its tourism market, draw-ing many visitors from both South America and Northern Europe, and not relying as heavily on American markets as do some of the more northerly Caribbean nations. The construction industry has been supported in recent years by two major hotel projects, the recently com-pleted Renaissance Hotel and Retail Mall/Cinema, situated adjacent to the cruise ship terminal in Willemstad and the 350 room Hyatt Regency Hotel and Resort at Santa Barbara Plantation, which is due for completion mid-2010. Curacao’s diversity, its geographical lo-cation and its political standing as an island of the Netherlands Antilles has proved beneficial to the island in a difficult economic climate.

CURACAO

MARKET TREND18

REPORT

findings for 2009 show that the

Caribbean continues to suffer from the global downturn in the tourist industry. Sources from the regional press have described Jamaica and Saba as being notable exceptions for 2009, these two Islands being amongst the few within the Caribbean to achieve posi-tive growth. Anguilla, BVI, St Maarten and the Bahamas have been described as being the worst affected, with tourism numbers fall-ing through 2009 from between 15% and 25%, interestingly, all countries which cater to high-end tourist markets. Countries such as the Do-minican Republic with varied tourism streams, such as high-end, charter, cruise etc. look for-ward to positive forecasts in 2010.

Tourism:

Summarised

BCQSThe following table and chart demonstrate ‘stay over’ tourist figures for 2009, adjusted where applicable.

BAHAMAS TURKS &

CAICOS~

CAYMAN JAMAICA BVI~ ST.

MAARTEN

ST LUCIA B’BADOS TRINIDAD &

TOBAGO

CURACAO AVERAGE

1 United States No. Persons* 1,206,114 170,000 212,711 1,183,614 270,000 238,856 97,697 114,640 190,358 34,581 371,857

2 Canada No. Persons* 110,891 30,000 15,884 280,002 11,000 29,624 27,149 57,233 49,848 5,581 61,721

3 Europe No. Persons* 84,699 25,000 18,420 273,335 50,000 95,075 84,553 216,317 64,790 143,753 105,594

4 Other No. Persons* 74,009 30,000 19,120 91,594 25,000 67,244 65,820 114,104 112,054 172,807 77,175

Totals 1,475,712 255,000 266,135 1,828,544 356,000 430,800 275,219 502,294 417,050 356,723 616,348

* Numbers of arrivals are pro rata’d for the entire year from available information at the time of writing, which generally covers months Jan - Sept/Oct; sources: Various

~ Estimated figures due to insufficient current information

MARKET TREND20

REPORT

Indicative Construction Costs: (Median averages from range)

All values in US$

BAHAMAS TURKS &

CAICOS

CAYMAN JAMAICA BVI ST.

MAARTEN

ST LUCIA B’BADOS TRINIDAD CURACAO AVERAGE

ITEM DESCRIPTION * See Page 33 UNIT 1.06 1.29 1.13 0.67 1.12 1.00 1.00 1.12 0.83 0.72

1 High quality residential Median /SF 225 250 300 190 350 225 250 325 230 200 254.5

2 Medium quality residential Median /SF 170 180 170 120 250 175 150 175 140 120 165

3 Modest quality residential Median /SF 130 140 120 80 150 120 100 125 100 80 114.5

4 Storage or warehouse structures Median /SF 85 70 75 60 100 90 80 75 80 70 78.5

5 Retail, single-storey Median /SF 140 160 135 80 120 100 100 135 100 80 115

6 Offices, one to three storey, shell Median /SF 120 140 185 60 150 90 80 175 80 70 115

7 Offices, one to three storey, inc. fitout Median /SF 200 220 305 100 180 125 120 225 120 100 169.5

8 High rise 4 to 8 stories, shell Median /SF 160 200 245 70 220 175 90 150 90 80 148

9 High rise 4 to 8 stories, inc. fitout Median /SF 250 280 365 110 250 200 135 250 130 110 208

10 Specialist offices Median /SF 270 300 365 90 250 125 110 300 110 90 201

11 Hotels/ Condos, Five star urban Median /SF 300 320 350 200 350 190 220 300 210 180 262

12 Hotels/ Condos, Five star low-rise Median /SF 325 350 365 200 350 200 220 250 210 180 265

13 Hotels/ Condos, Three star economy Median /SF 200 225 185 130 200 180 150 175 140 120 170.5

BCQSIndicative Construction Costs:

MARKET TREND22

REPORT

Average Rental and Sales Values:(Median averages from range)

All values in US$

BAHAMAS TURKS &

CAICOS

CAYMAN JAMAICA BVI ST.

MAARTEN

ST LUCIA B’BADOS TRINIDAD CURACAO AVERAGE

ITEM DESCRIPTION * See Page 33 UNIT 1.06 1.29 1.13 0.67 1.12 1.00 1.00 1.12 0.83 0.72

1 High quality residential Sales $/ SF 550 450 450 360 750 500 450 600 430 370 491

2 Medium quality residential Sales $/ SF 350 300 250 180 350 300 225 250 200 180 258.5

3 Modest quality residential Sales $/ SF 150 170 200 100 200 175 120 150 120 100 148.5

4 Storage or warehouse structures Rental/SF/ PA 22 10 22 10 16.5 22 16 10 20 10 15.85

5 Retail, single-storey Rental/SF/ PA 45 35 36 30 20 26 25 40 30 30 31.7

6 Offices, one to three storey, shell Rental/SF/ PA 40 25 40 10 20 24 22 25 20 10 23.6

7 Offices, one to three storey, inc. fitout Rental/SF/ PA 31 35 50 20 28 33 30 35 20 20 30.2

8 High rise 4 to 8 stories, shell Rental/SF/ PA 32 25 40 20 25 26 22 25 20 20 25.5

9 High rise 4 to 8 stories, inc. fitout Rental/SF/ PA 36 35 50 20 40 35 30 35 20 20 32.1

10 Specialist offices Rental/SF/ PA 50 40 50 20 45 45 40 40 20 20 37

11 Hotels/ Condos, Five star urban $/ bed/ night 350 350 300 180 300 125 220 375 220 190 261

12 Hotels/ Condos, Five star low-rise $/ bed/ night 350 350 300 140 300 130 220 235 160 150 233.5

13 Hotels/ Condos, Three star economy $/ bed/ night 100 150 150 60 150 110 110 85 70 60 104.5

BCQSIndicators for Sales and Rental Values:

MARKET TREND24

REPORT

The following graph represents construction cost by jurisdiction and their relationship to one another. Using St. Lucia as base (1.00), we can therefore see, that costs in Jamaica are the low-est at a factor of 0.67 (-0.33), and that costs in the Turks and Caicos are the highest at a factor of

1.29 (+0.29). This also demonstrates that whilst Ja-maica and Turks and Caicos are geographically only 400 miles apart, the cost of construction in the Turks and Caicos Islands is double that of Ja-maica. A similar, albeit less pronounced, relation-ship exists between Barbados and Trinidad.

Average Construction Costs by Country:

BCQSBid Environment:The Bid Environment can be categorised into five scenarios as per the following table:

Research suggests that the current Bid Environment in each jurisdiction can be identified as follows:

MARKET TREND26

REPORT

of costs is by no means an exact

science, and depends heavily on the source of in-formation procured. Not only must local markets be researched and considered, but also those global markets which directly affect the construc-tion markets in the Caribbean region. This is es-pecially true of those countries within and without the region which manufacture raw materials as well as finishes items. Therefore, influences are truly global, inasmuch that whilst, traditionally, ma-terials and goods have generally been procured from fellow Americas markets, raw and finishes materials are now also imported from countries such as Indonesia and China in the far east to Eu-ropean countries such as Italy and Germany for specialist finishes items such as kitchens and tiling. In order to arrive at the following forecasts, we have therefore considered world markets as well as our local markets, where we have researched basic costs of materials, plant and labour as well as analysing indicative construction costs.

Forecast Escalation:

The forecast

BCQS

Notes: Cost research on an ongoing basis includes,

but is not restricted to the following cost elements,

which represent common costs of construction with-

in the region. A weighting has then been applied to

proportion the percentage of the value of each ele-

ment against a notional whole project cost:

BAHAMAS TURKS &

CAICOS

CAYMAN JAMAICA BVI ST. MAARTEN ST LUCIA B’BADOS TRINIDAD CURACAO AVERAGE

CONSOLIDATED LABOUR, PLANT AND MATERIAL

2010 0.20% 0.20% 0.20% 0.20% 0.30% 0.20% 0.20% 0.20% 1.20% 0.50% 0.30%

2011 3.30% 2.80% 3.50% 3.50% 3.80% 3.50% 3.50% 3.50% 4.50% 3.50% 3.50%

2012 1.40% 1.40% 1.60% 1.40% 1.90% 1.60% 1.60% 1.90% 1.90% 1.90% 1.60%

MATERIAL• 8’’ Hollow-core Concrete Block• Ready-mix Concrete 4000 psi pump mix• Washed Concrete sand• Aggregate, 3/4 ‘’• Cement• 3/4’’ rebar• 5/8’’ plywood• 30lb Roofing Felt• 2’’ x 8’’ pressure treated rafter• Plaster Sand• 1/2’’ regular sheetrock• Semi-gloss latex based white paint• 16’’ x 16’’ ceramic floor tiles• Hollow-core flush door 3’ 0’’ x 6’ 8’’• Copper tubing 3/8’’ diameter

PLANT• Dump truck -12 cy• Backhoe• D3• Excavator, 20 tonne

LABOUR• Labourer, non-skilled• Skilled carpenter• Steel fixer• Painter/ finisher• Tiler• Mason (excl. helper)• Plumber (excl. helper)• Electrician• Foreman/ Supervisor

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individuals building their own homes, through governments im-

proving schools and infrastructure, to large corporations developing office, retail or com-mercial property, the mitigation of risk has al-ways been key to the success of any construc-tion project. In the current economic climate, with greater enforced demands upon private and public developers alike, it is now more important than ever for the detailed examination of project risk from the very inception stage of any type of de-velopment. This early planning helps to ensure a smoother construction process and increases the probability of successful project completion.

Mitigating Riskby Chris Docherty

Most critical decisions relating to the devel-opment of a project are made at the concept stage, when only limited information is avail-able. It is at this stage that it is essential to seek expert advice which will help form the success or otherwise of any construction project. It is by mitigating the risk at this level that can save a developer money, time, resources, and un-necessary problems during the construction process. The failure to analyse and allocate risk at concept stage is often a result of the mis-guided belief that such mitigation is an unnec-essary expenditure to a project. Such problems or disputes can be varied, but most commonly involve the same two recurring themes, namely the unexpected and unplanned expenditure of further time and money. Independent professional expertise helps a Client to understand the costs involved and the contractual implications of decisions before they are made, thereby ensuring that the construc-tion process is as equable as possible. By getting involved at project inception, BCQS can help to guide a design team through common and specific project risks, including budgetary issues, design alternatives, and value engineering.

From

BCQSRobust cost planning coordinated with design development is essential. The procurement route taken and the contract chosen should be workable for the particular project in its particu-lar environment and be sure to protect the Cli-ent from unnecessary risk. The Appointment of the most suitable contractor with a complete design and a firm and realistic price can only benefit a project throughout the build. The pro-cesses put in place at pre-contract stage will always have a great influence on a project throughout its post-contract lifespan. Further-more it is essential for any developer to have an experienced representative administrating the contract and controlling the payments and cost implications throughout the post contract stage. There is always going to be risk. However, the success or failure of any construction proj-ect depends upon the proper mitigation and removal of unnecessary risk and the allocation of remaining risk to those best suited to hold it. Thereafter, effective post contract monitoring and control help to mitigate risk throughout the construction life of a project. Although every project has its own particularities and nuances,

our advice in all instances would be to start an early relationship with a professional cost consultancy, that knows the jurisdiction, knows construction and knows how to protect its cli-ents in a market which is often overwhelming. A consultancy like BCQS International.

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• Project Management;• Quantity Surveying;• Construction Management;• Cost Management;• Property Valuations and Appraisals;• Due Diligence Analysis;• Loan Monitoring;• Feasibility and Market Studies;• Risk Analysis;• Value Engineering;• Life Cycle Costing;• Developer Representation;• Distressed Property Solutions;• Insurance Claims Consulting/Loss Adjusting.

has true multi-jurisdictional reach and is incorporated in-dependently in the Bahamas,

Barbados, British Virgin Islands, Cayman Islands, St Lucia and the Turks and Caicos Islands. Established in 1969, we have earned a leadership position in our field and we offer a comprehensive range of services, including but not restricted to:

About BCQS

BCQS

BCQS

Our projects include prestigious residential properties, large-scale commercial buildings and offices, civic and government buildings, hotels and resorts, and apartments and con-dominiums. We are approved consultants for the British Government’s Foreign and Common-wealth Office, the Department for International Development (DFID), the Caribbean Develop-ment Bank, and for European Union funded projects. Our appraisal services are prepared using the Royal Institution of Chartered Surveyors’ (RICS) guidelines and the majority of our profes-sional staff are members of the RICS, a 140,000 member organisation representing property interests worldwide. We are approved con-

sultants for major banks in the region such as Scotiabank, First Caribbean International Bank, Royal Bank of Canada and Butterfield Bank, as well as other leading international institutions such as Textron Financial, Banco Popular, First Bank and Barclays Bank. We believe in the professional development and management of our clients’ property port-folios and our mission is to ensure that every cli-ent receives the greatest value for money along with unsurpassed service. If you believe that BCQS could be of service to you, we would welcome the opportunity to discuss your project requirements. Our contact details, country by country are detailed at the front of this report. We look forward to hearing from you.

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Weights and Measures:There is no regional pattern of quantification within the region in terms of metric or imperial systems. The following is intended

as a guide to the conversion rates of the most common units of measurement within the construction industry in the region.

Imperial

Length 1 inch 2.54 cm1 foot 12 in .3048m1 yard (yd) 3 ft .9144m1 mile 1760 yd 1.6093km Area 1 sq inch (in²) 6.4516 cm²1 sq foot (ft²) 144 in² .0929 m²1 sq yard (yd²) 9 ft² 0.8361 m²1 acre 4840 yd² 4046.9 m² Capacity/Volume 1 cu inch (in³) 16.387 cm³1 cu foot (ft³) 1728 in³ .0283 m³1 fluid ounce (fl oz) 28.413 ml1 pint (pt) 20 fl oz .5683 litre1 gallon (gal) 8 pt 4.5461 litre Mass (weight) 1 ounce (oz) 437.5 grains 28.35 g1 pound (lb) 16 oz .4536 kg1 stone 14 lb 6.3503 kg1 ton 20 cwt 1.016 t

Metric

Length 1 millimetre (mm) .0394 in1 centimetre (cm) 10 mm .03937in1 metre (m) 100 cm 1.0936 yd1 kilometre (km) 1000 m .6214 mile Area 1sq cm (cm²) 100 mm² .1550 in²1 sq metre (m²) 10000 cm² 1.1960 yd²1 hectare 10000 m² 2.4711 acres1 sq km (km²) 100 ha .3861 mile² Capacity/Volume 1 cu ccm (cm³) .0610 in³1 cu decimetre (dm³) 1000 cm ³ .0353 ft³1 cu metre (m³) 1000 dm³ 1.3080 yd³1 litre (litre) 1 dm³ 1.76 pt1 hectolitre (hl) 100 litre 21.997 gal Mass (weight) 1 milligram (mg) .0154 grain1 gram (g) 1000 mg .0353 oz1 kiligram (kg) 1000 g 2.2046 lb1 tonne (t) 1000 kg 09842 ton

BCQS

1.00 Block and steel construction, pitched shingle roofs on sarking, cedar doors and windows, wood finish or

porcelain floor tiling, solid surface countertops, electrical, hot and cold plumbing

2.00 As above but with ceramic floor tiling, fiberglass shingle roofing, laminated plastic countertops, standard

jalousie windows, electrical hot and cold plumbing

3.00 Block and steel walls, sheet metal roofing, ceramic floor, aluminium jalousie windows, outside laundry tubs, cold

water plumbing with electrical

4.00 Walled and metal sheet roofed, electrical and water

5.00 Open plan, bathrooms, glass storefront

6.00 Shell only partitioned, staircase, package units A/C, bathrooms, doors and aluminium windows

7.00 Fitted out partitioned, staircase, package units A/C, bathrooms, doors and aluminium windows

8.00 As above shell only, with elevators

9.00 As above fitted out, with elevators

10.00 Including medical centres, laboratories, restaurants, etc.

11.00 Five-Star high rise urban

12.00 Low rise Five-Star resort with normal facilities

13.00 Low rise Three-Star economy hotel with normal facilities

*Notes: Building types referred to in cost indicator sections are as follows:

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This report is intended as a guide only. Should the reader

require detailed construction advice, then the services of a

professional RICS accredited and professionally indemnified

Quantity Surveyor should be sought. BCQS International Ltd

accepts no responsibility for results of the actions of individu-

als acting directly through the findings of this report;

Whilst we have made every effort to ensure that all rates

and statistics herein are accurate, BCQS International Ltd

accept no responsibility for the accuracy of the sources of

such rates and statistics;

Sources have been referred to where appropriate.

Although extensive research has been carried out in the

compilation of this report, much of it has been generated in-

house, and not all references have been named. We hereby

extend our thanks to those sources known to us through pro-

fessional relationships, suppliers, employment brokers, plant

hire companies etc. throughout our named jurisdictions;

Neither the whole nor any part of this report or any ref-

erence to it may be included in any published document,

circular or statement nor published in any way without BCQS

International Ltd’s written approval of the form and context

in which it may appear;

BCQS International Ltd gives no warranty, representation

or assurance that the statements, conclusions and opinions

expressed or implied in this report are accurate or valid.

BCQS International Limited has prepared this report without

any acceptance or responsibility on their part to agents out-

side of the employ of BCQS International Ltd.

Due to current volatile financial markets, our findings

should be regarded as valid for a limited period of three

months, after which they will be subject to re-examination.

B A H A M A S C AY M A N I S L A N D S B A R B A D O S S T . L U C I A B R I T I S H V I R G I N I S L A N D S T U R K S A N D C A I C O S I S L A N D S

BCQS

B A H A M A S C AY M A N I S L A N D S B A R B A D O S S T . L U C I A B R I T I S H V I R G I N I S L A N D S T U R K S A N D C A I C O S I S L A N D S

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REPORTB A H A M A S C AY M A N I S L A N D S B A R B A D O S S T . L U C I A B R I T I S H V I R G I N I S L A N D S T U R K S A N D C A I C O S I S L A N D S