After almost two years of downturns, the local construction industry is expected to benefit from increased activities with a slew of infrastructural projects scheduled to come on stream in the lead-up to the general election due by September of this year.

According to industry player and managing director of Atlantic Hardware and Plumbing Company Deanall Barnes, the sector, though blighted by a mix of challenges, should see some offshoots of growth in the coming months as Jamaicans get ready to go to the polls.

“We anticipate that with the elections due this year, the Government will embark on a major capital expenditure programme which will redound to increase activities in the sector,” he told the Jamaica Observer.

The Gvernment’s $45-billion Shared Prosperity through Accelerated Improvement to our Road Network (SPARK) Programme, lined up as that to which he refers, works minister Robert Morgan said should see upgrades being done on approximately 100 of the island’s thoroughfares. Projects under the programme are targeted for completion before the end of the 2024/25 fiscal year.

The work being executed in phases has already seen the roll-out of Work Order 1 which had projects spanning some 21 constituencies and eight parishes, including the corporate area. Work Order 2, which covered an additional four roads across 21 constituencies, saw projects commencing in late February, while activities under Work Order 3, which comprises another 42 roads across 21 additional constituencies, was scheduled to have begun at the start of this month.

“The SPARK Programme should act as a fillip to the sector and bolstered by these activities our team anticipates moderate growth in the domestic construction sector,” Barnes said to the Business Observer.

Despite these increased activities, the vulnerable sector, which remains under new threat he said, is also now called to pay close attention to trade developments in the US and how they are likely to further weigh on output, if any at all.

“It is too early to have a definitive perspective on the imposed tariffs by the US on certain countries; however, we are watching the developments closely,” Barnes said.

The local construction sector, after benefiting from back-to-back quarters of robust growth since the onset of the COVID-19 pandemic, has in the last two years suffered from a wave of setbacks brought on by high interest rates, reduced real estate activity and a general trimming of capital expenditure projects. According to data released by the Planning Institute of Jamaica (PIOJ), the sector, which saw a 2.1 per cent contraction during the last quarter of 2024, continued to experience significant downturn in both the building construction, and other construction components.

“The fall-off in the building construction component was due mainly to the performance of the residential category, reflected in a 19.0 per cent downturn in housing starts by the National Housing Trust (NHT),” preliminary estimates of economic performance released last month by the entity revealed.

Additionally, the total value of mortgages disbursed by the NHT over the October to December reporting period, the entity said, declined by 24.2 per cent to total $6.2 billion. For the other construction component, fallouts were driven by a decline in capital expenditure on civil engineering activities largely due to the winding down of roadwork activities associated with the South Coast Highway Improvement Project (SCHIP), as well as the impact of weather-related events, which hindered ongoing work. Reduced disbursements by the Jamaica Public Service (JPS) over the period also negatively impacted output from the sector.

“A further contraction in the other construction component was tempered by increased disbursement by NROCC, which disbursed $2.8 billion, up 34.9 per cent relative to the corresponding quarter of 2023. Expenditure during the review period was primarily for the Montego Bay Perimeter Road and the Southern Coast Highway Improvement Project (SCHIP),” the PIOJ data however noted.

The sector, Barnes said, continues to be adversely impacted by relatively high interest rates, he blames this as one of the major inhibitor of growth.

With interest rates now slightly reduced from the 7 per cent high seen since February of last year, the central bank, which has been making adjustments to keep unstable inflation in line with its 4-6 per cent targeted range, many complain is not being done fast enough. In contrast to the current 6 per cent rate, the Bank of Jamaica had for a few quarters since 2019 consistently held interest at a historic low of 0.50 per cent and this helped to fuel the strong post-COVID growth seen for the sector.

“Mortgage rates are still at elevated levels, consequently, reducing an effective demand for house loans. Unfortunately, despite the reductions by the central bank, financial institutions have also been much slower in adjusting their own rates and whilst we are cognisant of the ‘lag effect’ in the financial sector, we are still concerned that rates are still at an elevated level,” Barnes said.

Crediting the agility of Atlantic’s business, the company, he said, has, despite the softness of the market, been able to record double-digit growth year on year.

Up to the end of the company’s nine-month period in 2024, total revenues stood at $1.2 billion.

“However, fortunate for us, our customers have been very loyal and sales have continued to hold steady,” Barnes stated.

The hardware distributor, following the recent launch of a $500-million initial public offering (IPO), set to close on March 13, the managing director said, will be using some of the funds raised to build up its capital base as it increase operational efficiencies across the business and diversify product offerings.