Construction sector injects $36-M into NMI economy

Despite decline in numbers of foreign investors who express interest in pouring fresh capital into the CNMI, hundreds of construction activities in the Northern Marianas contributed close to $36 million to local economy in 1999.

The amount represents 386 construction proposals approved by the Department of Public Works’ Safety Code Division last year.

CNMI enjoyed additional $57 million in fresh capital from the construction sector in 1998, although the amount is lower than the previous year’s $80 million.

Records obtained from the commerce department’s Central Statistics Division noted that 104 permits for commercial structures have been approved by the SCD in 1999.

This is translated into some $20.074 million worth of construction activities in the commercial sector with close to $15 million, or 25 percent, of which was applied for during the first three months of last year.

In the residential sector, the safety division in 1999 approved the construction of 264 housing units throughout the Northern Marianas which amounted to around $15.6 million.

While last year’s figures appear encouraging, the construction sector in the Northern Marianas is not likely to rally stronger this year with all indications pointing to the declining trend in the real estate sector.

Department of Commerce records revealed a shrinking pattern in construction activities in the islands since the first three months of last year, as the quarterly average of building permits dropped to less than a hundred from 141 in 1998.

This, even when private financial institutions in the CNMI expanded their lending base for real estate loans beginning the first quarter of 1999, ending the year with a total of $53.4 million approved loans.

The construction industry received a major boost in 1997 spurred by new activities totaling 463, which is higher than the previous year’s 343. New construction activities jumped higher in 1998 with the BSC issuing 564 new building permits.

Housing loans approved by the Commonwealth Development Authority, and its commitment to release 1,000 home loans by the turn of the century helped minimize the decline in the residential sector.

CDA Board Chair John S. Tenorio disclosed that NMHC has approved roughly about 700 housing loans within the last two and a half years and intends to close a thousand loans by year-end.
Government officials are upbeat on the possible multiplier effect of the pending commencement of $120 million worth of locally and federally funded Capital Improvement Projects with the nearing of the $60 million municipal bond float.

Mr. Tenorio said the significant increase in last year’s real estate loans from commercial banks and CDA was fueled by a bigger demand for home refinancing because of the lower interest rates.