NMI construction sector in deepest slump • Activities cost only $18.5-M in 1999

After contributing almost $100 million in total funds circulating around the CNMI economy three years ago, the Northern Marianas construction sector suffered a record blow falling beyond the $20 million-mark by end-December 1999.

Officials attribute the decline to the staggering number of new investors in the CNMI and the approach taken by existing businesses which have decided to forego expansion due to weakening consumer confidence amid the recession.

Construction activities on the island amounted to only $18.5 million, which translate to 361 building permits approved by the Department of Public Works’ Safety Code Division, last year.

Of this, $5 million were earmarked for commercial construction activities while the remaining $13.5 million were primarily used to finance home or residential improvements.

In 1998, the industry pumped $48.3 million into the CNMI economy for 587 construction activities, majority of which were also concentrated in the residential sector.

The construction sector started spiraling downward in 1997 when total amount of activities fell to $65.2 million from the previous year’s $90.4 million, when erection of commercial structures outnumber activities in the residential sector.

The construction industry started dipping since then, until it reached a record-low of $18.5 million last year, from the year-ago’s $48.3 million, according to statistics obtained from the public works department.

Records obtained from the commerce department’s Central Statistics Division noted that only 20 permits for commercial structures have been approved by the SCD in the last quarter of 1999.

This is translated into measly $200,000 worth of construction activities in the commercial sector. In the residential sector, the safety division code in the same period approved the construction of 44 housing units throughout the Northern Marianas which amounted to around $2.4 million.

While last year’s figures appear discouraging, the construction sector in the Northern Marianas is still 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.

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 flotation of the $60 million municipal bond.