- Cyprus Property News Magazine - http://www.news.cyprus-property-buyers.com -

Construction sector hits rock bottom

CURRENT construction projects will run out in seven months with nothing lined up past that time, a survey released yesterday showed.

The construction business, one of the main engines driving the economy, is in free fall and the outlook appears extremely bleak, according to research by the Federation of Associations of Building Contractors (OSEOK).

Yesterday the federation released data gathered so far this year indicating that construction has been hit hard by the on-going credit crunch.

Low demand, the lack of liquidity and loans, and the general economic crisis are identified as the main culprits for the on-going slump.

The federation said its most disturbing finding was that, on average across the island, there remain an estimated seven months for pending construction projects, after which no contracts are lined up.

OSEOK said this index of contracts has been dropping steadily over the past two years and is currently at its lowest-ever point.

“The index confirms the great crisis experienced by the construction sector,” the federation said. The research, conducted with RAI Consultants, covers all the districts.

“The data shows that activity in the construction industry remained close to its lowest levels during the period April to August 2012, while chronic trends do not in the least point to recovery, on the contrary, activity is expected to continue dropping,” the federation said.

It said the problem had worsened over the past four months for contractors across the island, with more and more layoffs being recorded during this period.

At the same time consumer demand is likewise going from bad to worse. According to the contractors, its ‘Purchase-Building Index’ for a 12-month period is currently at an all-time low since it began gathering data, and demand for renovation is likewise extremely poor.

The percentage of contractors stating that their business has increased over the past four months has decreased by 56 per cent for the period April to August, according to OSEOK’s research.

The data was gathered from contractors who were asked to fill out questionnaires.

“It would appear that this index has hit rock-bottom, since many contractors cannot afford to lose more business given that they have very few, or zero, projects to work with; at the same time, government statistics show that a large number of contractors are closing shop or have already done so.”

The federation said moreover that the gloomy numbers apply to all the districts, including Nicosia and Limassol which until recently appeared to be holding up better to the financial squeeze.

The crisis in the construction industry began manifesting itself as early as 2010, when as many as 10,000 workers lost their jobs according to the federation.