By Anna Rose Madray Wednesday, September 3 2008

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One Woodbrook Place...

While CL Financial’s Home Construction Limited (HCL) retrenched over 100 workers last week due to inflation and a slowdown in the local real estate market, the Housing Development Corporation (HDC) yesterday said the housing industry was still stable, with the exception of escalating prices for construction material.

HDC’s corporate communications officer Leslie John said since their houses were subsidised by the Government, they have not been affected by rising costs as much as private companies.

“We are producing houses for the Government’s home programme, so the infrastructure costs are subsidised by the Government and the cost is not transferred to the user,” explained John.

According to John, HDC’s infrastructural costs include electricity, water and sewerage, as well as land development. Despite the subsidy, she said, “there are challenges in terms of the cost of steel and other construction material.

As a result, it is a battle for us to try and keep the price of housing in the reach of people.”

She said also that it was a bit challenging to balance the negotiation of contracts with contractors as well as keep the cost of housing down, but emphasised that the HDC had no immediate intentions of dismissing any of its contractors.

“Right now, we have 190 active projects,” she said, and explained the company employed approximately 100 small, medium and large contractors. John said inflation in the construction sector was under constant review by the Government, and if the costs of materials continued to escalate it would be addressed by the Cabinet.

HCL’s corporate communications manager Lisa Ghany yesterday said the company was currently going through a restructuring process, since it had been “top heavy” for a while.

As a result, she said more than 100 workers had to be retrenched. She said inflation was a problem and explained there was indeed a slow down in the real estate market, as opposed to the construction sector which was quite vibrant.

“ The buying and selling of property now takes longer,” she said, adding the Government now “had a heap of projects going on,” so the market was less demanding. Sharon Inglefield, CEO of NEALCO Limited, also said there was a slowdown in the real estate market.

“It is not a slowdown in the entire market, but particularly to an oversupply of townhouses and apartments, as a result of developers all building this type of housing at the same time,” she explained.

While she said the trend was nothing to panic about, she noted, “once you have an oversupply, the price will soften.” She also said a large number of contractors were now employed with the Government, so it was extremely competitive to secure contractors.

Economist J’wala Rambarran said there was not yet enough evidence to conclude that the real estate market was slowing down.

Rambarran said he felt HCL’s retrenchment exercise occurred because its major One Woodbrook Place project was nearing completion, and did not require as many workers.

He said it was natural that people would gravitate toward the Government’s more affordable housing programmes, than purchase apartments or townhouses as they would have done before. “Demand from one part of the market to another, doesn’t mean that demand has fallen overall,” he added.