The construction industry, after several years of strong growth, earned more money during the first quarter of this year than in any quarter since the beginning of 1999.

The boom that began with major office developments in the second half of the 1990s has now incorporated, hotels, houses and substantial government projects.

But will the growth last much longer?

Statistics indicate that the construction industry appears to be approaching a slower period. According to Government statistics, only $5.8 million of new work was started during the first quarter of this year - a paltry sum considering the average value of new work started during each of the previous 12 quarters was $40.7 million. Excluding the $70 million Berkeley project, which inflated last year's first quarter figures to $94.5 million, the average was $34.9 million.

"Although business in the industry is fairly buoyant at the moment, there is some level of concern regarding the next two to three years," said Tim Berry, the president of the Bermuda Construction Association.

A decline in office construction has been offset by major Government projects, including the Berkeley secondary school. But once contractors complete current projects, they may find it difficult to find new work.

Mr. Berry said that proposed legislation which could prevent American companies from reincorporating here and financial scandals had influenced business confidence and could prompt potential commercial clients to postpone their construction projects. Mr. Berry said that recent bidding on commercial buildings and large houses had been "very competitive".

Competition for smaller residential jobs has not been as intense because of high demand in the sector, which has been partly fuelled by low interest rates.

In mid-2001, residential construction became the single biggest contributor to the industry, replacing offices, shops and warehouses, which had been the most lucrative sector since at least 1999.

In the first quarter of this year, contractors were working on $15.8 million worth or residential work, compared with $5.7 million in office building work and $10.1 million of hotel work. Most general contractors have followed the work.

Mr. Berry said that specialist sub contractors and commercial shop fitters may have less demand for their services, although some have turned their attention to high-end residential work and hotel projects.

Because the construction labour is relatively liquid, he explained that workers whose companies have suffered have been able to switch jobs.

Bermuda Air Conditioning project manager Chris Chiappa said his company noticed a decline in commercial work between six and eight months ago, but that work had been replaced by residential contracts.

Now his company is busy with what he called the "commercial side of residential" - outfitting houses with central air conditioning systems that are typically reserved for offices.

"They are up quite dramatically," he said. "Building seems to be in a real boom for larger residentials now."

"The construction industry is busy," he said. The phone doesn't stop."

He said ductless air conditioning systems, which are more likely to be found in more modest houses, were selling at about the same rate as last year.