Bermuda's construction industry is not overheating because several proposed developments will fail to come to fruition, according to the president of the Construction Association of Bermuda.

Association head Alex DeCouto said it was a common misconception that the Island's construction industry was experiencing a boom, with some saying the pace cannot be sustained.

"I don't think that is what is happening," he said. "If you look at the history of construction it happens in cycles, and we are currently in a high point. I also think that the concentration of some of the projects, many within Hamilton on streets people walk by every day, give the impression that construction is happening everywhere.

"And I think people need to pause for a second when it comes to all the SDOs (Special Development Orders) that have been passed. Just because a site has been granted an SDO does not mean it will be built. We have seen that people get an SDO but then are unsuccessful in securing financing and the project fails.

"Some of these sites are on their third or fourth SDO and nothing has been built yet. So I treat the announcement made on Wednesday with a bit of caution."

Earlier this week Premier Ewart Brown announced a deal had been struck with Bazarian International to develop the former Club Med site for the luxury Park Hyatt hotel chain. On the same day Dr. Brown announced that Government and developers Southlands Ltd. signed the land transfer document to relocate two "boutique" hotels and a private residence club from the South Shore to the former US Naval Air Station on the Sandys peninsula.

Information on financing for the Southlands project has not been made public while Mr. Bazarian said, when questioned, that he has never failed in securing financing for a Caribbean hotel.

Twelve SDOs have been granted since July 2003.

Mr. DeCouto said: "Hotel financing is one of the most difficult types, we're talking hundreds of millions of dollars. With the current market it will be rather hard to secure financing for large hotel developments.

"If you look at two of the current hotel developments, Tucker's Point and The Reefs, they have been financed locally. Bank of Bermuda financed the construction of Tucker's Point and Butterfield Bank is financing the expansion of the reefs. It is not international money involved. "Ithink Bermuda absolutely needs a premier hotel andI really want to see one on the Island but I don't think that they will all happen. I think the first one that gets built, it will almost be like winner takes all. Probably one more will be built after that, but I don't think five more will be built after that. I don't think they will be able to get the financing for it."Figures released by the Department of Statistics revealed the value of new projects started in 2007 was $134.7 million a decrease of 6.4 percent compared to 2006, when the value of new projects totalled $143.9 million. Construction work that took place during 2007 was valued at $344.3 million, a year-on-year increase of 24 percent compared to 2006. Despite the proliferation of cranes around Hamilton, work done on offices and shops accounted for only $55.8 million a drop of 13.5 percent when compared to 2006. Renovations on hotels and guest houses accounted for a large bulk of construction done last year, $155.1 million. Work done on homes accounted for $110 million. However, only 269 new residential units were created during the year a decrease of 11.5 percent when compared to 2006 and 19 percent when compared to 2005.Though Mr. DeCouto said he did not believe the construction industry was taking on too much he did say 2008 will most likely be a blockbuster year for building. "Government's capital expenditure on the courthouse and housing initiatives, such as Perimeter Lane and Harbourview, will also likely impact 2008 figures. I would say that without a doubt 2008 will see a significant increase in construction spending over 2007 and may even be a record year."But I do not think we need to bring in international contractors to manage projects. By and large I think this is unnecessary, as the expertise we have available on the island is extremely capable. Obviously the locals involved in the industry have unparalleled knowledge of local techniques, and they are frequently combined with expatriate professionals who are exceptionally qualified."