Bermuda's construction industry is booming with a number of records being broken for projects carried out and completed in the second quarter of 2008, according to the latest Government figures.

The Department of Statistics' Second Quarterly Bulletin of Statistics revealed that the total value of building work started in the second quarter of this year at $146.6 million was almost double the previous record for the quarter, pointing to an expected record year for the industry in 2008.

In addition the total value of work put in place during the same period stood at a record $102.3 million.

But Alex DeCouto, president of the Construction Association of Bermuda, has called on Government to spend more money on public capital projects to boost the local economy and jobs market.

Mr. DeCouto said that the biggest increase in work was on offices, shops and warehouses, with as much work in place for the first half of 2008 as the whole of last year. And he reckons there will be a lot of competition for new tenants when work is finished.

"For myriad reasons, several big office developments all got off the ground at nearly the same time, and this has spiked output," he said.

"As a result, the market for commercial space is likely to see a corresponding jump in competition next year as they all fight for prospective tenants."

Despite believing the financial backing for these projects was secured several months beforehand, Mr. DeCouto warned that the future activity of the commercial office sector will probably be impacted by the global credit crisis.

Looking at the residential sector, he said it has remained unexpectedly buoyant, while hotels have underperformed, although work has been steady on the fractional units at Tucker's Point Club and Reefs Hotel.

"But certainly the other major hotel projects that have been purportedly imminent have failed to materialise as of yet," he said.

"I had been made to understand that Lehman was financing at least one of these projects before they went bankrupt, so that might explain a delay.

"But I think we remain hopeful that one or two major hotel developments will get underway by the start of next year. I wouldn't be able to say with any certainty which ones are more likely than others."

Mr. DeCouto said there was anecdotal evidence from the industry that suggested a definitive downturn in residential construction and renovations, and that a number of firms have been downsizing and are generally finding it difficult to keep busy.

"Comments from the Minister of Finance recently that Government capital projects may be curtailed as a result of recent global financial turmoil is therefore very concerning," he said.

"Capital expenditure through Works & Engineering and the Bermuda Housing Corporation helps to keep many of the smaller firms (employing mostly Bermudians) busy with a consistent workload of residential units and whatnot."

He said the type of spending on projects was significant in terms of local employment, giving the example of spending $2 million on residential construction, thus keeping 20 people employed for a year, but by spending the same amount on a commercial hotel kitchen that was fabricated overseas, only eight people may be employed for a month to install it.

"The Bermudians employed in the residential and public sector construction work are seeing a drop in demand," he said.

"Government has an opportunity to spend on capital projects to offset this slowdown, and I think it would be a mistake to do the opposite. This would result in local job losses."

"In the long-term, I would have to be somewhat concerned. If commercial office space sees a drop off next year, combined with a pull-back in Government capital projects and a lack of hotel development, we could be in for a steep decline.

"However, I would be quietly confident that Government will still push on with most projects (its housing agenda is a high priority) and that at least one or two hotels will manage to go ahead. This should temper the fall while continuing the cyclical nature of output for the industry."