An important contributor to Trinidad and Tobago’s economy, the construction industry

was estimated to account for 5.2% of GDP in 2014. There are 12 locally based
companies with a turnover of TT$25m ($3.85m) or more, 200 firms with turnover in the
TT$5m-25m ($771,00-3.85m) range and a larger number of smaller companies below
that, many of them operating informally. The sector accounted for 15.6% of the labour
force, according to T&T’s Central Statistical Office. The industry can be broken down
into four main sub-sectors: building construction; civil infrastructure, such as roads,
dams and drainage systems; the energy construction sector, linked to oil, gas, and
power facilities; and quarrying, which includes the production of aggregates for road
building and cement.
Good Growth
With the sector, including the quarrying sub-segment, growing by 7.1%, 2014 was a
reasonably good year for the construction industry, with the overall economy growing
by an estimated 1.5% (revised from the original 1.9%) and providing some moderate
underlying support for building work demand, according to the government’s “Review of
the Economy 2014”. Typically, construction activity is more volatile than the economy
as a whole, with higher peaks and lower troughs in the business cycle. In line with this,
construction sector growth in the past two years has been running ahead of GDP.

A key reason for this performance is the government cycle. “During and after a general
election construction activity slows down, especially if there is a new party in power as
they may take time to get their footing before new contracts are awarded. This could
affect the industry for up to 12 months or even longer,” John Connon, the managing
director of regional construction and design build company NH International
(Caribbean), told OBG. “Low oil and gas prices may exacerbate the situation given the
effect this will have on the economy and the government’s ability to spend on capital
projects. It is unfortunate that such cyclical activity is common in the construction
sector,” he added.

A similar concern was voiced by Thomas Chanona, CEO of local construction company
Kee-Chanona, who told OBG, “Overbuilding can be an issue of concern for contractors.
The previous government, for instance, had started an excessive amount of projects for
the size of the island, leading to unsustainable cost inflationary pressures.” An
important part of construction demand comes from the public sector. Contractors said
2010-12 was a slow period partly due to the fact that the incoming government
cancelled a number of its predecessor’s projects and took some time to identify, fund
and procure new ones. However, once a new policy was set, from 2013 onwards new
tenders began to be announced and activity increased.
Cement Sales
One sign of a growing construction market in 2014 was that Trinidad Cement Limited
(TCL) reported its sales increased by around 9% from TT$1.9bn ($292.98m) in 2013 to
TT$2.1bn ($323.82m) in 2014. The firm, which is the main supplier of the local market
but also exports to the Caribbean and Latin America, said this was primarily driven by
growth in Trinidad and Jamaica, and it is well positioned to take advantage of growing
demand in the CARICOM region. The improvement in sales came despite renewed debt
servicing difficulties and management changes in 2014. Mexico’s Cemex is the largest
shareholder in TCL, through Sierra Trader, with a 20% stake, which is set to rise to
35% after a February 2015 deal with the Mexican giant.

Oil Price Impact

Despite good signs on the growth front, the fall in oil prices in late 2014 and early 2015
caused a degree of concern among contractors, because of the unfolding impact on the
economy and government spending in particular. The government of Prime Minister
Kamla Persad-Bissessar had to recalculate the budget based on revised oil and gas
prices. The prime minister said spending would be reviewed, with infrastructure
projects for which funding had not yet been confirmed likely to be shelved or
postponed.

Asked in early 2015 to describe morale in the construction sector, Mikey Joseph,
president of the T&T’s Contractors Association (TTCA), described it as nervous but OK.
He told OBG, “Companies in the civil infrastructure sector are OK, as elections are
approaching and in an election year all governments like to pave roads and complete
public works to show they are doing things.“ However, Joseph added that the situation
was worse in the energy segment as “no new plants are being built and there is little
maintenance work.” In regards to building construction, he said contractors had been
expecting an improvement but feared it would not materialise due to the impact of the
oil price slump.

Housing Sector
The housing sector forms a key part of building construction activity. Traditionally, the
public sector has supplied roughly 50% of new residential house construction and
around 30% of new mortgages. Mortgages are managed by the T&T Mortgage Finance
Company, while construction is carried out by the Housing Development Corporation
(HDC). Both of these institutions are state-owned and fall under the remit of the
Ministry of Housing and Urban Development (MHUD). New demand for housing is
comparatively low given that the annual population growth rate is 0.3% and ownership
rates are already high – at around 77%, according to the Inter-American Development
Bank.

However, Asgar Ali, special advisor at the MHUD, told OBG, “These raw statistics belie
the manifest need for state-subsidised housing and shelter. The ministry currently has a
database, which has grown over decades, of more than 160,000 housing applications,
with the majority of applicants qualified to obtain mortgage financing.” He added that
the solution which the government and the HDC have been pursuing is public-private
partnerships in home construction.

One area where improvements are being sought relates to reducing bureaucracy and
streamlining building permits. In 2013 Vasant Bharath, minister of trade, industry,
investment and communications, said the process for acquiring construction permits
would be reduced from 297 days to six weeks. However, progress has taken its time. In
the World Bank’s “Doing Business 2015” report, T&T achieved a significant
improvement in its the overall ranking, rising from 97th in 2011 to 79th in 2015.
However, in terms of the dealing with construction permits category the country
actually slipped back, from 77th in 2014 to 113th in 2015. Additionally, according to the
World Bank, obtaining a building permit was still taking an average of 250 days.

Bank Credit
According to Joseph, access to credit is restricted by existing regulations, which limit
bank investment in real estate. The way the rules are interpreted can prevent banks
from lending for build-operate-lease-transfer projects. These credit restrictions, it is
argued, give foreign contractors a competitive advantage. Contractors are also calling
for a lien law. At present, if a client fails to pay for a building, it remains his or her
property, and the contractor is left with no option but to initiate legal action to recover
the debt. A lien law would allow the building to be sold faster and for the proceeds to
be used directly to pay off the debt.

Foreign Contractors
One of the big issues for the local construction industry is the question of international
competition. The TTCA has expressed concern over the number of large construction
contracts won by international groups and, in particular, by Chinese companies. The
local industry acknowledges that it may not be able to contend for some of the more
sophisticated projects, but it also believes it is not always given the chance to compete
on equal terms when it is viable to do so and that some foreign companies are unwilling
to work with local suppliers.

Several companies in the sector have voiced concerns that the government gives an
unfair advantage to Chinese firms, which will often fly in their own employees to live
and work on-site. In an end-of-year speech at a TTCA banquet in December 2013,
Christopher Garcia, then president of the contractors’ association, singled out French
group Vinci Construction as an example of the “right way to involve foreign contractors
in the industry”. He noted that the company had not secured work to build offices, a
police station or a university campus, work “that our local contractors are completely
capable of undertaking”, but had instead worked on the large Uriah Butler/Churchill
Roosevelt intersection road project, and had achieved a 65% local content rate.

Two international companies, China Jiangsu Construction Corporation and Shanghai

Construction Group, have between them secured more than TT$2bn ($308.4m) worth
of public contracts, including the National Aquatics Centre, the National Cycling Centre,
Couva Children’s Hospital, the University of the West Indies’ (UWI) South Campus and
the University of T&T site at InTech in Wallerfield – designed to be the country’s first
science and technology park.

While required by law to sub-contract electrical and plumbing to local contractors,

Chinese companies generally offer lower local content and tend to bring in their own
workers from China. Joseph maintained they also have access to Chinese government
funding at interest rates of around 2%, giving them an advantage over local
competitors. Companies active in the industry and concerned over the fairness of
procurement policies and the need for local content regulations took part in discussions
over a new procurement law, which received parliamentary approval in December 2014.

Register
Another major issue is the absence of a building company registration and quality-
control system, which would allow customers to contract firms they know meet certain
minimum standards of technical competence, experience and safety. While the industry
could self-regulate, the TTCA said that because much of its work is in the public sector,
it wants the government to be involved and to support a registration system, for
example, by agreeing that only registered firms can apply for state building contracts.

Civil Infrastructure
Public sector infrastructure work has also grown in importance. Some local companies
told OBG that while 25 years ago it accounted for 20% of their portfolio, this has grown
to 80%, a trend that is representative of the industry as a whole. Inadequate allocation
of resources at the start of a project is a common problem that requires costly
adjustments, as engineering planning capabilities are weak.

New Road
One of the biggest projects in Trinidad is the TT$7.5bn ($1.16bn) Solomon Hochoy
Highway extension, which will link San Fernando to Point Fortin. The government has
considered this 47-km project, described as the largest and most complex infrastructure
development undertaken in the country, to be of strategic significance and of particular
importance to the economic and social development of previously isolated communities
in southern Trinidad. It will connect San Fernando in the south with the towns of Debe,
Penal, Siparia, Fyzabad, La Brea and Point Fortin. The main contractor chosen by the
government is the Brazilian company Construtora OAS, with the American firm AECOM
acting as project manager.

There has been some controversy over the project. A local resident and former
university professor, Wayne Kublasingh, campaigned for the government to divert a 14-
km portion of the highway to avoid it cutting through several communities and part of
the Oropouche Lagoon, on the grounds that it would cause disruption and
environmental damage. The prime minister then established an independent committee
to consider these concerns, and is now implementing most of the committee’s
recommendations. The public has shown itself to be largely supportive of the highway
project, with a recent survey showing as many as 57% of respondents believing the
project should continue.

Tackling Hurdles
Rodrigo Ventura, the local OAS superintendent, told OBG that the project involved
human resources and materials challenges. Of the 1690 employees working on the
project, 93% were locally hired, and while skill levels were good, a scarcity of personnel
for specific positions had required the firm to run a training school at the camp site in
partnership with state agencies. “We realised that the large quantity of infrastructure
projects ongoing in the country in parallel to our project has limited the availability of
local workers, mainly specialised machine operators and heavy truck drivers. So as not
to jeopardise the project, recruitment of expatriates has been necessary in some
instances,” Ventura told OBG.
Regarding materials, the bottleneck has been the supply of aggregates at the quantity
and quality required by the project. The unavailability of some materials, given the
geological characteristics of the island, the production capacity of local quarries and the
limited land transport resources – exacerbated by the scale of demand from other
projects – has meant that they need to be imported from countries like Canada, St
Lucia, Grenada, the Dominican Republic and Suriname through local ports, which also
has limitations.

The cost of materials provided locally was rising at 15% per annum. “It is somewhat
challenging for an international contractor to run a project that complies to the highest
international standard, as required by the government, while sourcing a minimum of
40% local content. However, we have been successful, and have actually reached a
higher percentage. The relationship with the government is positive overall and the
project is now progressing rapidly,” Ventura said.

The future of a second-largest highway project, the San Fernando-to-Mayaro Highway,

was also under discussion as a result of the need to reduce capital expenditure in 2015.
Roger Hosein, an economist at UWI, told local media in January 2015 that as part of
the programme to diversify the economy away from excessive reliance on hydrocarbons
it would be desirable to complete the San Fernando to Point Fortin extension and
“perhaps at some point” to start the Mayaro to San Fernando link. The San Fernando-
Mayaro link is in part conceived of as a gas corridor to facilitate access by gas
exploration and production businesses to offshore fields. In March 2015 Suruj
Rambachan, minister of works and infrastructure, told local media that he expected
work to begin before the general election. Still, others disagree and argue that it should
be postponed due to the fact that while there were plans for deep-water drilling off the
east and south-east coast of Trinidad, those areas were easily accessible by sea.

Energy Construction
As mentioned, the expected slowdown in the oil and gas sector means that a number of
future projects with an important construction industry component are likely to be put
on hold. One that awaits approval is a $400m mid-scale liquefied natural gas (LNG)
plant proposed by Luxembourg-based Gasfin Development, in association with the
state-owned National Gas Company (NGC). The project, known as Caribbean LNG,
would involve building an initial 500,000-tonnes-per-annum liquefaction plant at
Brighton Port, La Brea. In December 2014 Roland Fisher, CEO of Gasfin, told local press
that the project was still awaiting final approval from the government.
There is also some expectation that state-owned Petrotrin’s plans for an ultra-low-
sulphur diesel plant will get under way during the course of 2015. The project has been
hampered by disagreements between Petrotrin and the lead contractor, Samsung
Engineering. The proposal is part of Petrotrin’s Clean Fuels Upgrade Programme,
conceived of as a way of improving the profitability of the Pointe-à-Pierre refinery in the
face of tightening product specifications.

In addition, BP T&T awarded one of the more substantial construction and civil
engineering contracts of 2014 to France’s Technip for the engineering, procurement,
installation and construction of the Juniper gas facility, off the south-east coast. This
project includes laying 10 km of rigid concrete-coated subsea pipelines.

Massy Wood Group, a consortium of Wood Group of Scotland and Massy Holdings of
Trinidad, said in 2014 it had won a two-year construction services contract from
Atlantic, the gas liquefaction operator at Point Fortin. Meanwhile, Acciona Agua, a
consortium led by Spain’s Acciona, announced in November 2014 that it had won a
$102m, three-year contract to build a wastewater treatment plant and sewage network
in San Fernando. Work on the system, which includes 16 km of sewers and seven
pumping stations, began in May 2015.

Outlook
Many contractors expect 2015 to be a transition year. Public sector building and
infrastructure works demand is likely to remain strong as the current government
prioritises existing projects in an election year. At the same time, the important energy-
related construction sector is expected to suffer from the downturn in oil and gas
prices. Many contractors are concerned that there will be a pause in government work
as new priorities are discussed and formulated.

See also:

BP, China, GDP, World Bank

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© OXFORD BUSINESS GROUP 2016
An important contributor to T&T’s economy, the construction industry accounted for an
estimated 5.2% of GDP in 2014 and 15.6% of the labour force, according to T&T’s Central
Statistical Office. 2014 was a particularly good year for the sector, which grew by 7.1%,
outperforming the wider economy for a second consecutive year. In 2015, the energy-related
construction sector is expected to feel the effects of the downturn in oil and gas prices, though
public sector building and demand for infrastructure works are likely to remain strong.
Meanwhile, in the real estate sector, the political uncertainty arising from the forthcoming
election is likely to put a damper on the volume of transactions and have a slight effect on
prices, while the supply of affordable housing for low- and middle-income families is expected
to remain below pent-up demand through 2015 and 2016. This chapter contains an interview
with Roodal Moonilal, Minister of Housing and Urban Development.

The construction industry, along with other trade groups, has campaigned for years to
reform procurement procedures, as a way of combatting corruption, ensuring greater
transparency and achieving greater value for money. The long process of political
discussions on the subject came to a conclusion in December 2014, when both houses
of parliament passed the Public Procurement and Disposal of Public Property Bill.
Better Value
Attempts to introduce anti-corruption and procurement legislation have been made since 1997,
so the approval of the law was a significant landmark. Bhoendradatt Tewarie, the head of the
Ministry of Planning and Sustainable Development, welcomed the law as an effective way of
dealing with corruption and the waste of public money. He noted it contained sanctions against
bid rigging and collusion, and heavy fines for anyone involved in corrupt practices. The law also
contains regulations on transparency, accountability, value for money and local content. Fines
are in the range of TT$1m-10m ($154,200-1.54m), and judges are given the discretion to hand
down prison sentences.

The Trinidad and Tobago Manufacturers’ Association welcomed the law, which “offers the hope
that a new level of commitment will be demonstrated by our law and policymakers to implement
a procurement framework that is transparent and lends itself to true accountability in the use of
all our country’s valuable resources”.

Winston Riley, former president of the Join Consultative Council and current chairman of the
Private Sector Civil Society Group on Public Procurement, two of the private sector lobby
groups involved in the discussions, told OBG, “The biggest plus is that we have achieved most
of what we wanted – about 80% of what we lobbied for – in the legislation.” However, he
warned that corruption levels are still high, and much will depend on how rigorously the new law
is applied.

Independent Scrutiny
Riley noted that under the new law, value for money is carefully defined and established as the
overriding criterion for allocating public contracts. He highlighted the importance of the creation
of an Independent Office of Regulation reporting only to parliament and appointed by the
president after consultation with the prime minister and the leader of the opposition. The office
would help promote best practices and review and scrutinise all procurement activity
independent of the political administration. Riley also said that the procurement rules apply to
the use of “public money”, and there is a wide definition of public money in the act that includes
any monies received, spent or committed by a public body from which it can be inferred that the
state accepts ultimate liability in the event of default.

Riley added that this meant that government-togovernment agreements for the procurement of
goods, works or services will be governed by the act and will no longer escape the purview of
parliament. Local content regulations would also apply – something that would help the domestic
construction industry.
One cause for concern is the time it may take to fully implement the law. While the act received
the approval of President Anthony Carmona in January 2015, it now falls to the Ministry of
Finance and the Economy (MFE) to provide the necessary infrastructure and budgetary
requirements to support the operationalisation of the act, something the Larry Howai, head of the
MFE, initially suggested might take a year, but later indicated may be achieved by September
2015.

Corruption Perceptions
Looking forward, one way of assessing the impact of the law will be to monitor T&T’s position
in the Corruption Perception Index (CPI), released annually by Transparency International. For
2014 CPI ranked T&T 85th out of 175 countries, with a score of 38 (the higher the score, the less
corrupt a country is considered to be). T&T had slipped down the ranking compared to where it
was five years earlier, with 79th out of 180 in 2009. The average score for the Americas in the
2014 report was 45th, while within the Caribbean, T&T scored higher in terms of corruption
perception than Barbados (24th), St Vincent and the Grenadines (29th), and Dominica (39th).

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Conditions could become tougher for owners of office space in Trinidad and Tobago
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The broadly defined real estate sector of Trinidad and Tobago is dominated by three
aspects. First, land is scarce, and perhaps of equal importance is that the perception of
scarcity is ever-present. Trinidad has an area of around 4800 sq km and most of the
country’s population of 1.34m is concentrated on the western side of the island, from
Chaguaramas to Point Fortin and inland as far as Arima. By contrast, Tobago is around
300 sq km and is home to about 61,000 people. Second, past booms in energy prices
have often rendered housing unaffordable for many people. This is because in a
country where the energy sector accounts for around 42% of GDP but only 3.3% of
employment, the benefits of a sharp improvement in the country’s terms of trade do
not flow naturally to many households. Research from the Inter-American Development
Bank (IDB) pointed to the fact that during the 1970s the government’s response was to
increase the supply of housing. However, to the extent that this helped to boost
economic activity, it might have exacerbated the problem. Lastly, the government and
its agencies play a key role in real estate development, the provision of housing, real
estate management and mortgage finance.
Meeting Needs
After the slump in energy prices in the 1980s, government priorities switched to
providing subsidies to lower-income households. According to the IDB, nominal family
incomes did not rise much from 1992 to 2005, with an annual growth rate of 2.7%, well
below nominal GDP growth and the increase in housing prices (353%). When energy
prices began to rise again from the early 2000s, many households benefitted from the
wealth effect, as home ownership at the beginning of the period was already high at
77%.

In the meantime, demand for mortgages remained fairly low. Despite this, the quality
of housing increased substantially, especially for low-income families. Since the mid-
2000s, the government has focused on intervention in the mortgage market. This
intervention has taken three forms: the provision of mortgage finance at below-market
rates to low-income households; the creation of a public sector institution to develop a
secondary market for mortgages; and pressure on private sector banks to increase
mortgage finance. Total lending to the private sector rose by 5.8% year-on-year in
November 2014, while loans to consumers saw a 7.1% rise. However, mortgage
lending increased by 11.7% in November 2014, up from 10% a year earlier, according
to data published by the Central Bank of T&T (CBTT).
Ministry & Agencies
The Ministry of Housing and Urban Development (MHUD) is the government agency
that oversees formulation and execution of policies related to housing and real estate
development. The ministry is also responsible for a number of agencies. The Sugar
Industry Labour Welfare Committee (SILWC) works with former workers within the
sugar industry who took advantage of Voluntary Separation of Employment Programme
redundancy payments. SILWC has issued leases for farming to former workers of
Caroni, which was the main producing company for sugar and other crops and closed in
2003. SILWC assists the farmers with infrastructure works and upgrades of settlements
on the properties that it administers. The Land Settlement Agency began operations in
1999, with a mandate to assist squatters who are living on state-owned land and
applied to have their situations regularised before October 27, 2000. It has received
23,000 applications for its Certificates of Comfort. Recent estimates suggest there are
250,000 squatters living on state-owned land. The Environmental Management
Authority is the statutory body that is charged with protecting and enhancing the
environment.

Meanwhile, the Community-based Environmental Protection and Enhancement

Programme (CEPEP) is overseen by an incorporated entity, the CEPEP Company Limited
(CCL), which was set up in 2008. CEPEP began operations in 2002. Its responsibilities
include: assisting local communities to improve the conditions of the physical
environment (e.g. through landscaping programmes); increasing employment
opportunities for unskilled and semi-skilled people; and creating opportunities for small
businesses. When it started, CCL worked with 106 contracting companies in 34 districts
designated as Environmental Work Areas. In July 2014 CCL issued tenders for auditing
services for its accounts for the year from September 2012 to September 2013. In the
year to September 2011, CCL received and disbursed just under TT$311m ($47.96m).
Key Player
The MHUD is also responsible for the Urban Development Corporation of T&T
(UDeCOTT). This is a project development and management agency established in
1994 with four objectives: development of Port of Spain as a business and financial
centre; regeneration of San Fernando as the country’s energy centre; promotion of 13
major centres identified in the National Physical Development Plan; and construction
management for large-scale key security and health assets. It describes itself as “the
government’s primary developer of choice”. As of early 2015, UDeCOTT identified more
50 projects with which it is, or has been, involved. These include several police stations,
the San Fernando Teaching Hospital, hospitals at Arima and Point Fortin, the
Government Campus Plaza as well as the Couva Children's Hospital.

In 2011 the company came under fire and was fined by the T&T Securities and
Exchange Commission (TTSEC), the financial markets regulator, for delays in the
publication of its 2008 annual report and 2009 interim report. UDeCOTT’s 2007 annual
report was published on its website as late as mid-September 2014, and revealed total
assets of TT$6.05bn ($932.91m). PwC, which audited the accounts, noted in December
2013 that they were unable to provide an audit opinion for four reasons: UDeCOTT
management failed to account for a March 2010 report by a Commission of Enquiry; the
firm’s records were found to be incomplete for events “occurring between the date of
the consolidated financial statements and the date of [the] auditors’ report”; the
auditors doubted that UDeCOTT could be assumed to be a going concern; and PwC
found that if the international accounting standard for leases had been applied,
UDeCOTT’s assets and contributed capital would have been reduced by TT$585m
($90.2m).

Other Sector Agencies

There are three other public sector-controlled development companies over which the
ministry does not have line control. One is the National Insurance Property
Development Company (NIPDEC), which is a subsidiary of the National Insurance Board
of T&T (NIBTT), the central institution in the country’s social security system. NIPDEC
was set up in 1977 and serves the various ministries and agencies of the government.
Its core business is real estate development, including upscale housing projects. It also
operates car parks in Port of Spain and elsewhere, and two warehouses in
Chaguaramas. NIPDEC is, additionally, a leading provider of procurement services for
the public sector. It also has a contract from the Ministry of National Security for the
transport of prisoners. NIPDEC uses tailored financial solutions for its clients, including
build-own-lease-transfer structures.

Offering Service
Another firm is Port Lisas Industrial Port Development Corporation (PLIPDECO), which is
listed on the T&T Stock Exchange; the company is 51% owned by the government.
PLIPDECO was set up in 1966 and operates the Port of Point Lisas, the country’s
second-largest port, which has six general cargo and container berths. Port Lisas
handles containers, lumber, steel and bulk commodities. PLIPDECO is also the owner
and landlord of the 860-ha Point Lisas Industrial Estate, which has tenants that include
a mix of methanol, ammonia and urea plants, steelworks and smaller light
manufacturing and services companies. At the end of 2014, PLIPDECO’s assets totalled
TT$2.26bn ($348.49m). Turnover and profit for the year amounted to TT$273m
($42.09m) and TT$115.17bn ($17.76bn), respectively.

Lastly, the Evolving Technologies and Enterprise Development Company (e-Teck) is the
non-energy industrial real estate development arm of the Ministry of Trade, Industry,
Investment and Communications following the revision of its strategy in 2011. It
currently runs 17 industrial parks across the two islands and collects rents from 319
tenants. Among other development projects, e-Teck declared the Tamana InTech Park
open for business in June 2014 and expects the completion of the park’s ICT
infrastructure by mid-2015. The park covers over 12,000 sq metres, divided in 21 lots.

First Homes
In addition, the MHUD oversees the Housing Development Corporation (HDC), which
was created by its Act No. 24 of 2005. The HDC is the key provider of first homes for
low- and middle-income families. Some 75% of the available housing is reserved for the
public through a random selection system. Another 10% is reserved for members of the
police, fire, prisons and defence services, while the remainder is reserved for special
emergency cases, those with physical disabilities and senior citizens.

In his September 2014 statement about the 2015 budget, the finance and economy
minister, Larry Howai, noted that the HDC had 160,000 outstanding applications for
housing. He also noted that 1000 new homes had recently been completed in Egypt
Village, Princes Town, Union Hall and Victoria Keys. Meanwhile, 3000 new units were
under construction. Howai added that high-rise apartment buildings in Pleasantville,
Laventille, Morvant and Gasparillo would be refurbished and retro-fitted during the 2015
fiscal year. The government is also lending money to eligible low-income families under
the Neighbourhood Upgrading Programme, which is being funded by a $40m loan from
the IDB. Meanwhile, the government is regularising conditions for squatters at 30 sites,
and providing land at subsidised rates to low-income households at 10 other sites. The
process of issuing leases to former employees of Caroni is ongoing, with 1700 leases,
out of 8800, having been distributed and sold on the open market.

Mortgage Finance
Finance is available through T&T Mortgage Finance Company (TTMF). The lender is
51% owned by NIBTT and the government has a 49% stake. It serves customers
through its head office in Port of Spain, along with branches in Tobago, San Fernando,
Chaguanas and Arima. TTMF will lend at a variable rate of 2% to customers whose
monthly income is TT$10,000 ($1542) or less and where the value of the property does
not exceed TT$850,000 ($131,070). TTMF also offered fixed-rate loans of 5% for the
first five years for families with a monthly income of TT$10,000-30,000 ($1542-4626)
for properties valued up to TT$1.2m ($185,040). It also has a mortgage cover
programme – insurance that guarantees the repayment of the loan in the event of the
original mortgagor dying – in collaboration with Cuna Caribbean Insurance. Over the
course of 2013 TTMF’s loan portfolio rose from TT$2.99bn ($461.06m) to TT$3.17bn
($488.81m). TTMF has two main sources of finance: one is the issuance of long-term
bonds and the other is sale of mortgages in the secondary market.

The central institution in the secondary mortgage market is Home Mortgage Bank
(HMB), which is also owned by NIBTT. HMB buys mortgages from TTMF and private
sector lenders. It holds the loans on its own books, or passes them to the Mortgage
Participation Fund (MPF). The MPF is a TTSEC regulated mutual fund that enables the
public to earn a guaranteed return from a portfolio of mortgages. Interest accrues daily,
as in a money market fund. HMB is also an originator of mortgages, targeting middle-
income households. In 2014, for instance, HMB provided around TT$123m ($19m) in
gross new mortgage loans and purchased roughly TT$263m ($40.6m) of mortgages in
the secondary market. Aside from selling mortgages to MPF, HMB raises funds through
the sale of taxable and tax-free bonds. Since 1999, HMB has also issued Guaranteed
Mortgage Investment Certificates, which are secured or collateralised mortgage
obligations that can be structured – in terms of interest and repayment terms – to meet
the exact requirements of the investors.

Private Sector
Home Construction Limited (HCL) is the largest private owner of real estate in T&T. It
has been owned by CL Financial Group, the holding company that was at the centre of
a financial crisis in 2008 but which has since been recapitalised. HCL has several
projects under way, including some in and around Trincity, near Piarco International
Airport, and the One Woodbrook Place mixed-use project that will offer office, retail and
high-end residential space in Woodbrook, Port of Spain. As of early 2015, 400 of the
420 residential units in One Woodbrook Place had been sold, while the offices had not
been completed. HCL has traditionally expanded its land bank through purchase of
40.5-ha plots that had previously been owned by sugar planters. HCL is the owner of
the only developable land in the west and also owns pockets of land between the east
side of Port of Spain and Arima.

Major developers include DA Chin Enterprises, which is one of the firms that has bid for
the grant of a lease for the development of 9.3 ha of land in the 27-ha Invaders Bay
area. It is the main company of entrepreneur Derek Chin, who also developed the
MovieTowne cinemas in Port of Spain, Chaguanas and Tobago. The country’s leading
conglomerates, ANSA McAl and Massy, have also been active in real estate.

Legal Framework
There are a number of legislative challenges for the industry, and development of low-
cost housing is often not sufficiently profitable to attract private sector developers.
According to the local law firm Fitzwilliam Stone Furness-Smith & Morgan, roughly
three-quarters of residential real estate is governed by the relatively complex Common
Law Title system, which requires that the title for a parcel of land be traceable by the
registration of deeds (or other documents) via a public office. The remainder is covered
by a more simple system, which is similar to the Torrens title regime used in Australia.
Under this second system, the official certificate of title is the sole source of
information, and there is no need for a potential buyer of a piece of land to look beyond
this record.

Another ongoing problem is that there has not been a coherent national development
plan that has the broad support of all, or at least most, major real estate developers
and both main political parties. There has been no coordinated push to promote
immigration, which would underpin growth in demand for real estate and developers.
The current government has strongly supported the Solomon Hochoy Highway
extension to Point Fortin, and has scrapped the previous government’s plans for a rapid
rail line project in eastern Trinidad, citing prohibitive project costs.

Meanwhile, the construction sector is hampered by the lack of an overarching scheme

that guarantees the quality of homes that are built. Mikey Joseph, the president of the
T&T Contractors’ Association, told OBG that the construction sector includes 12 local
companies that have turnover of TT$25m ($3.85m) and above, 200 firms that bring in
TT$5m-25m ($771,000-3.85m) every year and several smaller players that are not
registered and do not commit to particular quality standards. When a sub-standard
building is damaged as a result of inclement weather or other problems, the owner will
probably find it difficult to get compensated. “When these issues go to court, they can
take up to 10 years to resolve,” Joseph said. To date, the government has shown little
interest in setting up a national scheme to ensure that the quality of builders’ work is
covered by some form of insurance.

Outlook
It is unlikely that the latest fall in energy prices will reduce the housing shortages
alluded to by Howai in his budget speech. In spite of the best efforts of the government
and its agencies, the supply of affordable housing for low- and middle-income families
will still be less than the pent-up demand through 2015 and 2016. Meanwhile, demand
for housing of all kinds in the west will exceed supply, and central Trinidad will continue
to develop faster than the rest of the country. Mortgage lending will also likely continue
to grow faster than other kinds of lending.

Strategic planning, in both the public and the private sectors, will be complicated by the
political uncertainty arising from the forthcoming election, which is expected to put a
damper on the volume of transactions and affect prices somewhat. It is possible that
the financial problems of UDeCOTT will receive greater publicity. A merger of TTMF and
HMB will continue to be a matter for speculation going forward. However, the decision
to combine these two entities or maintain the separation between the two will belong to
NIBTT.

See also:

GDP
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