Resilience and growth in international business, signs of rebound in tourism and a buoyant real estate market have offered cause for optimism, but will can they remain on track?

The backdrop of an ageing population and an increasing government debt burden looms large over the island’s future, adding to the challenges ahead.

To help us analyse what the coming year may hold, we spoke with Michael Neff, a man with an excellent vantage point from which to observe the Bermuda economy. As Butterfield Bank’s managing director of Bermuda and International Wealth, his customers are from all parts of the economic spectrum, from those struggling to make ends meet, to corporate clients, to the uber wealthy.

Inflation

A painful rise in the cost of living has affected everyone on the island, particularly those stretched financially. The latest Consumer Price Index figure clocked overall inflation at 4.7 per cent in August, noting a near 10 per cent increase in food prices and 15 per cent rise in fuel and power costs.

More up-to-date data from our largest source of imports, the United States, shows inflation there was 7.7 per cent in October — on the bright side, the lowest rate of price increases since January.

“In Bermuda, we import everything, so we import inflation,” Mr Neff said. “We, as a bank, don’t believe inflation is running at 4.7 per cent: we believe it is 10 per cent or more. If you look at the core items that affect people — food, fuel, electricity — you’re up into the double-digit range.”

The worst-case scenario, Mr Neff added, would be “1970s-style stagflation, where, because of commodity price shocks, there is inflation and at the same time, sluggish economic growth, because we have not yet recovered fully from the pandemic”.

A tight labour market putting upward pressure on wages will maintain inflationary pressure, as well as high energy prices emanating from the Ukraine war and extraordinarily high prices of many building materials.

Interest rates

Central banks’ main weapon against inflation is to raise interest rates. The knock-on effects have hit Bermuda borrowers in the pocket. Mr Neff said: “I think you will see far fewer rate rises in the coming year, but you’re likely to see a sustained period of elevated rates to make sure that inflation is being cured. So we’re all going to go through a period of pain, because to kill off inflation, you have to kill off demand.

“The consensus view is towards the back end of next year, rates will start to come down. We would agree with that, but as we as we have seen, the world is a very unpredictable place and the Fed will be guided by the data.”

Higher interest rates have a silver lining for Bermuda’s property and casualty and life re/insurers, who invest massive portfolios of premiums invested predominantly in fixed-income securities. Resulting increases to investment income will boost their profitability.

International business

The re/insurance industry, the main plank of Bermuda’s international business sector, has been on a roll. Despite taking a hit from losses related to the pandemic and the relatively high incidence of catastrophes, the insurance industry’s prospects for 2023 appear promising.

Fitch Ratings has predicted reinsurance rates will increase 10 per cent during January 1 renewals.  Meanwhile, expect an uptick in investment income courtesy of higher interest rates.

Inflation, while it creates challenges for underwriters in pricing coverage correctly, will also serve to continue the upward momentum in rates that has been evident for some years, as will the ongoing and increasingly apparent impact of climate change.

Bermuda’s re/insurers are seeing growth beyond their traditional strength in property-catastrophe business, in areas such as mortgage and cyber. In addition, as John Huff, CEO of the Association of Bermuda Insurers and Reinsurers remarked last month: “Bermuda insurers and reinsurers are also becoming the specialty and casualty market of choice.” This trend was evident in ABIR’s global underwriting results survey, which revealed a 21 per cent increase in net its member companies’ net premium written.

The life reinsurance sector continues to boom, driven by secular tailwinds — a growing need for retirement solutions from a global ageing population and a burgeoning demand for life insurance from a growing middle class.

A hardening market also makes self-insurance options more attractive, driving further growth and new uses for captive insurers, another world-leading segment of the Bermuda market. Insurance-linked securities have also proved resilient after Category 4 Hurricane Ian caused devastation in Florida.

While fintech will suffer a blow in confidence emanating from the collapse of the FTX brokerage, another consequence may be a growing acceptance the industry cannot expect to gain the trust of investors without effective oversight — and the island, as a leader in digital assets regulation, will have a case to argue that it can provide it.

Local business

It’s shaping up to be a tough 2023 for domestic enterprises.

“The pandemic was bad enough, but our recovery will be frustrated by the economic environment we’re in,” Mr Neff said. “If you adjust for inflation, retail sales are lower now than they’ve been in the last 15 years.

“If you asked me, when we look at our loan book, what we worry about — we worry about small and medium-sized enterprises. And we will work with those customers as we did in the pandemic. It’s of no interest to us to have clients go to the wall.”

Inflation will drive up input costs for local businesses, as staff ask for pay rises to keep up with the soaring cost of living. Businesses’ resilience through the upcoming tough period will partly be determined by their ability to pass on rising costs to customers — which will be harder for those selling discretionary products and services than for those selling essentials.

On the bright side, a rebound in tourism may help the surviving businesses that suffered most during the pandemic, as will the knock-on effects from the continuing success of the international business sector.

Working population

Bermuda has a rapidly growing cohort of seniors as baby boomers continue to retire. At the same time, the number of working people whose taxes and health insurance premiums fund the healthcare and pension system for seniors, has plunged. By 2021, there were 31,316 filled jobs in Bermuda, 8,897 fewer than in 2008. Over that 13-year period, Bermuda made a net average loss of 684 jobs annually.

In September, Jason Hayward, the Minister of Economy and Labour, declared the Government’s intention to grow the working population by 25 per cent over the five years — a total of 8,418 jobs.

Mr Neff applauded the idea, saying the size of the economy was largely determined by the size of the labour force. “We have to be very focused on how to grow the pie,” Mr Neff said. “We would like to see more clarity from the Government on how we’re going to add more than 1,500 jobs a year, but it’s very encouraging to hear them say that’s what needs to happen.

“By 2026, 25 per cent of our population will be 65 and older. That’s a scary demographic. Clearly a bigger working population will be needed to support pension and healthcare costs.”

To achieve an increase in the workforce will require a coordinated effort, he added, that could perhaps be harnessed by a task force drawn from the public and private sectors.

“If we agree that we need to grow the working population, the next question is, OK, so how do we deliver on that?” Mr Neff said.

Conclusion

There are signs in the US that inflation may be starting to cool off and the US Federal Reserve has signalled that it will slow the pace of interest rate increases. There is light at the end of the tunnel.

Mr Neff concluded: “Most people think the US will have a mild recession next year, and we don’t disagree. And when the US sneezes, Bermuda catches cold.

“Sadly, that’s where we are, and we’re going to have to manage through a difficult year. But a general recovery back to pre-pandemic levels is probably on the cards — it’s just going to take longer than we had hoped.”

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Speaking with Jonathan Kent were:

Liz Ebbs-Brewer, manager, recruitment services, Expertise Group

Shaun Penny, senior recruitment consultant, Acumen Group

Sylvia Jones, director — Bermuda, Elevate Executive Selection

Comments were edited down for brevity.

Navigate: How is the war for talent playing out in Bermuda?

Liz: We’re in an employee-driven market — before Covid, it was more employer-driven. It’s especially competitive in technical roles where designations are required, such as actuaries and accountants. We’ve definitely seen an overall increase in base salaries for technical skill sets. We’ve seen broader implementation of work-from-home options, a critical benefit for many people whose lifestyles have evolved around it.

Sylvia: Many of the startups who got their licences approved 12 to 18 months ago have reached that point where they’re ready to expand their teams and they’re all coming into the market at the same time. Candidates often have multiple conversations on the go at the same time. They’re going to choose a company that’s not only a good fit with a very competitive compensation package, but they’re ready to act now. That makes a huge difference.

Shaun: Covid really dented the market. A lot of professional talent left the island and hasn’t come back. Those roles did not go away —the need is still there. Almost daily I’m having conversations with people who say ‘keep me in mind if anything comes in’. They are seeing that salaries have gone through the roof in the last year. But companies can’t keep throwing out more and more money for salary – it’s not sustainable. Salary offers have gone up 10 to 15 per cent, I would say. Employers are also getting more creative with total comp, for example with housing allowance if the talent is coming from off island. Their need to fill these positions is not six or nine months away, it’s now. Employees who may not be quite ready for a promotion are now getting a chance.

Navigate: Many companies are talking enthusiastically about diversity, equity and inclusion. Are you seeing changes in hiring practices or or talent management that would reflect this?

Sylvia: When it comes to executive search, we’ve not witnessed any changes that take DEI into account. There may be internal protocols, but they’re not necessarily communicated to us. There’s always a traditional desire for Bermudians at the executive level, and that’s always stipulated from the outset. But beyond that to be honest, we really don’t encounter specific instructions in relation to DEI.

Liz: I have seen companies who have implemented processes to minimise bias in the recruitment process. More are using online portals that can hide information that could cause bias, such as names and universities. Also, some have asked us not to provide compensation expectations at the initial phase, as this could cause bias, particularly with gender imbalance. A number of clients ask us to identify a talent pool that reflects the island’s population. During the past six months, a few clients have asked about necessary adjustments to interview processes to accommodate candidates who have different needs so that they can perform to the best of their ability in the interview.

Shaun: I have seen a desire to hire Bermudians or spouses of Bermudians. Outside of that, everybody I’ve worked with says they’re just looking to hire the right person.

Navigate: The major challenge with diversity seems to be at the higher levels.

Shaun: One factor in that may be that about ten years ago, there was a shift that many highly qualified, professional women put their careers on hold to take care of the family. I’m seeing more individuals coming back into the workforce. Without the gap in their profile, they would probably be in a senior role now, but it was a decision that they made for family.

Liz: I agree — I’ve seen a few exactly like that. There is also a glass ceiling issue. At Expertise, we recently presented diversity data to IB CEOs. One finding was a significant underrepresentation of black women beyond middle management despite their significant years of experience and education. This is something that needs to be addressed urgently.

Navigate: The Bermuda Government has expressed its desire to grow the working population by 25 per cent, or 8,400 people, over the next five years. What do you think about this idea?

Shaun: It’s only going to be good for the economy, for employers and for agencies like all of us on this call. I don’t think that number is unreachable, but we will maybe need to build some more houses. Having more people on island would lower costs for everything, because there would be more more availability. I only see it being a plus for for everybody involved.

Sylvia: The working population number is severely inadequate to fund the ongoing and surely increasing costs of running the government. I think the government needs a clear roadmap and to communicate that Bermuda is open and receptive to companies and individuals. The roadmap needs to specify those we want to attract. I see great potential in the private family office sector. These individuals are small in number, but they contribute a huge amount to the economy. Their top four criteria are safety, scenery, a business-friendly timezone, and easy access on and off island. Bermuda exudes all of these. So why not capitalise on it? I think that if we hit the right chord and get them here, the knock-on effects will be will be positive for everybody.

Liz: An increase in the working population will benefit all businesses here. But challenges that we’re seeing for people relocating now would need to be overcome — housing is one, in particular a shortage of rental accommodation for professionals relocating with a family. With regard to work permits, the Department of Immigration does great work — the swift processing time they’ve implemented for qualified actuaries has been positive. But we have also seen challenges for businesses facing long processing delays. That could be challenging if we have more people coming in.

Shaun: Overall, I also think Immigration does a good job, but maybe some more hands on deck would help. Mostly, our permits get done on time, generally within eight to ten weeks. From a housing standpoint, I find there is much more Airbnb available for rent than there is long-term rental property.

Sylvia: I agree about the need for more hands on deck. Work permit delays can push companies to consider: Does the role have to be fulfilled in Bermuda? What about taking it overseas? What about remote working from overseas? It brings all that into play. The housing crunch has really become a challenge from mid-2020 to now.

Navigate: Can you share any examples of the housing shortage’s impact on individuals?

Sylvia: We’ve had two situations where an executive came and rented a one-bedroom apartment and left his family overseas, because they couldn’t find a family home. The hiring company then runs the risk of potentially losing that individual if this remote family life doesn’t work out for them. We used to be able to show our relocation clients ten or 12 homes, five or more years ago. It’s not a tenable situation if you’re asking someone to take a job, but you only have two houses to choose from. There are many homes tied up in family trust scenarios that have been allowed to fall into dilapidation and if those could be somehow renovated and reinserted into the inventory, it would help. The real needs in Bermuda now are for three- and four-bedroom executive homes and for two-bedroom city living and for these projects to be started today. I’ve said to potential property developers, we will pre-fill the properties for you, but you have to start construction now — it’s really urgent.

Shaun: Bermuda is often compared with Cayman. If I take a drive in Cayman, I’m seeing ten different developments and they’re all saying 80-90 per cent sold. I know Bermuda has less land, but I don’t see any such developments here. There’s a lack of homes now — if you want to grow the working population by 8,000, where are they going to live? If you want to be a leader in attracting talent, other things matter too. In Cayman, you can own a property at the end of the day you walk on island and become a citizen in eight or nine years. Maybe there need to be programmes for families with dilapidated homes to renovate and get that rental return. The need for housing is not going away.

Navigate: Is the rise of remote working having any impact on the Bermuda jobs market?

Liz: The cost of living and of doing business in Bermuda is just ever increasing, so many companies are reviewing which roles need to be based here. The argument for outsourcing has become especially pertinent for roles where the individual is working from home successfully. If you don’t need to be in the office here, you can be doing this role from a lower-cost jurisdiction. This trend of outsourcing back-office jobs is not new. It’s been happening slowly over the past eight to 10 years and, given the current economic climate, it’s probably going to accelerate.

Navigate: Are any candidates asking to work remotely from the country where they are located?

Sylvia: Yes, we’ve had candidates looking to work from Canada, the British Virgin Islands and California for companies based in Bermuda. They were very upfront about it and fully expected to find a role. Two did and one is still looking. This is quite a recent trend. With regard to senior roles, they’re mandated by the BMA to be located in Bermuda, so that takes the remote option out of the equation. I agree, this trend has been going on for several years. Companies have changed their business models to operate this way, so we shouldn’t be trying to bring those jobs back, we should be looking at attracting new industries and more companies.

Shaun: More candidates now are talking about working from home two or three days a week, for example. Companies have adjusted and are more flexible on where the work is done. But growing companies still want their people to still be in the office. They want the energy and synergy of everybody working together. Certainly, however, remote work is not going away.

The post On the frontline of the war for talent appeared first on RG Magazines.

Renters are having particular problems finding a home. The dearth of inventory was highlighted by Pete Goodhall, managing director of real estate website Propertyskipper.com, who reported in November that rentals “remained near lows at 82”.

Adam Birch, sales and rental agent for Coldwell Banker Bermuda Realty, said lower-than-normal rental property availability was a global trend and Bermuda was no exception. “We used to have 30-plus listings at any given time, but those days are gone for now as demand continues to outstrip supply,” he said.

Factors behind the low inventory could include properties being listed as vacation rentals, an influx of returning Bermudians or newcomers, relationship breakups, property that is no longer tenantable, and landlords removing property from the rental market after negative experiences with tenants, he added.

The arrival of “digital nomads” on Work from Bermuda certificates has also had some positive impact, especially on western and eastern listings, Mr Birch said. The overseas remote workers are more focused on amenities than being close to Hamilton, he added.

Most sought after in the rental market are three-bedroom and one-bedroom properties. Workers coming to Bermuda to work for expanding startups in recent years have fuelled the market for the former, Mr Birch said.

“Much of the demand is from families in the three-bedroom range, looking at rentals anywhere from $6,000 to $15,000 a month,” he added. “The peak demand is for standalone three-bedroom homes in the $7,000 to $8,000 range.”

For employers bringing in staff from overseas, the lack of suitable housing options has become a significant issue, compared to pre-pandemic days. “Then, new families would fly in for a few days and we could line up tours of five or more properties for them to view — now I might have one property I can show them,” Mr Birch said.

Incoming international business workers must act fast on available properties, or face getting dragged into bidding wars. Making a quick decision is difficult for guest workers unfamiliar with Bermuda’s idiosyncrasies, such as the single-car rule, shared yards and the need for reverse air conditioning, he said, adding: “Looking for accommodations in advance is not an option because the listings are here today and gone tomorrow.”

Properly priced smaller properties are also being snapped up. “The lower end of the market has always been extremely active and competitive, but we are receiving a massive number of inquiries for property under $3,000 a month,” Mr Birch said. “Recently, we had a property that received 76 inquires in one day with 21 viewings.

“Affordable properties for Bermudians are extremely rare, especially two bedrooms, $2,000 or under — I would have no issue filling a block of 20 two-bedroom affordable housing units in about a day or so.”

While there is clearly demand for more residential inventory in Bermuda, the cost of newbuilds or renovations to achieve that has skyrocketed during the pandemic. Construction rates reflect the soaring prices of building materials and the strong demand for contractors.

For valuation professionals like Suzanne Stones and Steven Bowie of Bermuda Valuers & Appraisers Ltd, an independent consultancy, this makes for an unusual environment in which their services are especially valuable.

“The point we always try to get across is that cost doesn’t equal value,” Ms Stones said. “Just because something costs a million dollars to build, it doesn’t mean it’s worth a million dollars.

“A few years ago, we were seeing standard residential rebuild costs of about $375 per square foot. Now they seem to be going up almost monthly, to the point where we don’t like to give any indication on reinstatement costs, because they fluctuate so frequently.”

The appraisers advise prospective buyers of “fixer-uppers” to be fully aware of what intended renovations would cost before they commit to a purchase. And with any renovation, it’s better to call in the appraiser beforehand, they suggest.

Mr Bowie said: “As a profession, we’re pleased to see that more people are coming to us, saying ‘I want to do this, it will cost me x thousand dollars, what will the end value be?’”

Central banks around the world have raised interest rates in an attempt to curb inflation. Banks in Bermuda have in turn raised their lending rates, making it more expensive for borrowers to buy property.

As yet, Mr Bowie has seen little impact from rising mortgage rates on the market, particularly at the top end. “Our agency friends are seeing a slight slowing down, but in the run-up to the holiday season, that’s not unusual. At the higher end, many of the buyers we’ve seen over the past 18 months have been cash buyers — they will not be bothered whether interest rates go up or down.”

Higher-end demand is also being spurred by a number of residents acquiring British Overseas Territories Citizen (BOTC) status, and with it, the right to purchase property and reside on island.

“Some BOTCs have been used to paying north of $10,000 a month in rent and now they want to own their ‘piece of the rock’,” Ms Stones said. “They have confidence in the island and there’s an increasing pool of them and not an infinite supply of property.”

Mr Bowie said BOTCs tended to look for similar types of property — with a water view, swimming pool and well suited to entertaining. As more are granted BOTC status, demand for properties with these attributes is likely to stay strong, he said. On the supply side, more land has become available at Riddell’s Bay and White Crest Hill, locations where lots had been sold for seven-figure sums for buyers to build their own homes.

Whichever way the market moves in 2023, the real estate industry can be reassured that Bermuda is showing no signs of losing its appeal as a special place to live.

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Alex DeCouto, of Greymane Contracting Ltd, said there was usually a significant lag between a decision to proceed with a development and work starting, making construction “like the proverbial cruise ship in the ocean of the economy”.

He said: “When the economy heats up, it can take a year or more for the construction industry to feel the impact after projects get from the drawing table to the job site.

“Similarly, when a recession starts to take hold, most construction projects are already financed and have compelling reasons to complete regardless.”

Mr DeCouto said 2022 was an “unusual year” for the industry, with a lack of “mega projects creating big value” but lots of smaller scale activity keeping employment up and benefiting a broad range of mostly local firms.

He said anecdotal evidence from his own firm and other contractors suggested next year may follow suit, in terms of employment levels and amount of activity.

But Mr DeCouto added: “I am wary of the clouds in the distance: interest rates are rising, impacting the cost of financing projects, demand might be cooling, people might hesitate making those big decisions.

“The drawing table decisions that are deferred today will mean less projects for the industry a year from now.”

Not least of the large-scale projects potentially breaking ground in 2023 is the long-awaited multi-million dollar renovation of the Fairmont Southampton, Bermuda’s largest hotel, which has been shuttered since October 2020.

Premier David Burt said recently he remained confident the resort would open in 2024, although the Government has yet to close on a deal with the developers.

Mr DeCouto said: “Even with some inside knowledge, it is hard to understand what is happening with that project.

“The scheme for the renovation had been developed to very advanced stages last year, but it appeared to have stumbled at the starting gate. The property deteriorates every day that it sits unused.”

He said millions of dollars was spent by Gencom to buy the property so he was optimistic work would get going, perhaps in 2023.

Mr DeCouto said it appeared certain a foreign contractor would be involved, dampening the impact on the local market, and that expat workers would need to be used.

“The local construction industry already needs 25 percent or more of its workforce to be supplemented with expat workers before this job gets off the ground.”

Another major tourism project could begin at Ariel Sands in Devonshire; plans for a 33-room hotel, 21 villas and a 30-unit condominium building were approved in May.

Mr DeCouto said that proposal came “out of left field a bit” but again included a multimillion-dollar investment by the developer and a “scheme that is also at fairly advanced stages”. He said: “It also appears poised to start in 2023.”

He is worried that interest rates and a recession could impact developers’ decision making, but said: “Bermuda desperately needs hotel beds and I hope they are brave.”

Mr DeCouto suggested the Government should do more to attract hotel developers and investment because Bermuda was competing against countries like Mexico, Turks and Caicos, and the Cayman Islands, where building and operating costs could be “significantly lower” than in Bermuda.

“In many ways, we are not even doing as much in the way of concessions as these other jurisdictions,” he said.

There appears to be little in the pipeline in terms of government capital projects in 2023, with the long-discussed international arbitration centre on the corner of Reid Street and Parliament Street having stalled.

Mr DeCouto said it would be good to get some indication of the Government’s plan for Morgan’s Point, where it has repossessed a landlocked portion of the site. “Surely something must be done there,” he said.

He said new residential development was healthy and set to stay that way, with anecdotal evidence suggesting contractors and design firms were “very busy at the moment and booked out into next year”.

The commercial market was a little more uncertain, despite being “buoyant” at present.

“I think it will still be very difficult to find an available contractor in 2023, generally speaking, but the larger firms will definitely be looking to secure additional projects,” Mr DeCouto said.

“Our industry is relatively small; just a few good-sized projects can have a material impact on employment levels and commercial activity.”

Architect Colin Campbell, of OBMI Bermuda, said despite so much talk of recession, there was still “pent-up demand” for residential building work, post-Covid.

He said the pandemic caused people to want to make changes to their homes and “supercharged the financial ability” of some to do so, as a reduction in travel enabled those able to continue working to save more.

He said work was steady in 2022, despite ongoing supply-chain problems, and he didn’t expect that to alter much during 2023, even with soaring interest rates and increased building costs.

Mr Campbell predicted it would be a “sort of middle ground year” for construction. “It won’t be exceptionally high, it won’t be exceptionally low.”

The big change immediately ahead, Mr Campbell suggested, stemmed from the reality of climate change truly hitting home in 2022 and homeowners wanting to build resiliency for that into their properties.

“People’s attention on energy and the cost of energy will be as important as having the third or fourth bedroom, as important as upgrading bathrooms,” he said.

“That type of investment — $30,000 or $40,000 on solar panels, for example — is going to be one of those budget items that has now inserted itself into the model of ‘what type of home do we want for our family’.”

He added: “We are encouraging that too…we see this as a strategy for resiliency, not only for younger couples but for seniors as well.”

Mr Campbell said climate change would be one of the key “disruptors” of the industry going forward.

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Energy bill hikes are a key reason behind the growing attraction of installing solar panels, according to Denton Williams, the CEO of the BAC Group of Companies, which includes Bermuda Alternate Energy.

Mr Denton said there had been a fall-off in interest in the green technology early this year, but added: “There’s been a bit of comeback in October as a result of the high adjustment rate. People are getting their bills and deciding they are going to make the investment.

“We are hearing it from our staff in terms of sales and customers, and we also took a look at the number of planning applications so that includes our company and other developers as well.”

A total of 57 residential applications for solar panels were made from July to September, up from 37 in the second quarter. The overall trend is positive too: a total of 150 residential applications were made in the first nine months of 2022, compared with 62 for the corresponding period in 2019, the year before the Covid-19 pandemic.

The electricity bill rise came after Belco was given permission to increase its charges in response to rising fuel prices from July, as the fuel adjustment rate went up from 18.90 cents per kilowatt-hour to 20.12 cents.

In September, British-based insurer William Russell found that Bermuda was the most expensive place in the world to run appliances, with residents paying 41.2 cents per kilowatt-hour of power.

Mr Williams predicted a “substantial increase” in solar installation in the months to come. “In the residential market, the reason is primarily economic,” he said.“You’ve got a negative incentive like high electricity costs, the panels themselves are becoming cheaper, government offered duty relief on all aspects of a solar system – these sorts of things accelerate it.

“There have been significant improvements in the technology, so the panels become more efficient. People, I do believe, want to reduce their environmental impact. When the economics get behind it, I do believe they really drive it forward.”

The slowdown earlier this year could be attributed to the withdrawal of the Government’s solar rebate plan, Mr Williams added.

Under that rebate, homes with an annual rental value of less than $30,000 qualified for up to $8,000 to offset the cost of installing panels.

“The solar rebate should be a lesson learnt for people,” Mr Williams said. “If it is reinstalled, jump on it and take advantage. We think that would be another good incentive for people.”

Mr Williams said other options are available for families who want to go solar but do not have the cash to pay for installment.

“Our recommendation is to focus on energy efficiency and conservation first,” he said. “There are some good offerings from Butterfield Bank, HSBC and Clarien. Any system should pay for itself.”

On the corporate side, the leading driver of sales is the environmental factor.

Mr Williams said: “We are seeing a larger global movement towards ESG reporting, requiring reporting on annual reports and showing shareholders and stakeholders that you are trying to minimise impact on the environment.

“There’s a lot of interest in what people can do to demonstrate their commitment to improve their ESG metrics.

“We believe solar is on one of the best ways to help Bermuda meet its renewable energy targets. We are optimistic about the environment going forward.”

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But the times since March 2020 have been anything but normal, thanks to the effects of the Covid-19 pandemic, bringing a dearth of cruise ship visits and a spike in cargo rates that have caused pain across the Bermuda economy.

Cheryl Hayward-Chew, as chief executive officer of the Meyer Group of Companies, is hoping that 2023 will herald a return to something closer to the norm. “Just like the recession in 2010, Covid exposed any weaknesses in our economy,” she said. “It’s had a huge impact on the community and many are still recovering — it’s almost like a post-traumatic stress event.”

Ms Hayward-Chew’s work and experience gives her a broad perspective of all things maritime. Meyer Group is a port agent, managing the needs of all types of vessels entering Bermuda, from cargo to cruise to yachts.

Meyer Freight represents two regular cargo carriers to the island, the Bermuda Islander and its weekly service from Salem, New Jersey, and the Somers Isles service from Fernandina Beach, Florida. And Meyer Tours is an agency working with local tour operators to organise excursions for cruise ship visitors.

In addition, Ms Hayward-Chew is the chairwoman of Polaris Holding Company Ltd, parent company of Stevedoring Services, operator of Hamilton docks.

Increasing shipping costs have been one of the drivers of Bermuda’s rising cost of living. Globally, cargo rates have soared over the past two years.

“In 2020, people weren’t travelling or going anywhere, but they did start buying more goods, especially from Asia,” Ms Hayward-Chew said. “Normally, there is trade both ways, but at that time, many containers were going back empty to Asia.

“Importers can bring in containers from Asia, via a transshipment, which means it is shipped from Asia to a US East Coast port and then to the island on one of the local cargo lines. Before the pandemic the cost to ship a container from Asia was $5,000 to $6,000 – it rose to $24,000 to $25,000.”

Some importers who had traditionally sourced goods from Asia because they were cheaper, responded to the spike in shipping costs by switching to US suppliers, Ms Hayward-Chew said. But this year, the dynamics driving shipping costs are very different.

Western consumer demand has cooled with the easing of Covid restrictions, resulting in more spending on travel and services and less on goods.  As a result, Ms Hayward-Chew noted that shipping a container from Asia to Bermuda in mid-November cost between $4,000 and $5,000 — lower than pre-pandemic prices.

Other factors have added to goods transportation costs in 2022.  “The Ukraine-Russia war has resulted in skyrocketing fuel costs,” Ms Hayward-Chew said. “The cost of trucking in the US and Canada has also rocketed, because of both fuel costs and a shortage of truckers. Older truckers are retiring and younger ones are being snatched up by Amazon.”

At the end of 2021, the market price for a barrel of US crude was $75. By June this year it had soared 60 per cent to $120. By mid-November it had fallen back to just over $80, bringing a fall in emergency fuel surcharges and low transportation rates. A busy Christmas season for online shopping could drive trucking costs higher again, however.

Ms Hayward-Chew said the three local cargo lines — Bermuda International Shipping, Bermuda Container Line and Somers Isle Shipping — had tried to cushion the island from the effects of rising costs. “They had no increase in 2021 and an increase of between 3 and 4 per cent in 2022,” she said.

“Even though their operational costs have gone up by as much as 30 per cent, they’re very aware of the impact that increases have on Bermuda, consumers and importers. When they’re considering their increase for 2023, I’m sure they will be as conservative as possible.”

A broad-based slump in consumer demand is reflected in Bermuda’s import volumes. Polaris reported that in the six-month period ended September 30 this year, container cargo volumes were 11.7 per cent lower than pre-pandemic levels. Break bulk cargo, which includes heavy equipment, construction material and loose cargo, fell by nearly 20 per cent.

Another side of Meyer’s business — as port agent for cruise ship and as an agency for tourist excursions — saw an even more dramatic impact from the pandemic. After only four cruise ship visits in 2020, there were a mere 36 in 2021, compared to 184 in 2019.

“Our tour agency is there to serve cruise ship passengers, so having no cruise ships was decimating,” Ms Hayward-Chew said. “This year started slowly and quickly ramped up. We had a number of cancellations because of Covid policies, but in the end, we’ve had a good year.”

While the cruisers are coming back in 2022, excursion and experience businesses that had been downsized or shuttered over much of the previous two years, have in some cases been reluctant to risk a rapid return to full capacity. Meyer has also seen tour-boat operators struggling to find staff.

This comes as cruisers are returning to the oceans with enthusiasm. For example, Norwegian Cruise Line, a regular visitor to Bermuda, stated in an earnings report in November that it expected a record 2023, with full ships despite higher pricing. Such pent-up demand is reflected in Bermuda’s cruise ship schedule.

“Next year, we have 223 scheduled cruise ship visits — many more than 2019,” Ms Hayward-Chew said. “Even the first quarter, we have an unusually high 23 visits. But how will we service these vessels in January and February, when most of the industry will either be taking a breather or doing the maintenance work that may have been postponed over the past two years?

“We have had conversations with the Bermuda Tourism Authority about this and made clear that Bermuda needs to be open for business. Cruise ship passengers are the foundation of Bermuda’s tour and experience products. Knowing that thousands of people will be coming in is what enables many of them to exist.”

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BY JONATHAN KENT 

The great work-from-home experiment forced upon many employers when the pandemic struck Bermuda in March 2020 will lead to changes likely to last long after the worst of Covid-19 is behind us. 

As the pandemic fades, employers must decide whether they mandate a return to the office, whether staff are offered the option to work from home all the time, or whether there will be a hybrid model requiring a certain number of days in the workplace. There are numerous options. And employees who don’t like what their employer decides may look for somewhere else to work. 

Before the pandemic, 5 per cent of work in the United States was done remotely – now it is 40 per cent, according to statistics reported by The Economist newspaper. And while 27 per cent of employers were allowing flexible hours in 2019, the figure has risen to 88 per cent today. A sea change has taken effect in less than two years. 

Jenny Smatt, president of Ontru, a firm that advises on human-resource management and business strategy, says the “silver lining is that there are so many possibilities we have learnt for the way we do work”. She said the pandemic had led organisations to consider not only where work was done, but also how. 

“It’s highlighted the question of how effective our professional relationships are,” Ms Smatt said. “Are they working and where are the opportunities to improve those relationships? Moving forward, it’s causing a change in a number of businesses in the way that they do work and interact with their customers, as well as the way that teams interact in order to be effective.” 

Remote working has required managers to communicate differently with teams and with colleagues of different generations. Millennials, for example, are likely to be more comfortable with communicating quickly and frequently via digital channels than some of their elders. 

Overall, the need to react to a fast-changing environment has forced many to examine their own operations, Ms Smatt said. “It has stressed the need to be adaptable and agile. There cannot be one way of doing business. And we must be focused on results. 

“I’ve seen a huge shift in the way businesses are thinking about the way they get things done. This model is dependent on thinking through what success looks like. How we get there is not as important as whether we get the work done and done well.” 

While some businesses are reliant on customer interaction and need staff back in the workplace, those with the option of continuing to work remotely may do best to get feedback from their employees before mandating their future working model, Ms Smatt suggested. Integration of some flexibility within a hybrid model will help to accommodate colleagues’ different preferences. 

Those intending to mandate a full return to the office should engage with employees, she advised. “Some individuals feel they’re more productive at home. Talk with them about why that is and how we can leverage that – maybe blocking off two mornings a week without meetings, maybe working from home two days a week. It doesn’t have to be an all-or-nothing discussion.” 

Failure to engage could be costly in terms of potential talent loss. A survey by FlexJobs in the US found that 58 per cent of respondents would look for a new job if they could not continue remote work. 

Argus Group is one Bermuda employer who has listened to staff and built a new working model to accommodate differing working preferences, while striving to ensure that customer service levels are maintained. 

Kellianne Smith, senior vice-president, People Americas at Argus, said feedback from staff was that working remotely has had a positive impact on their work-life balance and job satisfaction. There were some, however, who loved working from the office and could not wait to get back. 

“So, by design we have been able to offer a hybrid option, which enables those who prefer the office to come in, while also giving those who prefer flexibility – for reasons including family commitments, a reduced commute or the benefits of quiet, focused time – the option to work from home,” Ms Smith said. 

“With our hybrid model, colleagues can rotate in and out of hot desk spaces and offices that are configured for collaboration with innovative, shared spaces. We believe this model embraces the freedom that most of our colleagues crave after working from home for months.” 

Some staff have said the Argus return-to-work model is “an excellent attraction and retention tool”, she added. 

“At Argus, we recognise that the needs and desires of our workforce have shifted due to the pandemic. This has been a focal point of our ongoing discussions and we have reimagined our internal policies and procedures to align with that vision.” 

Argus has found that since remote working started, productivity has held up well. “In fact, in many cases, we found it was enhanced,” Ms Smith said. “We were extremely impressed with how successfully our colleagues adapted to new technologies, showing agility and creativity in the way that they work and collaborate. As a result, this shift has not affected our client service delivery or strategic output.” 

The company’s support for its managers in the remote working environment included resource scheduling flexibility and performance management training, Ms Smith said. 

Argus is also mindful that customer service should be unaffected by the numbers away from the office at any given time. “For roles which require an on-site presence, such as frontline operations for walk-in customers, property management and digital teams, we are keen to ensure that we have enough staff covering those areas to yield the best result for our clients,” Ms Smith said. “Their experience always comes first, so whatever changes we make, we make certain our customers are not negatively impacted.” 

Seeking regular feedback from employees has revealed starkly differing preferences between those who love the collaboration in the office and those who have enjoyed working from home so much that they would rather operate remotely full time. 

Ms Smith said: “Our biggest takeaway is that they value flexibility, and we are happy to acknowledge where remote working has proven more effective and are prepared to balance scheduling accordingly.” 

The post New world of work appeared first on RG Magazines.

BY SAM STRANGEWAYS 

Retailers are hoping a busy December will “salvage” 2021 for them and set them on course for a more prosperous 2022. But they’ve learned over the past 20 months that, when it comes to Covid-19, anything can happen. 

Local retail sales plummeted in early 2020 after the pandemic hit and a lockdown was imposed. 

But from July last year onwards, once coronavirus restrictions eased, the Retail Sales Index rose – at least, until July 2021, when the year-over-year monthly sales gauge dropped for the first time in a year. 

Lorraine Shailer, head of the Bermuda Chamber of Commerce’s retail division, said the pandemic had brought challenges but also an improved, more dynamic sector and a sense that “change is possible”. 

“Retailers have had to adapt to meet different customer demands, both in what they are wanting to buy and how they want to shop,” she said. 

Ms Shailer added that there had been an “updating of services and offerings, which has led to a revitalised retail presence in Bermuda and, no doubt, new customers”. 

Tony Thompson, chief executive officer of Gibbons Company, said the department store had to immediately mitigate its risks at the start of the pandemic. 

“One of our biggest risks is inventory,” he said. “We were going into a new season, just receiving our spring merchandise and getting our summer merchandise on order. We cancelled our summer orders.” 

The store had the advantage of having relaunched its website the year before, so when lockdown came, all efforts went into getting stock on there. 

Mr Thompson said: “The website was the only means of making any money. We just changed gears.” 

But he admitted it wasn’t easy. 

“We are Gibbons Company. We are like a big ship and to change gears on a big ship, there are a lot of moving parts and a lot of people involved in it.” 

Mr Thompson said: “As we were cancelling orders, we changed some of our teams to web administrators. Our number one priority was to make sure we had the items that people wanted – the top sellers on the website – and everything else was just icing on the cake.” 

All of the store’s 76 full-time staff were paid throughout the lockdown and none were made redundant. 

Sales rebounded when workers began heading back into their offices in Hamilton. With many people not travelling, there was a positive knock-on effect for shops. 

But Mr Thompson is conscious heading into next year of the challenges that lie ahead, as travel off island returns to a more normal level and global supply-chain issues persist. 

“September and October were rough,” said Mr Thompson, referring to the spike in Covid-19 cases and its effect on footfall in Hamilton. “We hope November and December make up.” 

One local retailer credits Covid-19 with saving it. Online beachwear store Soltrino had poor sales pre-pandemic and was to shut down in March 2020. 

But founders Linda Cook and Michelle Viera quickly realised they could alter their business model for a captive audience. “We already had a website running with a payment gateway,” said Ms Viera. 

“Since we didn’t have much in terms of stock, we decided to offer a pre-order where our customers could select the items, colours and sizes that they wanted from our list of vendors. 

“It was a win-win situation – everyone ordered exactly what their style and sizes were and we made the margin without any guesswork.” 

She said the pandemic was a lesson in being able to “pivot quickly” and she hoped the company’s increased customer base would continue to buy local. 

“If consumers support retail outside of Bermuda, then that money is just gone – not to be recycled back into our economy.” 

Ms Cook added: “I think it’s more than just money staying in Bermuda. If you don’t support local business, it’s not going to be there. To be a tourist destination, we need shops, we need retail. We need a thriving community. If you take retail out of the city, what have you got?” 

Kristin White, owner of Long Story Short gift and bookstore in St George, said the same was true of the Old Towne. 

“It’s a part of our way of life here in St George’s,” she said. “It’s one of the only spots that is, in my opinion, a thriving village…it’s been that way for over 400 years.” 

She said retailers in St George’s had been largely without the mainstay of their business – tourists – for the past 20 months but had supported one another and adapted. 

Still, she added: “We have also not had the infrastructure support to rebound. We had cruise ships coming to Bermuda, but St George’s wasn’t able to get any of that traffic. That was a real disappointment for us. There were no ferries put in place.” 

Ms White has put much effort into upgrading the Long Story Short website to enable customers to shop online and coming up with new retail offerings, including carefully curated gifts. 

She said: “I think 2020, while it was hard, there was a renewed interest in shopping locally. There was this community effort in that. 

“I feel like we thought 2021…was going to come and save the day and it really didn’t. I, like a lot of retailers, have really invested a lot into this Christmas and we are hoping we can reap the benefits. For many of us, it’s the last chance to salvage this year.” 

Ms White added of her hopes for 2022: “I live in a constant state of optimism…I feel it’s going to be better than this year.” 

At the other end of Bermuda, Bulent Ganal, who owns Grand Bazaar and GB Home with his wife Teresa, said the lack of tourists hit the Clocktower Mall stores hard. But the couple has diversified their stock, adding more merchandise for locals, such as outdoor furniture, and they have advertised on Instagram for the first time. 

“That helped big time,” said Mr Ganal. He said this year was an improvement on 2020, when they had to tap into savings. 

He doesn’t expect much in Christmas sales but is keeping a watchful eye on the 2022 cruise ship schedule. 

“It will be nice if we get some of them,” he said. “So far, we are expecting about 180 visits. It gives us hope.” 

Ms Shailer said she too was hopeful for the island’s retail sector. 

“I think the prospects are good as life returns to normal,” she said. 

“Retailers just need to keep doing what they are doing – keep their websites alive, engage with their customers and continue to adapt to customer needs and wants.” 

The post Retailers look to 2022 with cautious optimism appeared first on RG Magazines.

BY JONATHAN KENT 

Amid the economic turmoil of the pandemic, Bermuda’s flagship international re/insurance industry has been an anchor of stability. Beyond just surviving these testing times, it has actually grown with the influx of billions of dollars of new risk capital and slew of start-ups known as the Class of 2020. Can the bright light of the Bermuda economy continue to shine in 2022? We asked EY partners Craig Redcliffe, regional insurance leader for the EY region of the Bahamas, Bermuda, British Virgin Islands and the Cayman Islands, and Eleanor Fisher, sustainability leader, about the prospects for the re/ insurance industry in 2022. 

RG: Scientists expect climate change to result in greater frequency and severity of natural perils like hurricanes and wildfires and there are signs that this is already happening. Do you see climate risk as a threat or an opportunity for Bermuda re/insurers? 

Redcliffe: Few would debate that climate change is having a significant impact on both frequency and severity of natural catastrophes. And this trend is expected to continue for the foreseeable future without some dramatic changes to our collective lifestyles. We have seen some reinsurers reduce their exposure to natural catastrophe risk going forward as a result. We have certainly seen pricing increase over the past few years in this class of business to compensate for this increased risk. The question of course, is whether the price increases are sufficient to compensate for this increased risk going forward. If reinsurers are not properly accounting for the impact of climate change in their models and pricing, it could have a significant unexpected financial impact going forward. Most reinsurers recognise climate change will have a significant impact on their business, and have embedded climate change in their risk management tools. An area of concern is the unmodelled risks in climate change. Reinsurers that are utilising expert judgement and analysis to reflect their own view of risk in their modelling will better understand their exposures and be in a better position to inform strategic decisions about climate related risks than those relying solely on outputs from vendor models. This is where the opportunity lies for reinsurers to differentiate themselves. 

RG: Cyber risk has often been described as difficult to underwrite. Is the Bermuda re/insurance market getting better at finding ways to provide cyber risk coverage? Is there an opportunity to write more cyber risk business? 

Redcliffe: Given the continued digitalisation of society, the reinsurance market plays a vital role in providing financial protection from cyberattacks. Cyber reinsurance has been growing significantly over the past few years, and I suspect it will continue to grow. There are certainly opportunities for the Bermuda market in cyber. There are also risks in entering new markets which are developing without well-developed models or data. However, this is where there is opportunity for new products or data analysis tools with AI capability to better underwrite this business going forward. 

RG: The pandemic has certainly cost some re/ insurers in terms of claims from business interruption, events cancellation and travel insurance, for example, but it has also reminded us all of the value of insurance because the “unthinkable” can happen. How would you describe the pandemic’s impact on the Bermuda market? 

The pandemic has reinforced the resilience of the Bermuda reinsurance market. In the face of a global pandemic, with travel restrictions, mandated work-from-home orders and many other restrictions, the Bermuda reinsurance market did not skip a beat. In the face of this adversity, the business class of 2020 was born with significant new capital and companies entering the Bermuda market. In addition, there were significant M&A transactions which occurred during this period, which continued to reshape the Bermuda reinsurance market. 

Coming out of this pandemic, there will be more focus on whether insureds would like to cover pandemic risk, as pandemic exclusions will be industry standard. In many locations, this is already the case. As such, insureds will need to be intentional in their risk-management decisions on whether they would like to cover this risk, and reinsurers need to be transparent in their exclusions and educate the insureds to ensure they are aware of all exclusions. It is not a good look for the industry when insureds think they are covered for an insured event and reinsurers believe otherwise. It is in everyone’s interest to have full transparency of the product being purchased. 

RG: The gathering momentum of the ESG trend is bringing ever greater expectations of re/insurers from investors, regulators and clients. What do you see as the key ESG threats and opportunities for re/ insurance boards to consider in 2022? 

Fisher: Increasingly we see that improving stakeholder value is no longer discretionary for the boards of re/ insurers, and that a major driver of stakeholder value now stems from transparent, sustainable practices aligned with ESG principles. Re/insurers are already taking the lead in certain sustainable practices partly driven by the key threat of exposure to climate risk on both sides of the balance sheet. 

Re/insurers must consider and plan how they will meet the inevitable mandatory ESG-related regulatory requirements currently being rolled out globally through 2022 and beyond. While much of the regulatory focus is currently on climate-related risk and led by the recommendations of the Taskforce on Climate-related Financial Disclosures (TCFD), we are seeing the focus extend into other areas with the establishment of the Taskforce on Nature-related Financial Disclosures and other frameworks. With the trustees of the IFRS Foundation also having announced last month that it has established a sustainability standards board, the trend in setting sustainability standards will continue – ESG reporting requirements are here to stay. 

ESG offers a clear opportunity for re/insurers to differentiate themselves in the market and to meet growing stakeholder demands around transparency. Recent announcements during COP26 have highlighted reinsurers which have committed to tackling climate change by joining the Net-Zero Insurance Alliance and Net-Zero Asset Owners Alliance. As reinsurers differentiate their value proposition through ESG commitments, catching up will become an ever more pressing priority and competitive threat through 2022. 

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BY JONATHAN KENT 

The real estate market – particularly the residential luxury segment – is booming. But it is unlikely that this pace of activity can be sustained through 2022, because there is not enough supply to meet demand. 

That is the view of one of the island’s top real estate professionals, Buddy Rego, of Rego Sotheby’s International Realty, who sees the pandemic as a significant factor in the resurgence of the higher end property market. 

“In the luxury sector, we’ve seen an increase of almost 100 per cent over properties sold in 2020,” Mr Rego said. “I think the Bermuda real estate market has been significantly undervalued for a very long time and this year, there has been a significant absorption of inventory.” About 50 per cent of the luxury market buyers have been Bermudian-based. 

Covid-19 has influenced the property market as the experience of lockdowns and working from home has led many to seek larger living spaces. Many have been cash buyers, Mr Rego said, in a time when consumers have been spending less on travelling and vacations. 

“The average selling price of a home today is $1.6 million, as opposed to $1.2 million in 2020,” Mr Rego said. “It’s a huge increase, but don’t construe that as meaning property values have gone up more than 30 per cent in a year – that’s not the case. It means that the better properties are selling. If you want a modern home that’s ready to move into, you’ll be paying top dollar.” 

Late in the year, he said the firm had seen a notable increase in properties in the $600,000- $800,000 range coming on the market – good news for first-time buyers. 

While there is a months-long time lag in the reporting of officially registered real estate transactions, Rego SIR has seen overall 2021 transaction numbers rise 80 per cent from 2020, which was itself a strong year. “I know that will come as a shock to many people, because the Bermuda economy as a whole has its challenges, particularly with hospitality and retail struggling greatly,” Mr Rego said. 

Looking at next year, Mr Rego believes the limited inventory will probably dampen activity from 2021’s elevated levels. “Now in the fourth quarter of 2021, we’re seeing qualified buyers who are not necessarily able to find the properties they want on the market,” he said. “Given that there has been so much demand this year and so many transactions, I expect that the horse has got out of the barn and unless something catastrophic – good or bad – happens in 2022, then I would expect demand to level off.” 

In the condominium market, which saw a strong rebound in transaction numbers in 2020, buyers at the lower end have struggled to find the move-in ready properties they seek, with many of the units in that category “dated and in need of renovation”, Mr Rego said. “The middle and upper end of the condo market has seen an increase in average selling prices this year, because the better properties are selling,” he added. “However, with the new policy that non-Bermudians can now only buy hotel tourism properties – previously they could buy any condo with a minimum rental value of $25,800 – I expect overall turnover to fall off during 2022.” 

Penny MacIntyre, a partner at Rego SIR, described the commercial real estate market situation as “a tale of two cities”. On the one hand, spaces previously occupied by retailers and restaurants are becoming vacant, while in contrast start-ups in the re/insurance industry have driven healthy demand for Class A and A+ office space – roughly defined as premises with waterfront views and a central location, plus services including a lobby concierge, security and parking. 

“As you look at ground level on Front Street, from the Birdcage over to the eastern side of town, you have so many restaurants and retail shops boarded up,” Ms MacIntyre said. “That’s not good for tourism and it’s not good for the local market. 

“Meanwhile, the Class A market is very tight. We’re used to seeing about 10 to 12 per cent of inventory being vacant – right now we’re probably seeing about 6 to 7 per cent. There are companies looking to convert commercial properties and make them into Class A offices. To fill the rest, you need more people in town.” 

The demand for home and office renovations and reburbishments is generating work for architects and constructions firms. “I know of some architectural firms who say they can’t take any new business,” Ms MacIntyre said. “For a long time, architects and designers were struggling for business, but now it’s swung in their favour. It’s great to hear that the majority of them are busy – and the construction industry follows suit.” 

Asked about the latest trends in demand, the Construction Association of Bermuda polled its members for opinions. A spokesman reported back: “There has been an uptick in demand in the residential sector. Many members report they are very busy with residential renovation projects. 

“On the commercial side, the feedback is less positive. One member notes that tenant fit-out projects in Hamilton have slowed up, as there are few new tenants taking spaces and existing tenants are working from home. Restaurant projects have also dropped off as restaurant owners do not have the funds available for renovations.” 

In terms of construction projects, the value of work put in place in the first half of this year totalled $95.2 million, according to government statistics, up from the lockdown-impacted corresponding period in 2020, but down sharply compared to the $136.5 million in the first half of pre-pandemic 2019. The stalled $180 million proposed overhaul for the Fairmont Southampton offers potential for a major new project. 

“We truly hope the Fairmont Southampton project gets financing,” the CAOB spokesman said. “Not just for our industry but for the tourism and business sectors.” He added that news of the planned redevelopment of Ariel Sands was also “great news for construction and tourism”. 

He added: “We doubt there will be much in the way of new commercial office buildings going up any time soon, but hope to see demand for renovating existing buildings pick up next year.” 

CAOB members were mixed in their responses to whether the Government’s Economic Recovery Plan would help their industry. “Some are cautiously optimistic, while others want to see the Government open up the island fully for visitors and reduce the costs of doing business here,” the spokesman said. “Customs duties are a particular concern with one member saying government should be doing more to encourage local business by reducing import duties for contractors and retailers.” 

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