Venezuela’s building boom

Venezuela’s building boom
Published: 12 October 2006

In Venezuela’s capital city, mechanical arms are cutting across much of the skyline as construction companies enjoy one of their best years since President Hugo Chavez took office in 1999.

Construction saw activity increase 27% during the first half of the year compared with the same period in 2005, and builders believe the good times will continue, thanks to strong economic growth fueled by high oil revenues.

But left out of the construction boom is needed low-income housing, a problem for the Chavez administration because the poor are the president’s key support group.

The country’s pervasive housing problem for the poor has led Caracas mayor Juan Barreto this year to seize apartments and buildings in the city for homeless families. He has also sought to take over all golf courses in Caracas to make way for housing. Chavez has promised to launch a housing plan for the poor after previous ones failed to produce results.

All the construction activity has now bumped into price controls Mr. Chavez decreed in early 2003 and resulted in shortages of building materials in recent months.

Cement makers, which have enjoyed record sales this year, have resorted to reducing their exports to supply growing demand at home.

Venezuela faces a deficit of 1.8 million low-income units -- the government had built 60,000 as of September -- a fraction of its original goal of 150,000 for this year. The government has consistently fallen short of meeting its low-income housing goals for several years.

Low-income apartments usually sell for around 50 million bolivares, about $23,300, but poor families seldom have the money to make down payments so they need government help. But more expensive homes, on the other hand, sell off quicker because target clients have more purchasing power.