US construction costs to soar in Katrina’s wake

A special report by US firm Reed Construction Data said demand for materials, labour and equipment will vary depending on the type of clean-up work.

The disaster led to an immediate 12% jump in lumber futures prices in the week after the catastrophe due to the destruction of gulf area inventories and the closure of sawmills, the report said. Demand for materials such as concrete and steel will have more impact on longer-term prices as replacement work kicks in next year, the report said.

It concludes: “Higher construction costs will affect all property prices nationally. Massive amounts of steel, lumber, concrete and machinery will be used in rebuilding the Gulf Coast over the next several years.

New construction will be more expensive, projects could face delays, and new development could be slowed.”

The report is confident that New Orleans will be rebuilt and will attract much public and private spending in the coming years. It says: “The new New Orleans will be built on a more solid foundation, it will attract companies that can take advantage of the region’s renewed infrastructure and exceptional strategic location.”

The report adds that a possible side effect of the reconstruction could be an actual growth in tourism due to the interest level in seeing the redevelopment. It says: “The effect of this very large inflow of funds will cause construction spending in New Orleans to explode over the next year or two. As the renewed city emerges, it will likely draw a greater volume of tourists interested in viewing the changes.”