Construction

Importance of the industry in Guatemala:

Construction is considered to be the largest generator of employment in the world; it causes  a multiplier effect by impacting other industries, since it uses services and inputs from other sectors to produce; it provides basic welfare elements to society by building from national infrastructure (bridges, roads, hospitals, schools) to personal welfare (housing, shopping centers, hotels, restaurants); finally, because it has the capacity to reactivate the economy quickly, since the investment and production of the projects can be generated in the short term.

Guatemala is privileged to be in a geostrategic position for access to important markets such as the United States of America and Mexico.  Based on this, there are efforts to position the country as the most important logistics platform in Mesoamerica. These efforts consolidate the development of road, port, airport, industrial and housing projects by the Government of Guatemala and the private sector.

In 2021, preliminary figures from the Bank of Guatemala showed a 7% growth in the construction sector and the sector accounted for 4.3% of the country’s Gross Domestic Product (GDP).

A 30% increase in total square meters of construction is projected for the medium term, which translates into a 0.5% increase in national GDP.

Construction Sector in Figures

Annual Construction Industry Growth
In Central America, Guatemala has shown the greatest dynamism in construction sector activity

Figures of the Monthly Index of Economic Activity (original series) as of December 2021. El Salvador as of November 2021 – Source: Central Banks

  • It is the productive industry that generates the most employment in the country, with more than 300,000 people employed.

  • 99 people are employed per 500 square meters (40 direct and 59 indirect) Source: Guatemalan Chamber of Construction

  • The Construction Industry Confidence Index as of August 2021 rated 71.67 points

  • Construction Permits as of August 2021 were 4,302

  • Housing Permits as of August 2021 were 2,796 with a year-on-year variation of 49% on average between 2020-2021.

  • Loans granted to the construction industry total US$ 1,973.87 million in 2021 Source: Banguat

  • As of March 2022, there are about 143 buildings under construction in Guatemala City Source: Municipality of Guatemala

  • Housing opportunity of around 2 million 237 thousand units Source: Guatemalan Chamber of Construction and ANACOVI.

Quick Window for the Construction Industry

It is a digital platform whose result of a joint effort by the Government of Guatemala  and the Guatemalan Chamber of Construction,  provides construction companies with up-to-date relevant industry information and statistics, training programs, networking to promote the exchange of contacts and business, and facilitating the management of paperwork for construction projects.

  • The 9 entities involved in the process of obtaining construction permits participate in the process.

  • Unification of the procedures prior to obtaining a municipal license, which leads to a reduction of more than 50% of steps, requirements and resolution time by the participating institutions.

  • Out of 744 working days, 263 requirements and up to 218 steps. With the quick window for construction industry, it is reduced to 200 working days, 115 requirements and 70 steps.

  • It provides legal certainty, clear rules, agility and transparency.

Guatemala is Moving Forward: Infrastructure Axis

In October 2021, an inter-institutional agreement was signed between the public and private sectors, which allows for a plan to drastically transform the infrastructure and become the logistics center of the region, and as a direct consequence,  the country’s economic recovery.

This, in accordance with the Government Plan 2020- 2024, which is based on fostering economic development and promoting competitiveness through road infrastructure with more than 52 projects and 990 kilometers to strengthen trade relations for imports and exports of Guatemala.

In March 2022 the Congress of the Republic of Guatemala approved the LAW TO STRENGTHEN THE MAINTENANCE AND CONSTRUCTION OF STRATEGIC INFRASTRUCTURE (Decree 21-2022) which aims to provide the Ministry of Communications, Infrastructure and Housing with the necessary resources to execute the prioritized projects to make Guatemala a more competitive country.

Public Private Partnerships (PPP)

Another modality in which the construction sector is being boosted is through Public-Private Partnership (PPP) contracts. In 2010, the “Law of Alliances for the Development of Economic Infrastructure” was issued with the purpose of promoting economic development through investment projects in roads, electricity generation and distribution, ports, airports and railways that are necessary for the country but exceed the financial capacity of the State. (Source: ANADIE)

In 2021, the Congress of the Republic of Guatemala approved the first project under this modality.

Type of Public-Private Partnership projects:

Not included: Water, Health and Education Projects

Project Portfolio
Escuintla-Puerto Quetzal HighwayUS$80 million
Urban Road and Urban Train (Metrorail)US$770 million
Guatemala City Northeast Bypass (Via Express)US$300 millon
Puerto Seco Tecún Umán US$ 40 millon
Modernization of La Aurora International AirportUS$120 millon
Government Administrative Complex US$240 millon
East-West Mass Public Transportation System of Guatemala CityTo be defined
Estimated total investment of more thanUS$1,550 millon