Jamaica Real Estate Roundup — Q3 2006: Summer Boom in Full Swing, North Coast Thriving Under Portia’s Administration, and the Property Market’s Most Productive Third Quarter

• Summer 2006 tourism season delivers boom-period peak performance for North Coast.
• North Coast resort communities: international demand sustains at cycle high.
• Kingston residential: premium and mid-market appreciation continues strongly.
• Portia Simpson Miller PNP government: stable economic management through first full summer.
• Broader Caribbean growth environment reinforces Jamaica property investment case.

The third quarter of 2006 confirms what the property market’s participants had hoped the year would deliver: a summer season in which the boom conditions that have been building through the decade’s extended growth cycle expressed themselves without interruption, with the North Coast resort communities achieving the international visitor volumes and investor engagement that the tourism sector’s sustained growth had been building toward, and the Kingston residential market sustaining the premium and mid-market momentum through the summer months with the full confidence that the boom cycle’s conditions supported. The Portia Simpson Miller PNP government is nine months into its administration, and the property market’s third-quarter assessment of the political and economic backdrop is one of the stability that the boom’s continuation requires, with the economic management that the PNP government has continued from the Patterson era remaining consistent enough with the growth environment’s conditions to sustain the confidence that the market depends on.

The external environment through Q3 2006 has been broadly supportive, with the global economic conditions that underpin Jamaica’s two key demand streams — international resort and residential investment, and the diaspora community’s property engagement — remaining in the benign territory that the boom period’s conditions reflect. The North American and British economies have continued to perform at levels that sustain the discretionary income and capital availability that the international and diaspora demand streams depend on, and the Caribbean growth environment more broadly has been delivering the regional confidence in property investment that the Jamaica market benefits from as the most established destination in its competitive set.

North Coast: Summer Tourism Peak and Investment Activity

The North Coast’s summer 2006 tourism performance was the third quarter’s most compelling evidence that the boom conditions were being fully realised in the market’s most internationally exposed segment. The major resort corridors from Montego Bay through Ocho Rios and into the western reaches of the North Coast’s luxury tier were delivering the visitor volumes and per-visitor expenditure that the sustained resort investment of the preceding years had been building toward. Hotel occupancy through the summer months reached levels that were impressive for what is nominally the Caribbean’s shoulder season, and the quality of the visitor profile — measured in origin markets, length of stay, and accommodation tier preferences — was consistent with the boom period’s international demand patterns.

The international buyer and investor community’s engagement with the North Coast property market through Q3 2006 was sustaining the activity levels that the boom cycle had established. Residential communities within and adjacent to the resort corridors were generating consistent enquiry from buyers in the primary international origin markets — the United Kingdom, North America, and continental Europe — whose continued engagement reflected the Jamaica North Coast’s established position as a credible primary and secondary residence destination in the international luxury property market. The development pipeline feeding the North Coast market continued to progress, with the planning and pre-sales activity that would deliver the next phases of resort community expansion into the market over the coming quarters providing evidence of the sustained developer confidence in the trajectory of international demand.

Kingston Residential Market

Kingston’s residential market sustained its premium segment’s appreciation trajectory through the third quarter without the summer slowdown that earlier market cycles had sometimes imposed, as the boom conditions’ improvement of transaction confidence had reduced the seasonal hesitancy that the premium segment’s buyers had historically shown through the summer months. The established residential communities serving Kingston’s professional and business class were generating the consistent transaction activity that confirmed the premium segment’s sustained momentum, and the pricing levels that the most sought-after addresses were achieving in Q3 2006 were the highest in the decade’s cycle.

The middle-market segment’s summer performance was similarly robust, as the financing conditions and the broader confidence environment that the boom cycle had sustained into its current mature phase continued to support the volume of transactions that the mid-market depended on. First and second home buyers active in Kingston’s middle-market through Q3 2006 were finding a market whose conditions — pricing, financing availability, transaction velocity — reflected the boom cycle’s most supportive configuration for the domestic owner-occupier seeking to move up the market or access it for the first time. The outlook for the remainder of 2006 was for continued momentum as the market approached the fourth quarter’s diaspora-driven peak season.

Regional and National Context

The Portia Simpson Miller administration’s first full summer in government provided the Jamaica property market with the backdrop of economic continuity and political stability that the boom conditions required. The new Prime Minister’s government had settled into its economic management responsibilities in a manner consistent with the investment community’s expectations, and the property market’s participants were observing the PNP administration’s performance against the economic indicators that mattered for property market conditions — inflation, interest rate trajectory, foreign exchange stability, and public sector financial management — with confidence that the boom cycle’s essential conditions were being preserved through the change of leadership within the governing party.

The Caribbean property market’s broader summer 2006 picture reinforced the Jamaica market’s confidence, as the wider regional investment environment continued to attract the international capital that fed Jamaica’s resort and residential property pipeline. The Barbados, Cayman Islands, and Trinidad property markets were all reporting the kind of sustained international demand that indicated the Caribbean’s continued standing in the international property investment community, and Jamaica’s position within that regional competitive set as the destination with the deepest tourism infrastructure, the most established diaspora property tradition, and the most diverse residential offering continued to support the sector’s confidence that international demand would remain a structural support for the cycle’s continuation.

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