Publication Date: 3 June 2010 | Coverage Period: 3 May – 2 June 2010 | Category: Monthly Review
May in Brief
- Security forces enter Tivoli Gardens on May 24; state of emergency declared in Kingston and St Andrew South.
- At least 73 civilians and four security personnel killed in the west Kingston security operation.
- Hundreds of residents displaced; homes destroyed or damaged across the Tivoli Gardens and surrounding communities.
- Christopher Coke remains at large as of this publication date; legal proceedings ongoing.
- National investor confidence faces its stiffest test since the global financial crisis; tourism warnings issued.
- Bank of Jamaica and commercial banks hold rates pending return to normalcy; rate-easing cycle temporarily paused.
The Tivoli Operation: A National Crisis
The events of 24–26 May 2010 in west Kingston represent the most serious episode of armed conflict on Jamaican soil since independence, and their consequences for the nation’s housing sector, its investment climate and its global reputation are still being assessed as this review goes to press. On the night of 23–24 May, the Jamaica Defence Force and Jamaica Constabulary Force — approximately 800 JDF soldiers and 370 police officers — mounted an operation in the Tivoli Gardens community of west Kingston, entering through barbed-wire barricades in pursuit of Christopher “Dudus” Coke following Prime Minister Golding’s decision to sign the extradition order.
The operation, which the government framed as a law enforcement action to apprehend a wanted fugitive, descended into sustained urban combat. At least 73 civilians were killed and more than 35 wounded over the 24–25 May period. Four members of the security forces also lost their lives. More than 500 persons were arrested and a two-month state of emergency was declared across Kingston Central and St Andrew South. Christopher Coke himself was not captured during the operation and remains at large as of this publication date.
The human toll is devastating and demands its own accounting. For this review’s specific focus on Jamaica’s housing and property sector, the events of May have implications that are immediate, structural and reputational, and that will shape market conditions for months if not years to come.
Housing Damage and Displacement in West Kingston
Independent assessors who entered Tivoli Gardens in the immediate aftermath of the operation found conditions that have been described by observers as appalling. Residential structures across the Tivoli Gardens housing scheme — originally built as social housing in the 1960s and subsequently overcrowded and deteriorated through decades of underinvestment — were damaged or destroyed during the fighting. The community’s warren-like layout of narrow lanes and densely packed concrete structures, which had served as defensive positions for the Shower Posse, bore clear evidence of sustained weapons fire.
The displacement of residents is significant. Hundreds of households were evacuated or fled before and during the operation. Community facilities — including churches and community centres that had served as informal housing support networks — were disrupted. The state of emergency, which restricts movement in the affected areas, has complicated the return of displaced residents and the assessment of structural damage to individual dwellings.
The government and the NHT face immediate questions about rehabilitation of the affected housing stock. The Tivoli Gardens scheme, which houses thousands of west Kingston residents in state-built accommodation, was already in chronic disrepair before the May operation. The additional damage wrought by the fighting will require significant public investment to remedy, at a time when fiscal constraints are already severe. Housing advocates have called for a comprehensive assessment and a committed government plan for Tivoli’s physical rehabilitation as a component of the broader community recovery strategy.
Impact on Kingston’s Investment Climate
The Tivoli operation and the state of emergency have struck Jamaica’s investment climate at precisely the moment when conditions were beginning to improve. The extradition order signed on 2 May — which this review noted in the May edition as a positive signal for investor confidence — was followed within three weeks by the security operation that brought the extradition saga to its violent resolution. The juxtaposition has been jarring for international observers and investors who had been beginning to discount Jamaica’s political risk premium.
Kingston’s commercial and residential property market has experienced an abrupt freeze in the days immediately following May 24. Agents in New Kingston, Half Way Tree and the commercial corridors of the capital report that scheduled property viewings were cancelled, client enquiries fell sharply, and the modest momentum of the preceding weeks evaporated. In the areas directly affected by the state of emergency — Kingston Central and parts of St Andrew — commercial and residential activity has been effectively suspended pending the lifting of emergency restrictions.
Longer-duration investors — those considering development projects with multi-year horizons — have been more measured. Several of the developers this review has spoken with in the days since the operation note that Jamaica’s underlying fundamentals — the JDX, the improving rate outlook, the tourism recovery — have not changed, and that the Tivoli operation, however traumatic, represents a clearing of a long-standing criminal governance problem rather than the creation of a new one. The capture of Coke, when it comes, would reinforce this reading. But the market cannot proceed on the basis of events that have not yet occurred, and the short-term impact on transaction activity and buyer confidence is real and measurable.
Tourism: Travel Advisories and the Resort Market
The United States, United Kingdom and Canadian governments issued updated travel advisories for Jamaica in the wake of the Tivoli operation, advising nationals to exercise increased caution, particularly in Kingston. While the advisories were careful to note that the disturbances were localised to specific west Kingston communities and did not directly affect the resort areas of Montego Bay, Negril, Ocho Rios and Port Antonio, the reputational damage to Jamaica as a safe destination is not so easily contained.
Tour operators and airlines are reporting increased enquiries about cancellations for the remainder of the summer season, and at least two cruise lines are understood to have reviewed their Kingston port schedules. The Jamaica Tourist Board has moved quickly to reassure visitors and trade partners that the resort areas are unaffected, and the Montego Bay Chamber of Commerce has been active in communicating the localised nature of the events to its international business contacts. Whether these reassurances are sufficient to prevent a meaningful decline in the second-half 2010 tourism statistics will be a critical question for the resort real estate market in the months ahead.
The NHT and Rehabilitation Imperatives
The National Housing Trust will be expected to play a role in the physical rehabilitation of west Kingston. The Trust has experience in both construction and community development, and its social mandate extends to the kind of distressed-community work that Tivoli’s rehabilitation will require. However, the scale of the challenge — structural assessment of hundreds of units, identification of rehabilitation priorities, sourcing of funding within the existing fiscal envelope — is substantial, and its delivery will compete for NHT resources that are already strained by the demands of the wider housing deficit.
The government has indicated that a comprehensive community development plan for Tivoli Gardens is under preparation. The plan is understood to go beyond physical housing rehabilitation to encompass social services, employment and community governance — recognising that the conditions in which the Shower Posse’s political economy took root were created, in part, by decades of deliberate neglect of the physical and social environment of the community. Whether the plan will be adequately funded and implemented with the urgency that residents require remains to be seen.
Interest Rates and the Broader Market
The Bank of Jamaica and the commercial banking sector have maintained their rate structures through the May crisis period. The rate-easing cycle that market participants had been anticipating has not been suspended — but it has been paused by events. With the state of emergency still in force and the final legal disposition of the Coke extradition matter unresolved, the BOJ is unlikely to make a significant policy move until there is greater confidence in the return to normalcy. The commercial banks that had been preparing announcements of base rate reductions have similarly chosen to wait for a clearer environment.
This pause is a setback, but analysts who have spoken to this review are clear that it is temporary rather than structural. The macroeconomic conditions that support rate reduction — the JDX, the IMF programme, the declining government bond yields — remain firmly in place. A return to the rate-easing trajectory is expected once the security situation has stabilised and the state of emergency has been lifted.
Housing Market Outside West Kingston
Outside the immediate zone of the security operation and the state of emergency, Jamaica’s property market has absorbed the May shock with greater resilience than the immediate aftermath might have suggested. Agents in Portmore, in the resort corridors of the north coast, and in the parish markets of Clarendon and St James report that activity, while subdued, has not collapsed. Buyers who were genuinely in the market before May 24 have generally remained engaged, and there is no evidence of the kind of forced selling or price panic that might accompany a broader economic crisis.
The NHT’s affordable housing schemes, operating in a segment of the market where buyer demand is driven by genuine need rather than speculative appetite, have been least affected. NHT waiting lists remain long and application volumes have not declined. The Trust’s schemes in Portmore and Clarendon continue to advance, insulated from the security drama by geography and by the nature of their buyer base.
Regional and International Context
International media coverage of the Tivoli operation has been extensive, reaching audiences well beyond the Jamaican diaspora communities that typically follow Jamaica news closely. The coverage has inevitably focused on the violence and on the political narrative — the government that harboured a drug lord until international pressure became irresistible — rather than on Jamaica’s economic reforms or its investment potential. For a country that has been working to reposition its investment image on the back of the JDX and the IMF programme, this coverage represents a reputational setback that will require sustained counter-messaging to address.
Looking Ahead
As of the date of this publication, Jamaica faces the task of recovering from a security crisis whose images have circled the globe, while managing the early stages of the economic recovery that the JDX and the IMF programme were designed to enable. The two narratives — crisis and reform — compete for the attention of the same international investors, diaspora buyers and tourism consumers whose engagement is essential to Jamaica’s medium-term property market recovery.
The resolution of the state of emergency, the return of displaced Tivoli residents to rehabilitated housing, and the eventual capture and extradition of Christopher Coke would together constitute the clearing events that the market needs. Until that clearing is more complete, Jamaica’s housing sector will operate in an environment of heightened uncertainty — though one in which the structural reforms of the preceding months have laid the groundwork for recovery that remains fundamentally intact. The medium-term case for Jamaica’s property market has not been destroyed by the events of May 24. It has been interrupted; and the duration of that interruption is now the central question for every investor and developer with a stake in this island’s future.
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