Caribbean Property & Investment Review — 2010 Year-End Review | January 2011

Publication Date: 3 January 2011  |  Coverage Period: 3 December 2010 – 2 January 2011

Morning Briefing

• Hurricane Tomas reconstruction continues across St Lucia, St Vincent and the Grenadines, and Barbados as insurance claims are assessed and infrastructure repair contracts are awarded.
• Freundel Stuart settles into office as Barbados Prime Minister following the death of David Thompson in October 2010, pledging continuity on economic and investment policy.
• Trinidad and Tobago’s People’s Partnership government under Kamla Persad-Bissessar marks its first full months in office with energy sector revenues sustaining the national budget.
• Haiti approaches the one-year anniversary of the January 2010 earthquake with international reconstruction pledges only partially disbursed and Port-au-Prince rebuilding slower than anticipated.
• Jamaica’s JLP government led by Prime Minister Bruce Golding enters 2011 facing persistent fiscal pressure and IMF programme targets, yet tourism arrivals for the December holiday period are reported ahead of 2009 figures.
• Regional property markets close 2010 with cautious optimism: luxury villa sales in Barbados and St Kitts showed resilience, while Dominican Republic resort corridor completions added new inventory entering 2011.

Hurricane Tomas: Recovery and Property Market Implications

Hurricane Tomas struck the eastern Caribbean in late October and early November 2010, inflicting its most severe damage on St Lucia and St Vincent and the Grenadines before weakening as it grazed Barbados. Two months on, the recovery picture is mixed. In St Lucia, banana plantations and coastal infrastructure bore the heaviest losses; hotel operators in the north of the island report most properties have reopened for the winter season, though several smaller guesthouses in the south remain closed pending structural assessments. Insurance adjusters have flagged elevated claims on residential and commercial property, and the rebuilding process is creating short-term demand for construction materials and skilled tradespeople across the island.

St Vincent and the Grenadines suffered significant agricultural losses and road damage to interior communities. The government has sought assistance from the Caribbean Development Bank, and early-stage repair contracts have been awarded for critical feeder roads linking farming communities to market towns. For property investors, the episode serves as a reminder that catastrophe insurance coverage — including business interruption — remains a non-negotiable element of any Caribbean portfolio. Regional insurers report that penetration rates for adequate wind and flood cover outside the luxury segment remain low, creating ongoing exposure for mid-market property owners. Barbados sustained less structural damage than initially feared; the southern coast resort belt was operational in time for the peak December season.

New Leadership in Barbados: Stuart’s Priorities for 2011

Freundel Stuart assumed the office of Prime Minister of Barbados in October 2010 following the death of David Thompson, becoming the island’s fifth premier. Stuart, a lawyer and long-serving DLP parliamentarian, is expected to maintain the economic policy framework set by his predecessor, including the ongoing effort to manage public sector debt and defend Barbados’s investment-grade credit ratings. For the property and investment community, the change of leadership has not disrupted the regulatory environment; the Barbados Investment and Development Corporation continues to process foreign investment applications, and the island’s open economy posture toward high-net-worth residents and second-home buyers is unchanged.

Stuart’s administration will be tested in 2011 by the need to balance public sector wage demands against fiscal consolidation targets. Barbados’s tourism-dependent economy benefits from strong winter arrivals from the United Kingdom and North America, but the recovery of UK discretionary travel spending remains uneven. Luxury villa rental rates on the Platinum Coast held firm through the 2010–11 winter booking season, suggesting that the premium end of the market continues to attract affluent visitors despite broader economic uncertainty in source markets. The mid-market segment faces more competitive pressure from cheaper Mediterranean alternatives, underscoring the importance of product quality differentiation for Barbadian operators.

Trinidad & Tobago: Energy Revenues and Construction Activity

Trinidad and Tobago ended 2010 in a position of relative fiscal strength, underpinned by hydrocarbon revenues that have allowed the Persad-Bissessar government to sustain capital spending commitments initiated under the previous Manning administration. The energy sector — oil, natural gas, and petrochemicals — continues to generate the foreign exchange and tax revenues that insulate T&T from the fiscal vulnerabilities affecting its Caribbean neighbours. Construction activity in the Port of Spain metropolitan area and along the east-west corridor remained elevated through the fourth quarter, with government-funded infrastructure projects and private sector commercial developments both contributing to demand for construction services and commercial property.

For investors, Trinidad’s dual-island character presents distinct opportunities. Port of Spain’s commercial property market caters primarily to the energy industry’s office and logistics requirements; Tobago’s smaller, tourism-oriented economy offers boutique hospitality and villa investment opportunities. The Tobago House of Assembly has signalled ambitions to grow airlift and attract new resort development, though progress on enabling infrastructure — particularly road upgrades and utility capacity — has been incremental. Regional investors with an appetite for dual-use properties that serve both corporate visitors and leisure travellers are watching the north coast of Tobago with interest as land values there remain comparatively accessible.

Haiti: Reconstruction One Year On — Investment Landscape

As the Caribbean region approaches the first anniversary of the January 12, 2010 earthquake that devastated Port-au-Prince and surrounding areas, the scale of what remains to be done is sobering. International pledges made at the March 2010 donors’ conference in New York totalled billions of dollars, but disbursement has lagged pledges significantly, hampered by governance questions, procurement complexity, and the sheer logistical challenge of operating in a country whose institutional infrastructure was itself destroyed by the disaster. Population displacement, with hundreds of thousands still in tent cities a full year later, has reshaped the urban geography of Port-au-Prince in ways that will affect reconstruction planning for years.

For the regional investment community, Haiti’s trajectory is watched as both a humanitarian concern and a long-term commercial consideration. The Caracol Industrial Park project in the north of the country, backed by international development finance, represents an attempt to redirect investment toward less-affected regions and build an industrial employment base. Property rights clarification — a pre-existing weakness that the earthquake exacerbated — remains a critical impediment to formal sector investment. Patient capital with long time horizons and partners embedded in local governance processes will be required. The 2011 presidential election cycle adds political uncertainty; clarity on the new government’s posture toward foreign investment will be a key variable for those monitoring Haiti’s recovery trajectory.

Caribbean Leaders This Month

Bruce Golding, Prime Minister of Jamaica — Golding and his JLP government enter 2011 focused on the path to IMF programme compliance, with fiscal consolidation measures constraining public spending. Tourism performance over the December period provides some positive news, with stopover arrivals tracking ahead of the prior year, reflecting continued recovery in the US travel market.

Kamla Persad-Bissessar, Prime Minister of Trinidad & Tobago — Persad-Bissessar’s People’s Partnership administration ends 2010 on a stable fiscal footing. The PM has signalled continued investment in social programmes funded by energy revenues, while maintaining an open posture toward foreign direct investment in the non-energy sector.

Freundel Stuart, Prime Minister of Barbados — Stuart faces his first full year in office with the task of reassuring markets and investors that Barbados’s fiscal and regulatory framework remains steady after the transition from Thompson’s leadership. Early signals suggest continuity rather than disruption.

Leonel Fernández, President of the Dominican Republic — Fernández’s administration continues to promote the DR’s Punta Cana-La Romana corridor as the Caribbean’s leading mass-market tourism and real estate destination. New resort completions and all-inclusive expansion projects signal continued developer confidence in the DR market.

Dean Barrow, Prime Minister of Belize — Barrow’s government is managing the nationalisation aftermath in the telecommunications sector while seeking to maintain the investment climate for tourism, offshore finance, and agricultural exports that underpin Belize’s smaller but growing property market.

Roosevelt Skerrit, Prime Minister of Dominica — Skerrit continues to position Dominica as an eco-tourism destination with a differentiated appeal to nature travellers, while the island’s Citizenship by Investment programme remains a source of fiscal revenue supporting public investment.

Denzil Douglas, Prime Minister of St Kitts & Nevis — Douglas oversees a St Kitts property market that has attracted notable luxury villa development, with the Peninsula and Christophe Harbour projects continuing to draw high-net-worth buyers and investors from North America and Europe.

Ralph Gonsalves, Prime Minister of St Vincent and the Grenadines — Gonsalves is focused on Tomas recovery and the ongoing Argyle International Airport construction project, which when complete will fundamentally change St Vincent’s connectivity and property investment appeal.

Looking Ahead

The 2011 Caribbean property and investment year opens against a backdrop of cautious global recovery. US economic growth is projected to remain moderate, supporting continued but not spectacular growth in North American visitor numbers to the region. European source markets, particularly the UK, face headwinds from fiscal austerity; operators most dependent on British visitors will need to work harder on value positioning to maintain occupancy.

Regional governments face a common challenge in 2011: maintaining capital spending on infrastructure and tourism product — both essential for long-term competitiveness — while managing debt levels that were elevated during the 2008–09 downturn. Those that can demonstrate credible fiscal management while continuing to invest in enabling infrastructure will be best positioned to attract the foreign direct investment that drives property market activity.

Citizenship by Investment programmes in St Kitts & Nevis and Dominica are expected to see continued application volumes in 2011, reflecting persistent demand from investors seeking Caribbean residency and passport options. The competitive landscape among CBI jurisdictions is evolving, with other islands monitoring the revenue potential and considering programme development of their own.

Caribbean Property & Investment Review is published monthly. Edition 187 covers the period 3 December 2010 to 2 January 2011. All market commentary reflects conditions and information available within the coverage period.

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