Publication Date: 3 March 2011 | Coverage Period: 3 February–2 March 2011
Morning Briefing
- Carnival four days away: Trinidad Carnival falls on Monday and Tuesday, March 7–8 — Port of Spain is buzzing with mas camps, soca concerts and the final frenzy of costume fittings; economic activity is at a peak.
- Arab Spring oil premium: Unrest spreading across Libya and the broader Middle East has pushed Brent crude above $110 per barrel, delivering a windfall for T&T’s energy revenues but sharply raising import costs for oil-dependent islands.
- Jamaica tourism strengthening: Winter arrivals data confirm that Montego Bay and Negril are outperforming expectations; PM Bruce Golding’s administration credits targeted marketing spend.
- Barbados spring market active: PM Freundel Stuart reports increased stamp-duty receipts in January and February, reflecting a pickup in property transactions on the Platinum and South Coasts.
- DR construction pipeline: President Fernández’s government releases revised approvals for 14 new hotel and resort projects along the north and east coasts, totalling an estimated $2.3 billion in foreign direct investment.
- CBI demand rising: Caribbean citizenship-by-investment programmes are reporting increased inquiry volumes from the Middle East and Eastern Europe, with political instability in those regions driving demand.
Carnival Eve: The Economic Impact of Trinidad’s Greatest Festival
As this edition goes to press, Trinidad & Tobago is four days away from the greatest street party in the Caribbean calendar. Carnival 2011 — falling on March 7 and 8, with Jouvert beginning in the pre-dawn hours of Monday morning — is set to be one of the most commercially vibrant in recent years, aided by a government that has actively positioned the festival as a centrepiece of its tourism and cultural economy strategy. PM Kamla Persad-Bissessar has spoken publicly about Carnival’s role in showcasing Trinidad & Tobago’s creative industries and its potential to drive year-round hospitality investment as visitors who experience the festival return for quieter stays.
The accommodation market tells the story vividly. Hotels in Port of Spain and the Carnival corridor have been reporting sold-out status for the Carnival weekend since October 2010, with many properties quoting rates three to four times their standard seasonal tariffs. The premium apartment rental market has been equally animated: furnished units in Woodbrook, St Clair and Newtown have been let on short-term contracts for anywhere between TT$8,000 and TT$25,000 for the Carnival week, depending on location, size and finish. This demand is partly met by a growing cohort of property investors who have recognised the yield potential of owning well-located residential units in Port of Spain and managing them as short-term vacation rentals during peak festival periods.
Beyond accommodation, the economic ripple extends throughout the entertainment, food and beverage, transport and retail sectors. Mas bands employ hundreds of seamstresses, designers and administration staff in the lead-up period. Steel pan orchestras and soca artists generate recording and performance revenues that circulate through the creative economy. And the international media coverage of Carnival — broadcast on Caribbean diaspora networks reaching millions of viewers in North America and the United Kingdom — provides promotional value for T&T’s broader tourism brand that is simply impossible to quantify but universally acknowledged as substantial. For property investors weighing the merits of different Caribbean markets, T&T’s cultural economy provides a differentiated proposition that sets it apart from purely beach-resort destinations.
Arab Spring Oil Premium: Winners and Losers in the Caribbean
The wave of popular uprisings sweeping North Africa and the Middle East since January 2011 has had a pronounced and divergent impact on Caribbean economies. For Trinidad & Tobago, which exports liquefied natural gas and petrochemical products to global markets, the oil price elevation driven by supply uncertainty in Libya is an unambiguous fiscal windfall. With Brent crude at $110 and trending higher, T&T’s budgeted revenue assumptions — based on a far more conservative oil price reference — are being exceeded, creating additional fiscal headroom that the Persad-Bissessar government is likely to channel into accelerated capital spending.
For Jamaica, Barbados, the Dominican Republic and most smaller island economies, the picture is precisely reversed. These nations import virtually all their petroleum requirements, and the oil price spike feeds directly into electricity generation costs, transport fuel prices and the cost of imported goods that are shipped in petroleum-fuelled vessels. Jamaica’s already high electricity tariffs — among the most expensive in the Caribbean — are projected to rise further, adding to the cost burden of doing business and suppressing disposable income for the household sector. The Jamaica Public Service Company is managing its fuel cost exposure through hedging instruments, but the duration and magnitude of the Arab Spring oil premium is genuinely uncertain.
Jamaica: Tourism Resilience and Property Market Signals
Despite its fiscal challenges, Jamaica’s tourism sector is delivering positive signals. PM Bruce Golding’s government has maintained the Jamaica Tourist Board’s marketing budget through the austerity period, a decision that appears to be yielding returns. January and February visitor arrivals from the United States and Canada are reported at levels approximately 5% ahead of the same period in 2010, and Sandals and other all-inclusive operators have announced capacity expansions for the Montego Bay and Negril corridors. For property investors, the correlation between resort operator confidence and villa market activity is strong: when the large chains invest in expansion, it typically signals a positive assessment of medium-term demand that benefits the broader residential and hospitality property market.
Kingston’s commercial property market presents a more nuanced picture. Office vacancies in the New Kingston central business district remain elevated compared to pre-2008 levels, and speculative development has been largely absent from the market for two years. However, the few transactions that are occurring are doing so at firmer prices than many expected, suggesting that motivated sellers are in the minority and that holders of quality commercial assets are prepared to wait for improved conditions rather than accept distressed pricing.
Caribbean Leaders This Month
Jamaica — PM Bruce Golding (JLP): Golding enters March with solid tourism data providing a counterweight to fiscal pressures. The IMF programme review due this quarter will be closely watched by regional bond markets and property investors sensitive to Jamaica’s sovereign rating trajectory.
Trinidad & Tobago — PM Kamla Persad-Bissessar (PP): With Carnival days away and oil revenues running above budget, Persad-Bissessar leads the region’s most buoyant economy. Her challenge is channelling the windfall into productive capital formation rather than recurrent spending that creates future fiscal obligations.
Barbados — PM Freundel Stuart (DLP): Stuart’s steady stewardship is rewarded with a modest uptick in property transaction volumes. The Platinum Coast market is showing spring season momentum, with several significant villa transactions reportedly in late-stage negotiation.
Dominican Republic — President Leonel Fernández (PLD): The DR’s development pipeline is the most active in the Greater Antilles. Fourteen new hotel and resort project approvals within the coverage period underscore the scale of investor confidence in the DR market.
Antigua & Barbuda — PM Baldwin Spencer (UPP): Spencer’s administration is pressing the case for renewed interest in Antigua’s luxury villa and marina property market, which has been slower to recover from the post-2008 global correction than more established markets such as Barbados and the BVI.
St Kitts & Nevis — PM Denzil Douglas (SKN-LP): CBI inquiry volumes are elevated. Douglas is positioning the programme’s real-estate investment option as a key driver of resort development funding on the southern peninsula.
Grenada — PM Tillman Thomas (NDC): Thomas is courting renewed interest from marina and superyacht sector investors following renovations to the Port Louis marina complex in St George’s. The Grenadine chain is being marketed as an underserved sailing destination relative to the BVI.
Overall performer this month: Trinidad & Tobago takes the regional performance crown, combining oil windfall revenues, peak Carnival economic activity and a government actively investing in tourism and housing infrastructure.
Looking Ahead
By the time Edition 184 publishes in April, Carnival will have come and gone — and the regional focus will shift to the spring tourism season and the lead-up to the June 1 start of the Atlantic hurricane season. Property markets typically see increased transaction activity in March and April as the winter rental season winds down and buyers who have been visiting on holiday begin to formalise purchase intentions.
The Arab Spring situation bears close monitoring. A sustained oil price above $100 per barrel through the second quarter of 2011 would significantly worsen the fiscal positions of oil-importing Caribbean economies, potentially forcing governments to revisit public expenditure commitments — including capital spending on the infrastructure that supports property market activity.
On the regulatory front, the FATF review of Caribbean financial centres scheduled for the second quarter may have implications for citizenship-by-investment programmes and offshore property holding structures. Investors using these arrangements should monitor developments and ensure their structures remain compliant with evolving international standards.
The Caribbean Property & Investment Review is published on the first business day of each month. Edition 185 covers the period 3 February to 2 March 2011. All market data reflects conditions as at close of the coverage period. This publication is for informational purposes only and does not constitute investment advice.
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