Jamaica Real Estate Roundup — Q4 2011: An Election Four Days Ago, a Christmas Season Under Transition, and the Property Market on the Edge of a New Era

• Andrew Holness becomes PM October 23 after Golding resignation.
• Snap election called; December 29 vote produces PNP win by narrow margin.
• Christmas diaspora season tempered by election campaign uncertainty.
• Property market ends 2011 with political clarity but fiscal questions unresolved.
• Kingston and North Coast markets await new government’s fiscal framework.

This edition of the Jamaica Real Estate Roundup goes to press four days after one of the most consequential general elections in recent Jamaican history. The People’s National Party’s victory on December 29, 2011 — with Portia Simpson Miller returning to the Office of the Prime Minister after a four-year absence during which the JLP’s Bruce Golding and, in his final weeks, Andrew Holness held government — closes a chapter of Jamaican political history and opens one whose fiscal and economic content is yet to be written in full. The property market that enters 2012 under a new government does so with the political clarity that a clear election outcome provides and the fiscal uncertainty that the challenge of managing Jamaica’s public debt at its most acute level in the modern era continues to impose on every dimension of the island’s economic life.

The quarter’s political dynamics were shaped by the sequence of events that followed Bruce Golding’s September 26 announcement of his resignation as Prime Minister and JLP party leader — an event covered in this Roundup’s Q3 2011 edition — through Andrew Holness’s assumption of the Prime Ministership on October 23, the snap election call, and the December 29 vote itself. The election campaign that ran through November and December added a layer of political uncertainty to the Christmas season’s property market dynamics that the timing of a December election made it impossible to avoid. Buyers and sellers who might, in a non-election Christmas season, have been advancing purchase decisions with the energy that the diaspora’s December presence generates were managing the additional uncertainty that the election’s outcome would introduce into the fiscal framework they needed to assess before committing capital.

The Holness Interlude

Andrew Holness’s brief tenure as Prime Minister — from his October 23 swearing-in through the December 29 election that his party narrowly lost — was a period too short to produce the fiscal policy developments that the property market’s participants were seeking from whichever government the election produced. The Holness administration’s approach to the fiscal challenge in its brief weeks in office reflected the constraints of governing through an election campaign period, and the property market’s assessment of Q4 2011’s political environment was one of patient waiting for the framework that the post-election administration would be in a position to develop and implement. The election’s December 29 outcome — producing the PNP government that the new year’s fiscal engagements will belong to — provided the political clarity that the post-Golding transition had temporarily suspended.

Christmas Season: Energy Persists Despite Campaign Uncertainty

The Christmas and New Year diaspora season’s property market energy was present through Q4 2011 despite the election campaign’s overlay of political uncertainty, reflecting the resilience of the diaspora buyer motivation that the combination of family reconnection, competitive property prices, and the currency advantage of overseas earnings reliably produces. The Jamaican-born resident of New York, Toronto, or London who arrived on the island in December 2011 for the Christmas holiday was navigating the election campaign’s political noise while maintaining the property market engagement that had brought them to viewing appointments and developer conversations in previous December visits.

The election campaign’s specific effect on the December property market was most visible in the deferred decision pattern: buyers who might, in a non-election December, have proceeded to transaction completion were holding their final decisions pending the election’s outcome and the post-election government’s early fiscal signals. The pipeline of pre-election viewing and assessment activity was substantial, and the post-election period’s property market engagement was expected to convert a meaningful portion of that pipeline into completed transactions as the political picture clarified. The December 29 result — four days old as this edition goes to press — has provided the political component of that clarity; the fiscal component remains to be established by the incoming PNP government’s early policy actions.

Kingston: Election Overlay, Structural Continuity

Kingston’s residential market through Q4 2011 maintained the structural characteristics that had defined the preceding period’s performance, with the election overlay moderating but not eliminating the transaction activity that the Christmas season and the market’s underlying demand dynamics generate. The premium segment’s resilience — anchored by genuine scarcity of quality stock, the income and wealth insulation of its buyer cohort, and the corporate and diplomatic rental demand that supports premium property income — persisted through the quarter’s political uncertainty with the same durability that had characterised it through the fiscal pressures of the preceding several years.

The middle-market segment’s Q4 2011 activity was more directly affected by the election campaign’s uncertainty, with buyers in the financing-dependent purchase range showing the heightened caution about commitment that the political transition and its fiscal implications encouraged. Developers and vendors serving this segment managed the quarter’s softer pace with the inventory and marketing adjustments that the environment required, maintaining their operations in the expectation that the post-election policy clarity would support a resumption of more active buyer engagement in the first quarter of the new year.

North Coast: Christmas Peak Amid Political Noise

The North Coast resort communities’ Christmas peak season delivered the occupancy and visitor activity that the calendar’s strongest leisure travel period reliably produces, with the international visitor’s holiday decision-making largely insulated from the domestic political dynamics that the December 29 election generated. The resort operators who were hosting their Christmas guests through the final days of the election campaign were doing so in an operational environment that the island’s political transition was not disrupting, and the experience of holiday visitors encountering Jamaica’s resort product at its seasonal best was generating the impression and the aspiration that the property market’s subsequent enquiry pipelines depend on.

Quarter Close: Clarity on the Political Side

The fourth quarter of 2011 ends with Jamaica having resolved its political uncertainty through the December 29 election and entering 2012 with a new PNP government whose fiscal inheritance — the accumulated debt burden and structural deficit of decades — is the defining challenge of the years ahead. The property market’s participants have the political clarity they needed from the election’s outcome, and are now awaiting the fiscal framework clarity that the new government’s early engagements will work toward providing. The year ahead will be a consequential one for the fiscal trajectory, the interest rate and financing environment, and ultimately the property market conditions that those macro variables determine. The Jamaica Roundup enters 2012 with the guarded expectation that the new government’s engagement with the challenge it has inherited will produce, through a constrained and difficult adjustment period, the foundations of a more stable and growth-supportive economic environment than the current one.

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