Caribbean Property & Investment Review — February 2012

Publication Date: 3 February 2012  |  Coverage Period: 3 January – 2 February 2012

Morning Briefing

• Portia Simpson Miller is formally sworn in as Prime Minister of Jamaica and begins assembling her Cabinet, with economic management and IMF engagement identified as the new government’s most urgent priorities.
• The Caribbean investment community notes the new year with cautious confidence, with forward hotel bookings for the winter season tracking broadly in line with 2011 levels despite continued Eurozone headwinds.
• Trinidad and Tobago enters its pre-Carnival period with heightened economic activity as hotels, restaurants, and service businesses prepare for the surge in domestic and visitor spending that accompanies the festival season.
• The Dominican Republic’s north coast continues to attract new resort development enquiries, with several international hotel brands reported to be in active discussions about site acquisition and management agreements.
• Barbados announces a package of measures to support the island’s tourism sector, including new airlift incentives for North American carriers and targeted marketing campaigns in key source markets.
• Eastern Caribbean citizenship by investment programmes report strong application pipelines heading into 2012, with St Kitts and Nevis and Dominica both seeing growth in enquiries from Asian and Middle Eastern investors.

Jamaica: The Portia Government Takes Shape

Portia Simpson Miller wasted little time in establishing the priorities of her new government. In the weeks since her swearing-in, the Prime Minister has moved to assemble a Cabinet that blends experienced PNP hands with some younger faces, signalling both continuity of institutional knowledge and an acknowledgment of the party’s electoral mandate for renewal. The investment community in Jamaica and across the region has been watching the Cabinet formation process closely, paying particular attention to the appointments to key economic portfolios.

The most consequential early signal from the new administration concerns its approach to the International Monetary Fund. Jamaica’s public debt, which stands at over 130 percent of GDP, is unsustainable without a structured programme of fiscal adjustment supported by external financing. The Simpson Miller government has made clear that it intends to engage the IMF constructively, a stance that has been broadly welcomed by the business community and by international investors who hold Jamaican government bonds. The specific terms of any new programme will determine the pace and depth of fiscal consolidation and will have significant implications for domestic demand and the broader investment climate.

In Jamaica’s property market, the post-election settling of political conditions is providing a modest fillip to activity. Transactions that had been deferred pending the electoral outcome are beginning to proceed, particularly in the commercial sector in Kingston and in the tourism property corridor along the north coast. Developer confidence in the long-term outlook for Jamaican tourism — supported by the island’s strong brand recognition, growing airlift from North America, and the continued expansion of all-inclusive capacity — remains solid despite the short-term fiscal challenges.

Carnival Approaches: T&T’s Economic Heartbeat

As February begins, Trinidad and Tobago is entering the most vibrant period of its cultural and economic calendar. The approach of Carnival — scheduled this year for the 20th and 21st of February — is already generating palpable energy across the twin-island republic, with hotels reporting strong forward bookings from Trinidadian diaspora members returning from North America and Europe, as well as from regional and international visitors eager to experience one of the world’s great street festivals.

The economic significance of Carnival extends well beyond the festival days themselves. The pre-Carnival season, which runs from Christmas through to Ash Wednesday, supports a substantial ecosystem of related businesses: costume designers, event producers, catering companies, transportation operators, and hospitality providers all benefit from the seasonal surge in activity. For the property market in particular, the Carnival period reinforces the desirability of Trinidad as a base for regional business activity, with the festival drawing executives and entrepreneurs who combine business visits with cultural participation.

Tobago is benefiting from the spillover of Carnival visitors who choose to extend their stays into a beach holiday on the smaller island. The Tobago tourism market continues to develop, with several boutique villa and hotel projects in the pipeline that target the premium independent traveller segment. For investors, Tobago offers an attractive combination of natural beauty, relative exclusivity, and the economic stability of T&T’s energy-underpinned economy.

Caribbean Investment Climate: Early 2012 Assessment

The Caribbean property investment market enters February 2012 with a generally constructive tone. North American buyer interest — which has been the principal driver of the market through 2011 — remains solid, supported by a modest improvement in US economic confidence and continued appetite among American and Canadian high-net-worth individuals for Caribbean holiday home acquisitions. The all-important US housing market is showing tentative signs of stabilisation after years of decline, which historically has a positive knock-on effect on Caribbean second-home purchasing activity.

The citizenship by investment sector is entering a particularly dynamic phase. St Kitts and Nevis, the oldest and most established Caribbean CBI programme, is experiencing growing applicant volumes from new source markets, particularly China and the Gulf states. The associated real estate investment — in approved hotel and villa developments that qualify applicants for citizenship through property purchase — is generating visible construction activity and adding to the islands’ tourism accommodation inventory. Dominica’s programme, which operates on a lower price threshold and is attracting a different applicant profile, is also reporting growing interest.

Caribbean Leaders This Month

Portia Simpson Miller, Prime Minister of Jamaica: Simpson Miller is establishing herself in office with a focus on economic management and fiscal discipline. Her government’s relationship with the IMF will be the defining policy question of her early months in power, and the terms of any programme agreement will be closely scrutinised by Jamaica’s investment community.

Kamla Persad-Bissessar, Prime Minister of Trinidad and Tobago: Persad-Bissessar oversees the pre-Carnival period with the satisfaction of a Prime Minister whose country’s economic fundamentals remain strong. T&T’s energy revenues continue to fund ambitious social and infrastructure programmes, and the twin-island republic remains the Caribbean’s most economically dynamic nation.

Leonel Fernández, President of the Dominican Republic: The DR’s president is overseeing a year that will bring a presidential election in May. Fernández cannot seek a further consecutive term, so the political succession question is dominating Santo Domingo’s political discourse even as the country’s economy continues to perform well.

Freundel Stuart, Prime Minister of Barbados: Stuart’s government is pressing ahead with its economic adjustment programme, seeking to maintain Barbados’s fiscal credibility while supporting a tourism sector that has faced headwinds from the Eurozone crisis affecting its European source markets.

Denzil Douglas, Prime Minister of St Kitts and Nevis: Douglas is presiding over what may be the most consequential period for St Kitts’s CBI programme since its founding, with applicant volumes and programme revenues reaching new levels. The government is investing programme revenues in infrastructure and social services, reshaping the island’s long-term development trajectory.

Roosevelt Skerrit, Prime Minister of Dominica: Dominica’s CBI programme is gaining ground as an alternative to the more expensive St Kitts option, and Skerrit’s government is carefully managing the programme’s growth while maintaining the due diligence standards that are essential to its international credibility.

Baldwin Spencer, Prime Minister of Antigua and Barbuda: Antigua’s sailing and yacht charter sector enters its peak season in good shape, and the island’s luxury hotel properties are performing well with North American high-net-worth visitors. Spencer’s government is working to maintain the island’s premium positioning in a competitive regional marketplace.

Looking Ahead

The Trinidad and Tobago Carnival on 20 and 21 February will be the Caribbean’s most significant cultural and commercial event of the month. Beyond its immediate economic impact, Carnival season serves as a reminder of the cultural richness and vibrancy that makes the Caribbean a compelling destination not just for tourists but for the long-stay visitors and second-home buyers who contribute substantially to the property market.

In Jamaica, the new Portia Simpson Miller government’s economic policy direction will become clearer as Cabinet assignments are confirmed and early budget signals are issued. The IMF engagement process is likely to dominate economic news from Kingston for the foreseeable future, and any progress toward a formal programme agreement will be taken as a positive signal by the investment community.

The broader Caribbean investment market is watching the Eurozone situation with continued attention. The European Central Bank’s long-term refinancing operations have reduced immediate financial market stress, but the underlying fiscal challenges in Greece, Italy, and Spain have not been resolved. The region’s property and tourism sectors are maintaining their adaptation strategy of deepening North American relationships while nurturing alternative source markets in Asia and the Middle East. The next edition will carry a full report on the Carnival season and its economic impact across the twin-island republic.

The Caribbean Property & Investment Review is published monthly for property professionals, investors, and stakeholders across the Caribbean basin. Edition 174 covers the period 3 January to 2 February 2012.

Follow Jamaica Homes on Youtube @jamaicahomes and Instagram @jamaica_homes and on Facebook @jamaicahomesnews Send us a message or email us at onlinefeedback@jamaica-homes.com or editor@jamaica-homes.com