Bolt’s Jamaica: How Olympic Glory Elevates the Island’s Property Brand — Jamaica Homes Monthly Housing & Development Review — September 2012

Publication Date: September 3, 2012 | Coverage Period: August 3 – September 2, 2012 | Category: Monthly Review

Month in Brief

• Usain Bolt won the 100m gold on August 5 in 9.63 seconds (Olympic record), the 200m gold on August 9 in 19.32 seconds, and anchored Jamaica’s 4x100m relay to a world-record 36.84 seconds on August 11 — making him the first man in history to defend both sprint crowns at consecutive Games.
• Jamaica’s total medal haul at London 2012 was historically exceptional: the island of 2.7 million out-sprinted nations of hundreds of millions, generating global headlines and affectionate international coverage.
• The London Olympics closed on August 12; Jamaica’s national mood entering September is one of extraordinary collective pride, with an island-wide sense that the country’s name carries unusual weight on the world stage.
• The PNP government continued to advance its housing programme; the NHT reported strong demand for mortgage applications in the August period.
• Commercial mortgage rates remained in the 11–14 per cent range; the housing deficit persists above 100,000 units.
• Diaspora engagement with Jamaica — already high following the Games — is expected to translate into elevated property enquiries in the months ahead.

Housing Market

There is a direct, if sometimes underappreciated, connection between Jamaica’s athletic reputation and its property market. When the island dominates global headlines — and in August 2012 it did so with a consistency that had international broadcasters reaching for superlatives — the ripple effects are felt well beyond sport. Real estate agents on the north coast reported enquiries from diaspora members in the United Kingdom in particular, where the Olympic period produced saturation coverage of Jamaica’s sprinters and a wave of national affection for the island.

In the domestic market, August 2012 was a broadly steady month. The Kingston metropolitan area remains characterised by demand that exceeds the formal supply of new units. Portmore continues to function as the primary release valve for Kingston’s workforce: its relatively lower land values and established NHT mortgage pipeline make it the most accessible market for first-time buyers in the Corporate Area catchment. Prices for two-bedroom units in schemes served by the NHT were in the J$5.5–8 million range through August.

The upper end of the market — Beverly Hills, Norbrook, Cherry Gardens — saw continued activity from high-net-worth buyers seeking to upgrade or acquire investment property. The rental sub-market in those areas, driven by expatriate demand from the multilateral and diplomatic community, continues to command premium rents that make buy-to-let economics viable for the minority of investors who can access equity financing.

Government Policy

The People’s National Party government entered its eighth month in office in August with its housing agenda still largely in the project-pipeline phase rather than the delivery phase. The Hellshire Phase 4 scheme is under construction; the broader public-private partnership framework the government has signalled remains under development.

Prime Minister Portia Simpson Miller’s administration has been consistent in its messaging: the NHT is the primary vehicle for affordable homeownership, and its mortgage products — available at zero to five per cent for qualifying contributors in the lower income bands — are being actively promoted. Industry observers note that NHT benefit limits have not kept pace with construction cost inflation, meaning that the effective purchasing power of an NHT loan has eroded in real terms even as nominal limits have been adjusted.

The parliamentary autumn session, due to commence in the coming weeks, is expected to bring further budget discussions and potentially some housing-specific announcements. The government is also navigating ongoing discussions with the International Monetary Fund about a new economic programme — a factor that constrains the fiscal space available for expanded housing subsidies.

Construction Sector

Construction activity in August reflected the dual character of Jamaica’s building sector. Formal sector projects — those financed through institutional channels and subject to Town Planning Department oversight — continued at a measured pace, with lead times on approvals remaining a persistent complaint among developers. Informal self-build activity, by contrast, showed its characteristic resilience: diaspora-funded construction projects were visible across multiple parishes, with the August post-Olympics period bringing a notable increase in remittance-to-construction flows among Jamaicans in the United Kingdom.

Materials costs remained elevated. The Jamaican dollar, which has been under intermittent pressure against the US dollar through 2012, adds a currency dimension to the imported-materials problem. Cement prices, a useful bellwether for construction sector health, moved modestly upward through the period.

On a more positive note, the government’s infrastructure programme continued to generate sub-contracting opportunities for the domestic construction industry. Road rehabilitation works in several parishes, funded partly through bilateral and multilateral assistance, have provided employment and kept sector capacity from deteriorating further.

Investment Outlook

The Olympic afterglow has a real, if temporary, effect on Jamaica’s investment environment. When the island is the subject of sustained positive international media coverage, the perception of Jamaica as an investable destination improves among the diaspora and among international investors who might otherwise overlook the Caribbean’s smaller economies. Property developers and tourism sector operators both report that post-Olympics enquiries tend to be more substantive than routine marketing could generate.

The structural investment constraints remain unchanged: commercial lending rates of 11–14 per cent, a complex planning approval environment, and an economy that has grown at below one per cent annually for the better part of a decade. Foreign currency-denominated investment in resort-adjacent and north coast properties is somewhat insulated from these domestic constraints, and that segment of the market — Montego Bay, Ocho Rios, Port Antonio, Negril — is where post-Olympics investor interest is most likely to crystallise.

For long-term investors, the Olympic period serves as a useful reminder of what Jamaica’s brand is capable of generating when the island performs at its best. The challenge is converting that episodic global affection into sustained capital flows.

Diaspora

No edition of Jamaica Homes Monthly has ever been published against a backdrop quite like this one. In August 2012, the Jamaican diaspora — in London, New York, Toronto, Miami, and every city where Caribbean communities have taken root — watched Usain Bolt and his teammates do something that defies easy summary. The 100m final on August 5, the 200m on August 9, and the relay world record on August 11 were not merely athletic events: they were assertions of national identity broadcast to a global audience of hundreds of millions.

For the property market, this matters. The Jamaican diaspora’s attachment to the island is affective as well as economic, and Olympic victories of this magnitude reliably produce what might be called ‘homeland reconnection’ moments: increased remittances, enquiries about property in the ancestral parish, renewed interest in retirement or return migration. Estate agents in St. Elizabeth, Portland, and St. Ann — the home parishes of many diaspora members — will be watching their enquiry pipelines carefully in the weeks ahead.

The UK diaspora in particular has been energised by an Olympics held on home soil. For Jamaicans who have spent decades building lives in Britain, watching their nation triumph at London 2012 carried an additional emotional charge. Property enquiries from this community are expected to be elevated through the autumn.

Affordability

Olympic pride does not, unfortunately, reduce mortgage rates or expand the supply of affordable housing. September 2012 finds Jamaica’s affordability challenge structurally unchanged from July: a housing deficit above 100,000 units, commercial lending rates that render formal market homeownership inaccessible to the majority of wage earners, and an NHT whose benefits, though meaningful, are stretched across a demand pool that grows each year.

The inflation environment adds another dimension to the affordability picture. Food price inflation, driven partly by the global commodity cycle and partly by the Jamaican dollar’s intermittent weakness, reduces the share of household income available for housing costs among low- and middle-income families. The squeeze is felt most acutely by renters in urban areas, whose housing costs have risen faster than wages for several consecutive years.

There is, however, a longer-term argument to be made. Jamaica’s global brand — sharpened and amplified by August’s performances — is a genuine economic asset. A country that the world associates with speed, excellence, and a distinctive cultural vitality attracts tourism, diaspora investment, and creative economy activity in ways that a less visible nation of equivalent size would not. The housing market is one of the eventual beneficiaries of that brand premium, even if the transmission mechanism is indirect and the timeline is long.

Looking Ahead

September brings the parliamentary autumn session, which will set the policy tone for the final quarter of 2012. The government’s ongoing IMF discussions are the most consequential macro variable: the shape of any new programme will determine the fiscal parameters within which housing and social policy can operate for the next several years.

The hurricane season, which runs through November, is a perennial reminder of Jamaica’s exposure to climatic risk. The Caribbean has experienced several significant storms in recent weeks, and Jamaica’s coastal and low-lying housing stock — much of it informally constructed — remains vulnerable. Developers and insurers are watching the Atlantic basin carefully.

For the property market specifically, the key question entering October is whether the post-Olympics diaspora engagement translates into actual transaction volumes, or whether it remains at the level of expressed interest. Past Olympic cycles suggest the former is possible but not guaranteed. The island’s agents, developers, and the NHT will need to be ready to receive and convert that interest.

Jamaica enters the autumn of 2012 carrying more global goodwill than it has known in a generation. The task now is to turn that goodwill into lasting economic substance — including, for the purposes of this review, into roofs over heads.