Caribbean Property & Investment Review — Edition 167 | September 2012

Publication Date: 3 September 2012  |  Coverage Period: 3 August – 2 September 2012

Morning Briefing

• Dominican Republic luxury resort pipeline expands as foreign developers accelerate land acquisition along the northern coast.
• Trinidad & Tobago energy sector posts a strong quarter with oil above US$90 per barrel and gas exports robust.
• Jamaica’s PNP government under PM Portia Simpson Miller continues fiscal consolidation talks with international creditors.
• St Kitts & Nevis CBI programme reports sustained high demand as the summer season closes.
• Barbados August 2012 tourism arrivals show modest improvement year-on-year despite sluggish UK visitor numbers.
• Caribbean hotel occupancy averaged 68% over the August peak, led by the Dominican Republic and Turks & Caicos.

Dominican Republic: Luxury Investment in Full Stride

The Dominican Republic’s luxury property market continued its upward trajectory through late summer 2012, underpinned by stable government under newly inaugurated President Danilo Medina, improving infrastructure, and a growing reputation among North American and European buyers. In the Cap Cana and Punta Cana corridors, inventory in the US$500,000–$1.5 million range moved steadily, with enquiries tracking well ahead of 2011 levels. Several international hotel brands confirmed new resort projects bringing an estimated 2,400 additional rooms to market over three years, driving ancillary residential development within branded resort communities. Construction activity in Santo Domingo’s upper residential districts remained brisk as domestic buyers competed with diaspora purchasers for new condominium product.

Trinidad & Tobago: Energy Wealth Sustains Property Demand

With oil prices holding in the US$90–$100 range, Trinidad & Tobago’s economy continued to generate the high household incomes that sustain one of the Caribbean’s most active domestic property markets. PM Kamla Persad-Bissessar’s People’s Partnership government maintained public expenditure, supporting construction activity and employment. In Port of Spain, demand for executive apartment rentals from energy sector expatriates remained elevated, with two-bedroom units in the Westmoorings corridor holding above TT$8,000 per month. Commercial property also reflected energy sector confidence, with several new office developments breaking ground in Q3. Tobago saw continued interest from overseas villa buyers in the Buccoo and Crown Point areas.

Jamaica: Fiscal Reform and Property Market Implications

Jamaica’s property market navigated fiscal uncertainty through August 2012. PM Simpson Miller’s PNP government, elected in December 2011, worked to stabilise public finances and open dialogue with the IMF toward a new programme. Kingston’s commercial property sector remained subdued as corporate occupiers awaited policy clarity. The upper residential market in Cherry Gardens and Norbrook showed resilience, driven by diaspora buyers seeking to acquire ahead of potential currency-driven price adjustments. The Jamaican dollar’s gradual depreciation over twelve months made USD-denominated buyers incrementally more competitive, partially offsetting the drag from fiscal uncertainty on overall market sentiment.

Citizenship by Investment: Demand Sustained into Autumn

The St Kitts & Nevis CBI programme continued to attract applications at a healthy rate as summer 2012 closed. Both the Sugar Industry Diversification Foundation donation route and the real estate investment route remained active, with enquiries from the Middle East and Asia Pacific supplementing traditional North American and European applicant pools. Dominica’s Commonwealth CBI programme similarly reported strong enquiry volumes at its more accessible entry price point. Industry observers noted that global economic uncertainty and increasing complexity of Western residency schemes were driving sustained Caribbean citizenship interest. Speculation mounted that at least one additional Caribbean jurisdiction was advancing plans to enter the CBI market before year-end.

Caribbean Leaders This Month

Danilo Medina (Dominican Republic) moved quickly after his 16 August 2012 inauguration to signal continuity with pro-investment policies while announcing targeted social spending, reassuring the real estate and tourism investment community.

Kamla Persad-Bissessar (Trinidad & Tobago) continued to manage energy revenues across social programmes and infrastructure investment, maintaining the consumption-led economic model underpinning T&T property demand.

Portia Simpson Miller (Jamaica) pressed ahead with fiscal discussions while managing domestic expectations around public sector wages and subsidy reform, with the IMF engagement remaining the defining economic narrative heading into Q4 2012.

Freundel Stuart (Barbados) faced continued pressure from sluggish economic growth and weak UK tourist arrivals, Barbados’s largest source market, while maintaining commitment to the fixed US dollar exchange rate peg.

Roosevelt Skerrit (Dominica) continued promoting the Commonwealth CBI programme as infrastructure financing, with new approvals tracking ahead of the prior year.

Perry Christie (Bahamas) focused attention on Baha Mar resort’s construction progress, a project that promises to transform Nassau’s hotel landscape and carry significant property market implications for New Providence.

Timothy Harris (St Kitts & Nevis) led opposition commentary on CBI programme management and transparency, while both government and opposition acknowledged the programme’s central importance to the federation’s fiscal position.

Looking Ahead

The opening of the 2012–13 Caribbean tourism season in October and November will set the tone for property enquiry volumes through the winter. Destinations with airlift improvements and new resort openings — notably the Dominican Republic and Turks & Caicos — are positioned to capture a disproportionate share of visitor growth.

Jamaica’s fiscal programme negotiations will remain a central theme for regional investors. A successful IMF agreement would represent a significant shift in the island’s creditworthiness narrative and could catalyse a renewed cycle of commercial and residential investment.

The CBI market is poised for further expansion, with industry sources indicating that announcements from additional jurisdictions may arrive before year-end. Investors holding Caribbean real estate qualifying under existing CBI frameworks are well positioned to benefit from any broadening of the eligible destination pool.

The Caribbean Property & Investment Review is published monthly. All market data referenced reflects conditions within the stated coverage period. This publication is for informational purposes only and does not constitute investment advice.