Caribbean Property & Investment Review — Edition 164 | December 2012

Publication Date: 3 December 2012  |  Coverage Period: 3 November – 2 December 2012

Morning Briefing

• President Barack Obama was re-elected on 6 November 2012, defeating Republican challenger Mitt Romney, providing policy continuity for the United States — the Caribbean’s largest source market for tourism and direct investment — heading into 2013.
• Antigua and Barbuda formally launched its Citizenship by Investment programme in November 2012, becoming the fourth Caribbean jurisdiction to offer passport access through qualifying investment and expanding the region’s CBI landscape significantly.
• Hurricane Sandy’s aftermath continued to shape the investment climate in Jamaica, with reconstruction activity in southern parishes gathering pace and the government seeking international development financing to support infrastructure restoration.
• The Caribbean’s peak holiday season entered full swing in November, with air arrivals from North America and Europe tracking ahead of 2011 levels across major resort destinations from Barbados to the Turks and Caicos.
• Trinidad & Tobago’s commercial property market maintained strength heading into year-end, with limited grade-A office inventory sustaining landlord pricing power in Port of Spain’s central business district.
• Dominican Republic recorded its strongest-ever November visitor arrival numbers, cementing the country’s status as the Caribbean’s largest tourism market by volume and reinforcing the fundamentals for residential property investment.

Antigua CBI Launch: A New Chapter for Caribbean Investment Migration

The formal launch of Antigua and Barbuda’s Citizenship by Investment programme in November 2012 was the most consequential structural development in the Caribbean investment migration market in years. By establishing itself as the fourth Caribbean CBI jurisdiction — joining St Kitts & Nevis, Dominica, and St Lucia — Antigua expanded investor choice and introduced competitive dynamics that were expected to benefit sophisticated applicants while testing the existing programmes to sharpen their propositions.

The Antigua programme’s real estate option — requiring investment in a government-approved resort development at a minimum qualifying value — was the pathway of greatest interest to the Caribbean property investment community. Unlike a pure cash contribution route, the real estate option created direct and immediate demand for qualifying villa and condominium projects on Antigua, and developers who had been in preparatory conversations with the government for several months moved quickly to position their inventory as qualifying assets once the programme was officially confirmed.

Antigua’s appeal as a CBI destination rested on several genuine strengths. The island possessed well-developed tourism infrastructure — V.C. Bird International Airport with direct connections to London, New York, and Toronto; a strong yacht charter and superyacht services industry; and an established reputation among the British travel market as a premium sun destination. The English Common Law legal system, Antigua and Barbuda’s membership of the Commonwealth, and the country’s CARICOM and OECS membership all added layers of credibility for applicants from established markets.

For existing CBI jurisdictions, Antigua’s arrival represented a competitive challenge that required measured response. St Kitts & Nevis, with its thirty-year programme heritage and deep agent network relationships, was well-positioned to defend its premium positioning. Dominica, which competed primarily on cost and processing efficiency rather than lifestyle, served a sufficiently distinct applicant profile that direct competition was limited. The CBI landscape heading into 2013 was, for the first time, a genuinely diversified market — one in which matching the right applicant to the right jurisdiction required more sophisticated advisory input than had previously been the case.

Obama Re-Election: Caribbean Investment Perspective

President Obama’s re-election on 6 November brought political continuity to the United States at a moment when Caribbean nations were carefully calibrating their economic and diplomatic positioning. From a Caribbean property investment perspective, the most direct implications of the US election outcome lay in tourism and real estate demand from the American market, which constituted the largest single source of visitors and residential property buyers across most of the non-francophone Caribbean.

The Obama administration’s second-term economic agenda — focused on addressing the so-called fiscal cliff of automatic spending cuts and tax increases scheduled for January 2013, as well as longer-term deficit reduction negotiations — would influence American consumer confidence and discretionary spending behaviour through the critical winter tourism and property purchase season. Caribbean tourism and real estate operators were broadly hopeful that the resolution of US fiscal uncertainty, whichever form it took, would provide clarity sufficient to sustain the North American travel and investment appetite that underpinned their businesses.

Caribbean governments also noted the Obama administration’s expressed interest in deepening economic engagement with the Western Hemisphere, including through investment facilitation and trade access frameworks. Jamaica, in particular, which was managing its IMF negotiations in parallel with efforts to attract US-linked investment into special economic zones and infrastructure projects, was attentive to how second-term US policy priorities might create opportunities for enhanced bilateral economic cooperation.

Sandy Aftermath: Jamaica’s Reconstruction Progress

A month after Hurricane Sandy’s passage through Jamaica, reconstruction activity in the southern parishes was gathering pace. Government agencies and international development partners were coordinating debris clearance, road restoration, and structural assessment programmes across the affected communities of Portland, St Thomas, St Andrew, St Catherine, and Clarendon. Insurance claims were being processed, though the disparity between insured and actual losses in lower-income communities meant that many household-level rebuilding projects would depend on personal resources or informal assistance networks rather than formal insurance payouts.

For professional property investors with assets in Jamaica — particularly in the north coast tourism corridor that had largely escaped Sandy’s direct impact — the coverage period saw a return to transactional normalcy. Rental bookings for the winter season were holding, and the hospitality sector was reporting that guest perceptions of Jamaica’s safety and accessibility had not been materially damaged by Sandy’s southern impact. The PNP government’s messaging emphasising reconstruction progress and north coast tourism resilience was broadly effective in sustaining destination confidence among international visitors.

Holiday Season Momentum Across the Region

The opening of the Caribbean’s peak December holiday season — the most commercially significant period of the year for the region’s tourism and hospitality-linked real estate markets — provided a welcome counterweight to the storm-related stories that had dominated regional news in October and November. Across Barbados, St Barts, Mustique, Anguilla, the Turks and Caicos, and the US and British Virgin Islands, luxury villa rental rates for the December 20 to January 6 holiday window were at or above prior-year levels, reflecting sustained demand from high-net-worth Northern Hemisphere visitors for Caribbean sun during the Northern winter.

The Dominican Republic’s holiday season performance was particularly noteworthy. All-inclusive resort complexes across Punta Cana, Bavaro, and Puerto Plata were reporting high occupancy projections, and the country’s hotel development pipeline ensured that the accommodation inventory to serve continued demand growth was being steadily added. For investors who had acquired units in DR resort properties as rental-income-generating assets, the November data pointed to a strong year-end settlement of rental accounts.

Caribbean Leaders This Month

Antigua CBI Real Estate Qualifying Developments — The launch of Antigua’s programme created immediate demand for approved resort developments, with developers who had anticipated the programme launch best positioned to capture first-mover advantage from enquiry flows generated by the official announcement.

St Barts and Anguilla Luxury Villas — The ultra-prime French and British Caribbean islands delivered another strong early holiday season, with peak-period rental rates for flagship properties sustaining the premium pricing that makes these markets attractive for long-term capital preservation investors.

Punta Cana, Dominican Republic — Record November arrivals affirmed the DR’s position as the Caribbean’s volume tourism leader, and the proximity of year-end completions in several resort residential projects was generating rental income flow for investors who had committed earlier in the development cycle.

Port of Spain, Trinidad — End-of-year commercial leasing activity sustained momentum in T&T’s prime office market, with enquiries from energy sector subsidiaries and financial services companies reinforcing the structural demand that characterises this resilient market.

St Kitts & Nevis CBI — The programme continued to process a healthy application pipeline through November, and the government’s measured response to Antigua’s launch — emphasising programme heritage and regulatory track record — appeared to be sustaining applicant confidence in the hemisphere’s oldest CBI jurisdiction.

Jamaica North Coast Tourism Belt — Montego Bay, Ocho Rios, and Negril delivered stable high-season openings, with major hotel operators reporting bookings consistent with prior years despite the broader noise around Sandy’s south-coast impact.

Turks and Caicos Islands — The British Overseas Territory’s ultra-prime Grace Bay Beach market sustained its position as one of the Caribbean’s most premium residential and rental markets, with December bookings reinforcing the TCI’s global luxury destination credentials.

Overall Performer: Antigua and Barbuda. The launch of the CBI programme transformed Antigua’s investment market narrative, positioning the island as the Caribbean’s newest and most consequential CBI destination and creating structured property demand that would shape the island’s development pipeline for years to come.

Looking Ahead

The Antigua CBI programme’s early weeks will be watched closely by the investment migration advisory community. The pace of applications, the clarity of processing procedures, and the quality of the first wave of approved qualifying developments will establish the programme’s credibility and set expectations for its medium-term trajectory. A strong launch will reinforce the Caribbean’s collective position as the world’s leading CBI destination cluster.

Jamaica’s IMF programme negotiations remain the island’s most consequential economic process. The coming months will test whether the government can secure a formal Extended Fund Facility agreement that provides the fiscal anchoring necessary to stabilise the debt trajectory and restore international investor confidence. Progress on this front — or the lack of it — will be a defining theme of early 2013 coverage.

As the Caribbean’s high season reaches its peak over December and January, the performance of the region’s tourism and rental markets will calibrate investor expectations for the year ahead. A strong holiday season — which current advance booking data suggests is the most likely outcome for most markets — will provide positive momentum heading into 2013’s first-quarter transaction period, when a significant proportion of the year’s property deals are agreed.

The Caribbean Property & Investment Review is published monthly for professional investors and high-net-worth individuals active in Caribbean real estate markets. All market commentary reflects conditions during the stated coverage period. This publication does not constitute financial or legal advice.