Caribbean Property & Investment Review — Edition 160 | April 2013

Publication Date: 3 April 2013  |  Coverage Period: 3 March – 2 April 2013

Morning Briefing

• The Dominican Republic’s construction sector entered a period of peak activity through March 2013, with multiple resort and residential projects across the Punta Cana corridor, Cap Cana, and the north coast advancing toward completion or entering new phases of development.
• Grenada continued preparations for the relaunch of its Citizenship by Investment programme, with government officials in consultation with international advisory firms about programme design elements that would distinguish the island’s offering in an increasingly competitive Caribbean CBI market.
• Jamaica’s IMF Extended Fund Facility negotiations were widely understood to be approaching conclusion, with market observers expecting a formal programme announcement within weeks as remaining structural benchmark discussions were resolved.
• Caribbean Easter tourism performed strongly across the major island destinations, with the late March holiday window delivering occupancy and rate outcomes broadly in line with or ahead of prior-year levels for villa and hotel operators.
• Trinidad & Tobago’s commercial property market maintained positive conditions through the post-Carnival period, with energy sector demand for office space and professional services facilities sustaining the Port of Spain prime market.
• Antigua’s CBI programme processing pipeline continued to develop, with the government reporting satisfactory progress on its internal administrative targets for application review timelines and qualifying development inspection protocols.

Dominican Republic: Construction Boom in Full Stride

The Dominican Republic’s position as the Caribbean’s most active construction market was unambiguous through the March 2013 coverage period. Across the country’s principal resort development corridors — Punta Cana-Bávaro in the east, Cap Cana immediately south, the Samará coast to the north of the capital, and Puerto Plata and Cabarete on the north coast — project activity ranged from site clearance and foundation work on newly launched schemes to interior finishing and pre-handover inspections on properties approaching buyer completion dates.

The sheer depth of the DR’s development pipeline — which had no equivalent in any other Caribbean market — was both a competitive strength and a risk factor that sophisticated investors needed to manage carefully. On the strength side, it meant that buyers had genuine choice across price points, locations, product types, and stages of the development cycle. From off-plan villa purchases at construction-phase pricing in new Cap Cana phases, through to completed turnkey resort apartments at Bávaro generating rental income from day one, the DR offered a range of entry strategies unmatched in the region. On the risk side, the volume of construction activity created quality control challenges — not every developer had the financial strength, management capability, and contractor relationships necessary to deliver to specification and on time in a market where demand had outpaced the supply of experienced construction resources.

President Medina’s administration maintained its investor-friendly posture through the period. The CONFOTUR framework continued to function as the primary incentive tool for hotel and resort development, and government infrastructure investment — particularly in road networks serving the Punta Cana and Cap Cana corridor — was ongoing. The expansion and modernisation of Punta Cana International Airport remained a priority, with government and private sector stakeholders aligned on the need to expand capacity to serve the growing international visitor volume that the country’s tourism growth trajectory demanded.

Grenada CBI Relaunch: A Fifth Caribbean Jurisdiction?

Grenada’s anticipated relaunch of its Citizenship by Investment programme added further competitive depth to the Caribbean’s investment migration market. The island had operated a CBI programme in the past that was subsequently suspended following concerns about programme administration and due diligence standards. The relaunch being prepared by the current government was understood to incorporate significantly enhanced due diligence protocols, drawing on the lessons of both Grenada’s own history and the best practice established by the more mature programmes in St Kitts and Antigua.

Grenada’s potential CBI proposition rested on several distinctive assets. The island’s membership in the Eastern Caribbean Currency Union — with its credible fixed exchange rate peg to the US dollar — provided monetary stability that appealed to applicants sensitive to currency risk. Grenada’s also maintained a bilateral relationship with the United States that was distinct from many other Caribbean CBI jurisdictions, and any programme that obtained E-2 Treaty Investor visa eligibility for Grenadian passport holders would represent a significant differentiator in the US-focused applicant market.

For the Caribbean property market, a credible Grenada CBI relaunch would create demand for qualifying developments on the island — a market that had remained relatively contained in terms of international investor attention during the years when its CBI programme was inactive. The combination of Grenada’s undeveloped coastline, its eco-conscious planning framework, and the potential for CBI-linked resort development created an interesting entry opportunity for developers willing to navigate the regulatory process ahead of programme formalisation.

Jamaica: Final Approach to IMF Programme Agreement

By the close of March 2013, Jamaica’s IMF Extended Fund Facility negotiations were widely understood to have entered their final phase. Government officials, while maintaining the cautious public posture appropriate to active negotiations, were signalling with increasing directness that the main structural issues had been resolved and that programme documentation was in preparation. The IMF’s Caribbean Article IV consultation teams and Jamaica’s Ministry of Finance had developed a productive working relationship through the extended negotiation period, and there was genuine goodwill on both sides toward a prompt and credible conclusion.

The specific structural commitments that Jamaica would make under the EFF — and which would define the policy environment for the island’s property market through the programme period — were expected to include a fiscal primary surplus target that would drive expenditure restraint across government; a public sector compensation framework that moderated wage growth in the short term; and structural reforms in the energy sector, where the high cost of electricity remained one of the most significant constraints on Jamaican business competitiveness. The Bank of Jamaica’s monetary policy framework would also be reviewed, with implications for interest rates and credit availability in the domestic property market.

For property investors, the imminent programme conclusion created a clear watch point. An EFF signing would be a signal moment — one that would prompt reassessment of Jamaica’s sovereign credit profile, potentially influence the cost and availability of development finance on the island, and provide the macro stability framework within which international investors could underwrite Caribbean acquisitions with greater confidence. The north coast tourism market remained the clearest near-term beneficiary of improved fiscal stability, given its dependence on international visitors whose confidence in Jamaica as a destination was influenced by perceptions of the island’s broader governance and economic management quality.

Easter Season: Caribbean Markets Perform

Easter 2013 — which fell on 31 March in the Gregorian calendar — delivered solid hospitality performance across the major Caribbean destinations. The holiday window, which attracted North American and European families seeking their first post-winter sun exposure, was an important secondary demand peak for the Caribbean’s resort and villa rental markets. The British market, in particular, which relied on the Easter school holidays as its primary spring Caribbean travel window, generated strong bookings for the established Barbados, St Lucia, Antigua, and Turks and Caicos markets.

The Dominican Republic’s Easter performance continued its strong year-to-date trend, with the country’s combination of all-inclusive resort infrastructure and growing boutique accommodation sector catering effectively to both budget-conscious family travellers and higher-spending lifestyle visitors. Easter week occupancy across the Punta Cana resort corridor was reported at levels consistent with the December peak, reflecting the DR’s year-round destination appeal in a way that more seasonally concentrated Caribbean markets could not match.

Caribbean Leaders This Month

Cap Cana and Punta Cana, Dominican Republic — The eastern DR resort corridors led the region’s construction activity through March, with projects across multiple price points and product types sustaining the building sector employment and investment flows that underpin the country’s property market dynamism.

Antigua CBI Qualifying Developments — Growing application volumes through the programme’s early months continued to generate structured property demand, with developers of qualifying resort projects reporting sustained enquiry from CBI applicants across multiple source markets.

Grenada (Pre-CBI Relaunch) — The island’s CBI relaunch preparation attracted attention from regional developers and investment migration advisers, creating anticipatory interest in Grenada’s coastal property market ahead of any formal programme announcement.

Barbados Easter Rentals — The British market’s Easter school holiday demand delivered strong west coast villa occupancy, providing a useful revenue bridge between the peak winter season and the summer shoulder period for Barbados rental property owners.

Port of Spain Commercial, T&T — Post-Carnival commercial property market activity in Port of Spain maintained positive momentum through March, with energy sector demand sustaining grade-A office enquiry and limited new supply reinforcing pricing power for existing prime assets.

Jamaica (Investment Watch) — The anticipation of an imminent IMF programme conclusion was functioning as a mild positive for Jamaica property sentiment, with investors who had been monitoring the island’s fiscal situation beginning to position for a post-programme entry point.

St Kitts & Nevis CBI — The world’s oldest CBI programme maintained its application pipeline through the spring, with the programme’s expanded agent network continuing to generate enquiry from Asia, the Middle East, and Latin America ahead of what was expected to be a strong second-quarter performance.

Overall Performer: Dominican Republic. The DR’s combination of Easter season tourism strength, construction sector momentum, and government investment facilitation made the country the standout Caribbean property market of the March coverage period, with no regional competitor able to match its breadth of investment opportunity and depth of buyer demand.

Looking Ahead

Jamaica’s IMF EFF conclusion is the most eagerly anticipated event in Caribbean investment circles as April begins. When the programme is formally signed, this publication will provide a detailed assessment of the agreement’s terms and their specific implications for Jamaica’s property market — including the likely trajectory of fiscal policy, interest rates, and domestic economic demand through the programme period.

The Atlantic hurricane season opens officially on 1 June, and the spring months represent the window for property holders across the region to complete their pre-season preparedness reviews. Insurance policy renewals, structural assessments, and property manager storm protocol confirmations should all be completed well in advance of the season’s opening. The 2012 season’s lessons, delivered most emphatically by Sandy, remain fresh in the regional property community’s institutional memory.

Grenada’s CBI relaunch timeline remains an important watch point for investors active in the investment migration property sector. When the programme is formally announced, it will expand the range of qualifying development opportunities across the Caribbean, adding a fifth jurisdiction to the regional cluster and potentially diverting some applicant flow from existing programmes. Developers with existing Caribbean presence should assess the Grenada proposition on its merits as the programme details become clearer.

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.