Caribbean Property & Investment Review — June 2013

Publication Date: 3 June 2013  |  Coverage Period: 3 May – 2 June 2013

Morning Briefing

• Jamaica’s IMF Extended Fund Facility entered its first full month of implementation in May 2013, with the government publishing its initial programme targets and the Bank of Jamaica signalling the monetary policy framework that would accompany the fiscal consolidation agenda.
• The 2013 Atlantic hurricane season officially opened on 1 June, with the National Hurricane Center activating its full monitoring and advisory capability for the six-month season window that runs through 30 November.
• Trinidad & Tobago’s energy sector maintained its position as the principal driver of the twin-island republic’s economic and property market performance, with midstream and downstream investment decisions anticipated through the second quarter generating sustained commercial property demand in Port of Spain.
• Dominican Republic’s tourism performance through May sustained the record-setting trajectory, with advance bookings for the summer months pointing to continued above-trend visitor volumes in the third quarter.
• Antigua’s CBI programme marked its sixth month of operation with the government announcing the first group of citizenship grants to applicants who had completed the qualifying investment and due diligence process, a milestone that reinforced programme credibility among the international advisory community.
• Caribbean property markets across the eastern island chain entered the summer shoulder period in broadly stable condition, with rental markets softening from winter peaks while residential transaction interest from European summer visitors began to emerge in the established lifestyle markets.

Jamaica IMF Programme: First Month of Implementation

Jamaica’s IMF Extended Fund Facility, signed on 1 May 2013, moved into its first full month of implementation through the coverage period. The government’s immediate programme obligations included the formalisation of the primary surplus framework, the operationalisation of the National Debt Exchange that formed a central element of the debt management strategy, and the publication of the structural benchmark schedule that would govern quarterly programme reviews.

From a property market perspective, the early implementation period was one of calibration and adjustment rather than immediate transformation. The fiscal tightening measures — wage restraint in the public sector, fuel price adjustments, and expenditure discipline across ministries — were beginning to feed through into the patterns of domestic economic activity that underpinned residential and commercial property demand in the Jamaican market. Construction activity on government-funded infrastructure projects, which had been constrained through the pre-programme period of fiscal uncertainty, began to be assessed and sequenced against the new budgetary framework.

The international response to Jamaica’s EFF signing and early implementation was broadly positive. Credit rating agencies had noted the programme announcement and were monitoring early compliance, with the expectation that sustained implementation would support a trajectory of gradual sovereign credit improvement. Development banks, including the Inter-American Development Bank and the Caribbean Development Bank, signalled their readiness to provide complementary financing for specific infrastructure and social sector projects that supported the programme’s structural goals. For property investors, this multilateral backing provided additional reassurance that Jamaica’s reform process had genuine external support and monitoring.

2013 Hurricane Season Opens: Risk and Preparedness

The formal opening of the 2013 Atlantic hurricane season on 1 June placed the Caribbean’s property risk management disciplines back at the centre of investor attention. NOAA’s seasonal outlook, published ahead of the season’s opening, projected a near-normal to slightly above-normal season — thirteen to twenty named storms, seven to eleven of which were forecast to reach hurricane strength, with three to six expected to achieve major hurricane status (Category 3 or above).

The prospect of an active season concentrated minds across the Caribbean investment community in the immediate post-signing period for Jamaica’s EFF. For Jamaica specifically, a significant storm making landfall in the 2013 season — particularly on the south coast communities still recovering from Sandy’s 2012 impact — would represent a major setback for the reconstruction effort and would test the government’s ability to maintain its fiscal programme commitments while responding to emergency needs. The IMF’s programme framework typically included provision for natural disaster scenarios, but the operational reality of managing simultaneous fiscal consolidation and disaster response was well understood to be exceptionally demanding.

Caribbean property holders who had addressed their insurance and structural preparedness before the season’s opening were in the strongest position. Those who had deferred these disciplines risked finding insurance renewal terms more restrictive once the season was underway, as insurers tightened their acceptance criteria during active tropical weather periods. The lesson from successive hurricane seasons — reinforced by Sandy’s 2012 impact — was that pre-season preparedness was not a box-ticking exercise but a genuine determinant of the financial outcome if a storm made landfall near one’s property assets.

Trinidad & Tobago: Energy Sector Sustains Property Market

Trinidad & Tobago’s property market entered the first half of 2013 underpinned by the energy sector’s continued investment activity. The twin-island republic’s petrochemical, liquefied natural gas, and upstream oil and gas industries were sustaining employment and demand for professional services at levels that kept the Port of Spain commercial property market in positive condition, with grade-A office availability constrained and asking rents holding firm against a backdrop of limited new supply.

The residential market in Trinidad’s premium north-west corridor — Maraval, Goodwood Park, Westmoorings, and the Cascade valley — continued to reflect the structural supply constraints and professional-class demand that had characterised these sub-markets for years. Turnover was limited, as owners in these areas held assets with both utility and capital appreciation potential, and new supply was constrained by topographic and planning factors that showed no sign of relaxation. For buyers with capital to deploy, the scarcity of available properties in these corridors meant that acquisition opportunities, when they arose, were competitive.

Tobago’s tourism and property market continued its measured development through the coverage period. The island’s summer season — which attracted a different visitor profile from the winter high season, with greater emphasis on regional Caribbean families, European adventure travellers, and diving and nature tourism enthusiasts — was tracking positively. Several boutique eco-lodge and villa developments that had been in planning or early construction through 2012 were approaching completion, adding a modest increment of supply to the island’s limited investment property inventory.

Dominican Republic: Summer Season and the Development Pipeline

The Dominican Republic’s transition into the summer tourism season demonstrated the country’s genuinely year-round destination appeal. While the summer months brought a change in visitor composition — with a greater proportion of regional Caribbean visitors, summer-holiday North American families, and budget-conscious European travellers replacing the peak-season luxury and business travel segment — overall visitor volumes remained strong and occupancy across the all-inclusive resort sector was projected to sustain the record-pace year-to-date trend.

The development pipeline continued to advance. In Cap Cana, several major branded resort and villa projects were in their final construction phases, with handover schedules for buyers who had committed at off-plan pricing now approaching. In the north coast markets of Cabarete and Puerto Plata, a new generation of boutique and lifestyle-focused developments was emerging, targeting the growing cohort of younger, activity-oriented international buyers who sought an alternative to the mass-market all-inclusive experience that dominated the Punta Cana corridor.

President Medina’s administration continued to signal investment-friendly intent through the coverage period. The government’s tourism master plan, which envisaged a doubling of the country’s hotel room capacity over the medium term, was advancing through planning stages, and bilateral investment promotion discussions with North American and European hospitality groups were ongoing. For the DR’s residential and resort property market, the implication was continued pipeline depth and government support for the infrastructure investment that underpinned resort community values.

Caribbean Leaders This Month

Jamaica (IMF Programme in Motion) — The first month of EFF implementation established the policy framework within which Jamaica’s property market would operate through the medium term, with the government’s early compliance providing the initial positive signal that sustained implementation could build upon.

Port of Spain Commercial, T&T — Energy sector demand sustained grade-A office performance through May, with T&T’s structural advantages over tourism-dependent Caribbean neighbours providing consistent commercial property market fundamentals even as the summer shoulder period softened leisure market activity elsewhere.

Cap Cana, Dominican Republic — Approaching handover dates for off-plan buyers in several major resort villa and condominium projects made Cap Cana the DR’s most active completion-stage market through the coverage period, with buyer settlement activity generating rental income launch for newly delivered units.

Antigua CBI (First Citizenship Grants) — The government’s announcement of its first citizenship grant cohort marked a significant operational milestone for the programme, demonstrating to the international advisory community that Antigua’s CBI machinery was functioning effectively and that investor commitments were being honoured within the expected timeline.

Jamaica North Coast Hospitality — The summer shoulder season on Jamaica’s north coast brought the characteristic mix of reduced North American and European visitor volumes and increased regional Caribbean and diaspora travel, with major hotel operators managing yield through rate flexibility and targeted package promotions.

Barbados Summer Market — The island’s summer period attracted European buyers exploring west coast acquisition opportunities at a time when seller flexibility was typically greater than during the peak winter market, with British and German enquiries for aspirational coastal properties noted by agents through May.

Turks and Caicos (Preparedness) — The TCI’s property community entered the hurricane season with well-established preparedness protocols, robust building code compliance in the post-2008 development era, and an insurance market that provided comprehensive coverage for high-value coastal assets in one of the Atlantic’s more storm-exposed archipelagos.

Overall Performer: Jamaica. The combination of IMF EFF implementation progress and the structural confidence signal it provided to the international investment community made Jamaica the standout narrative of the June 2013 edition. The island’s journey from fiscal crisis through negotiation to active programme implementation was a story of institutional resilience and political commitment that, if sustained, promised a meaningful medium-term improvement in the Caribbean’s most consequential property market turnaround.

Looking Ahead

Jamaica’s first quarterly IMF programme review — expected in the late summer months — will be the critical near-term test of the EFF’s sustainability. A successful review, confirming that the government has met its fiscal primary surplus and structural benchmark targets, will reinforce international confidence and maintain the positive trajectory of the island’s sovereign credit profile. This publication will provide detailed coverage of the review outcome and its property market implications when it is released.

The 2013 hurricane season’s opening weeks will be watched carefully given the 2012 season’s Sandy legacy. Investors with Caribbean property holdings are encouraged to maintain active monitoring of National Hurricane Center advisories through the season, to ensure that property manager storm protocols are in place and tested, and to confirm that insurance renewal terms provide adequate coverage for the specific perils and property locations in their portfolios.

The Caribbean’s summer shoulder period provides an opportunity for buyers who have been monitoring the region’s markets to advance acquisition research without the competitive pressure of the peak winter season. In Jamaica in particular, the combination of improved fiscal confidence post-EFF and summer shoulder pricing conditions may create a window of opportunity for investors with a medium-term horizon who believe in the island’s long-term tourism and lifestyle property credentials.

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.

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