Caribbean Property & Investment Review — Edition 137 | March 2015

Publication Date: 3 March 2015  |  Coverage Period: 3 February – 2 March 2015

Morning Briefing

• Trinidad & Tobago’s Carnival 2015 (16–17 February) drew record visitor numbers, injecting an estimated TT$1.5 billion into the economy and underscoring the festival’s role as a property and hospitality catalyst.
• WTI crude oil prices stabilised near US$50 per barrel in late February after their precipitous 2014 decline, offering T&T a brief respite but leaving the energy-dependent economy under sustained fiscal pressure.
• Jamaica’s National Housing Trust reported a 12 percent year-on-year increase in mortgage applications for January 2015, reflecting improved consumer confidence as the IMF Extended Fund Facility programme tracks its targets.
• The Dominican Republic’s construction sector posted its strongest February output in five years, with several resort-residential hybrid projects breaking ground along the Punta Cana and Cap Cana coastlines.
• Barbados’s Central Bank revised its 2015 GDP growth forecast upward to 0.7 percent, citing resilient tourism receipts and moderate foreign direct investment inflows despite ongoing fiscal consolidation.
• Citizen-by-investment programmes across the Eastern Caribbean continued to attract interest from Middle Eastern and Asian investors, with St Kitts & Nevis and Antigua & Barbuda both reporting strong first-quarter pipelines.

Carnival Dividend: Tourism’s Impact on Caribbean Property Markets

Trinidad & Tobago’s Carnival is far more than a cultural spectacle — it is a live demonstration of the Caribbean’s capacity to generate concentrated economic activity within a compressed timeframe. The 2015 festival, held on 16 and 17 February, attracted an estimated 40,000 overseas visitors, filling hotels across Port of Spain and spurring demand for short-term rental properties across the northern peninsula. Accommodation rates in Woodbrook and Newtown reached a seasonal peak of TT$1,800 to TT$3,500 per night for well-positioned apartments, underlining the rental income opportunity that savvy property investors have long recognised.

For property owners who calibrate their portfolios around event-driven tourism, Carnival represents one of the most reliable annual income events in the region. Real estate agents across Port of Spain report that the weeks surrounding Carnival have become a de facto marketing season, with overseas visitors often converting short stays into property viewings. Several agencies report that February 2015 produced the highest volume of property enquiries from the North American and European diaspora in three years, a trend that market participants attribute partly to lower transatlantic airfares driven by falling jet fuel costs.

Beyond the immediate festival economy, Carnival 2015 has strengthened the case for continued investment in the hospitality and serviced-apartment sectors in Trinidad. Developers with projects in the early planning stage are taking note: the gap between demand during peak events and available quality accommodation remains significant, and that gap represents investable opportunity for developers willing to target the premium short-stay market.

Oil Price Headwinds and T&T’s Fiscal Recalibration

While Carnival buoyed short-term sentiment, Trinidad & Tobago’s medium-term economic outlook is being shaped by forces far beyond the festival calendar. The collapse of global oil prices from above US$100 per barrel in mid-2014 to approximately US$50 in late February 2015 has fundamentally altered the government’s fiscal arithmetic. Energy revenues account for roughly 40 percent of government receipts, and the Ministry of Finance has been compelled to revise its 2015 budget assumptions and signal that capital expenditure programmes will face scrutiny.

For the domestic property market, the implications are nuanced. On one hand, reduced government spending translates into fewer state-funded construction projects and a slower pipeline of public-sector housing. On the other hand, the private sector — particularly developers targeting the upper-middle and premium residential segments — continues to find demand from a professional class whose incomes are not directly linked to commodity prices. Real estate valuations in Diego Martin and Westmoorings have remained broadly stable, though agents report a modest lengthening of average transaction timelines as buyers adopt a more cautious stance.

The commercial property sector is watching the energy company footprint closely. If international oil companies with significant leased office space in Port of Spain reduce their local headcounts in response to global restructuring, the Grade-A office market could face softening rents by the second half of 2015. Investors with exposure to commercial property in T&T would be prudent to monitor energy company employment announcements over the coming months as a leading indicator.

Jamaica: IMF Progress and the Housing Credit Opportunity

Jamaica’s ongoing economic reform programme under the IMF Extended Fund Facility is beginning to produce the conditions that property market participants have been anticipating. Inflation has trended downward, the Jamaican dollar has shown relative stability against the US dollar, and international reserves have been rebuilt to more comfortable levels. These macro improvements translate directly into lower risk premia for lenders and, over time, into more accessible mortgage financing for Jamaican households.

The National Housing Trust’s January data — showing a 12 percent year-on-year increase in mortgage applications — is a meaningful indicator. NHT’s contributory base spans formal-sector workers across the economy, making its application data one of the most reliable proxies for broad-based housing demand. The uptick in January suggests that improved macro conditions are translating into real household confidence. NHT’s ability to offer concessional rates well below commercial market rates continues to make homeownership accessible to a segment of the workforce that would otherwise be priced out.

For private developers, Jamaica’s trajectory is increasingly attractive. The combination of a stabilising macro backdrop, a large unmet housing demand (estimated at over 200,000 units), and a growing professional class is creating the preconditions for a sustained property cycle. Developers who establish land positions now, during the early stages of the recovery, will be best placed to benefit as credit conditions ease further through 2015 and into 2016.

Caribbean Leaders This Month

Trinidad & Tobago — Tourism & Hospitality: Port of Spain’s hospitality sector led the region’s February performance, with Carnival driving occupancy rates above 95 percent in the capital and generating record short-term rental revenues across the northern peninsula.

Dominican Republic — Construction Output: The DR’s construction sector delivered its strongest February performance in five years, with resort-residential developments at Cap Cana and Bavaro attracting both local and foreign capital at an accelerating pace.

Jamaica — Mortgage Market: The National Housing Trust recorded a 12 percent surge in January mortgage applications, signalling that IMF programme gains are translating into genuine housing market confidence among Jamaican workers.

Barbados — Economic Outlook: The Central Bank’s upward revision to its 2015 growth forecast — to 0.7 percent — marked a meaningful shift in tone from the cautious austerity narrative of 2014, with tourism receipts providing the primary positive driver.

St Kitts & Nevis — Citizenship by Investment: Kittitian CBI applications maintained strong momentum into the new year, with the programme continuing to attract Middle Eastern and Asian investors drawn by the combination of visa-free travel access and real estate investment options.

Antigua & Barbuda — Foreign Investment: Antigua’s Citizenship by Investment Programme reported a robust first-quarter pipeline, with several high-net-worth applicants proceeding through the real estate investment route, directly supporting hotel and villa development.

Cayman Islands — Premium Residential: Seven Mile Beach continued to attract ultra-high-net-worth buyers, with several transactions above the US$5 million mark recorded in February, cementing Cayman’s position as the region’s leading luxury property market.

Overall Performer — Trinidad & Tobago: Despite oil price headwinds, T&T’s Carnival economy delivered the region’s most dynamic economic performance in February 2015. The festival’s power to concentrate visitor spending, animate the rental market, and generate property enquiries from the diaspora makes it a unique asset in the Caribbean investment calendar — one that is impossible to replicate and highly resistant to cyclical downturns.

Looking Ahead

The Caribbean spring season presents a window of opportunity for investors who have been waiting for post-Carnival market clarity. With festival-driven rental premiums fading, property valuations across Trinidad will settle to more typical levels, offering buyers a more measured entry point. The question of whether oil prices will recover meaningfully in 2015 will be central to any investment calculus in T&T — a sustained recovery above US$60 would significantly improve the fiscal backdrop and restore confidence in the commercial property sector.

Across the wider Caribbean, the spring tourism season is expected to reinforce the positive trend visible in early 2015 data. Airline capacity into key Caribbean gateways — Montego Bay, Punta Cana, Nassau, and Bridgetown — is up year-on-year, reflecting carrier confidence in sustained demand. This capacity growth directly benefits short-term rental operators and hotel developers, and investors tracking tourism fundamentals will want to monitor forward booking data closely as Q2 approaches.

Jamaica’s IMF programme milestones in the coming weeks will be closely watched by both multilateral lenders and private investors. Continued programme compliance will reinforce the narrative of a credible reform path and support investor confidence. Equally, any sign of slippage — in fiscal targets or the pace of structural reform — would prompt a reassessment of Jamaica’s near-term investment premium. The balance of probabilities favours continued compliance, but the margin for error remains narrow.

The Caribbean Property & Investment Review is published monthly and provides analysis of real estate, economic, and investment developments across the Caribbean region. This edition covers the period 3 February to 2 March 2015. All market data reflects conditions prevailing during the stated coverage period.