Caribbean Property & Investment Review — December 2016

Publication Date: 3 December 2016  |  Coverage Period: 3 November – 2 December 2016

Morning Briefing

• Donald Trump was elected 45th President of the United States on November 8, 2016, triggering immediate assessment across Caribbean governments and diaspora communities of potential immigration and trade policy shifts.
• Hurricane Matthew reconstruction continues in Haiti, Jamaica, and the Bahamas; international donor pledges are beginning to translate into on-the-ground activity, though progress in Haiti remains painstakingly slow.
• ExxonMobil’s Liza Phase 1 development offshore Guyana continues to advance, with construction activity in the Stabroek Block generating growing excitement about Georgetown’s economic transformation potential.
• The Caribbean holiday season is opening with cautious optimism; hotel bookings for December through April remain solid across most resort destinations despite the disruption of Matthew.
• Caribbean financial centres including the BVI and Cayman Islands are monitoring post-Brexit UK policy signals that could affect their relationships with European financial markets.
• Jamaica’s National Housing Trust is advancing affordable housing programmes under PM Holness’s JLP government, with mortgage rate relief measures drawing applicant interest.

Trump Elected: The Caribbean Reckons With a New Washington

The election of Donald Trump as the 45th President of the United States on November 8, 2016 sent an immediate tremor through Caribbean government ministries, business associations, and diaspora communities. The Caribbean’s deep economic and social ties with the United States — spanning tourism, trade, investment, remittances, and the daily lives of millions of Caribbean nationals living and working in American cities — mean that a fundamental shift in Washington’s policy direction carries consequences that extend far beyond the political.

The most immediate concern in Caribbean capitals and community organisations centres on immigration. Trump’s campaign was built in significant part on pledges of dramatically tightened immigration enforcement, accelerated deportation of undocumented migrants, and restrictions on legal immigration pathways. For Caribbean nations, this translates into tangible anxieties. The estimated numbers of undocumented Caribbean nationals in the United States — Jamaicans, Haitians, Trinidadians, Guyanese, Barbadians, and many others — represent communities that have established lives, businesses, and family connections on both sides of the Atlantic over decades. The prospect of large-scale deportation programmes creates both human hardship and economic disruption for Caribbean societies that would receive returnees.

Remittances are a further pressure point of acute significance. For countries like Jamaica, Haiti, and Guyana, remittances from the diaspora in the United States represent a substantial share of GDP — in some cases exceeding 15 to 20 percent. These flows support household consumption, small business investment, and, critically for property markets, the construction and purchase of homes. Any policy environment that reduces the earning capacity of Caribbean diaspora communities in the US, restricts their ability to transfer money internationally, or simply creates sufficient fear and uncertainty that discretionary remittance sending is cut, would have measurable consequences for Caribbean property markets and broader economic stability.

Trade relationships present a more nuanced picture. The Caribbean Basin Initiative and related preference agreements have historically enjoyed bipartisan support in Washington, and Caribbean exports to the US market — while not enormous in volume terms — are important for specific sectors. More significant for the Caribbean is the direction of US travel: Caribbean tourism is overwhelmingly dependent on American visitors, and a US economy that performs well and generates consumer confidence tends to support robust Caribbean tourism spending. If Trump’s economic programme delivers growth, the tourism sector could benefit; if it produces uncertainty and recession, it would hurt.

Matthew Reconstruction: Progress and Persistent Gaps

One month after Hurricane Matthew’s devastating pass through Haiti, Jamaica, and the Bahamas, the reconstruction landscape presents a sharply divergent picture between nations. In Haiti, the scale of destruction in the southern peninsula — where entire communities were flattened, crops destroyed, and water systems contaminated — continues to overwhelm institutional response capacity. International humanitarian agencies operating in Grand’Anse and Sud departments report that emergency shelter needs remain acute, with hundreds of thousands of people still displaced or living in damaged structures. The cholera epidemic that has plagued Haiti since 2010 was exacerbated by Matthew’s flooding, adding a public health dimension to the already formidable reconstruction challenge.

International donor conferences have produced pledges, but the translation of pledged resources into actual reconstruction on the ground is characteristically slow. The coordination challenges inherent in directing large volumes of international assistance through Haiti’s governmental and non-governmental architecture are well-documented. Property markets in affected areas of Haiti — already operating on largely informal bases — will not see meaningful normalisation for many months, and the long-term implications for land tenure, reconstruction standards, and insurance penetration remain deeply uncertain.

Jamaica’s recovery trajectory is considerably more encouraging. The insurance sector’s claims processing has proceeded with reasonable efficiency, and the National Works Agency’s infrastructure repair programme has addressed many of the most critical road and drainage failures caused by Matthew’s flooding. Affected coastal properties are progressing through repair; several hotel properties that sustained structural damage are expected to reopen in time for the peak winter season. Jamaica’s institutional capacity for disaster recovery — while imperfect — reflects decades of hurricane preparedness investment that distinguishes it from less resilient contexts in the region.

Guyana’s Oil Transformation: A Long-Term Property Story

Amid the more immediate concerns of storm recovery and political uncertainty generated by the US election result, Guyana’s unfolding oil story represents perhaps the most consequential long-term structural shift in Caribbean property and investment markets currently underway. ExxonMobil’s Final Investment Decision on the Liza Phase 1 development, made in June 2016, set in motion a construction and development process that is now visibly underway in the Stabroek Block offshore Guyana’s Atlantic coast.

The scale of what Guyana’s oil reserves represent — with Liza Phase 1 alone projected to produce 120,000 barrels per day at peak, with multiple subsequent phases potentially pushing total production to several hundred thousand barrels per day by the early 2020s — dwarfs anything the Caribbean has seen from a single economic development catalyst in living memory. Georgetown is beginning to feel the early tremors of this transformation: international oil company personnel, contractors, and service company employees are arriving in increasing numbers, creating demand for quality residential accommodation that the existing market has limited capacity to meet at international standards.

Commercial real estate demand in Georgetown is also stirring, with service companies, legal and financial advisors, and logistics operators seeking office space appropriate for international operations. The infrastructure deficit — in roads, utilities, and connectivity — remains a constraint on Georgetown’s capacity to absorb a rapid oil economy expansion, and the Granger government faces enormous pressure to manage the coming revenue windfall in ways that build lasting public goods rather than repeating the resource curse patterns seen in other oil-dependent economies. For property investors willing to accept the risks of a frontier market environment, Guyana’s trajectory represents a genuinely distinctive opportunity.

The Holiday Season Opens: Tourism and Short-Term Rental Outlook

December marks the opening of the critical Caribbean winter tourism season, and across the region’s established resort destinations the mood is cautiously optimistic despite the twin disruptions of Hurricane Matthew and the uncertainty generated by the US election outcome. Hotel booking data for the peak December-to-April window is reported as solid across most of the major Caribbean tourism markets: Jamaica’s north coast, the Dominican Republic’s Punta Cana and Puerto Plata corridors, Barbados’s west coast, St. Lucia, Antigua, and the major Bahamian resort islands are all seeing good forward demand.

The short-term rental market — powered by Airbnb, VRBO, and similar platforms — is playing an increasingly significant role in Caribbean property investment economics. Owners of well-located villas and apartments in established tourism zones who have invested in professional management and quality fitout are reporting strong booking rates for the winter season. This trend is reshaping the investment calculus for Caribbean residential property: the ability to generate short-term rental income when not in personal use transforms a vacation home from a pure lifestyle acquisition into a yielding asset. Tax authorities across the region are taking increasing notice of this sector, and regulatory frameworks for short-term rentals are in various stages of development in different territories.

Christmas and New Year represent the single highest-rated week of the Caribbean tourism calendar, with villa rates and hotel occupancies reaching their annual peaks. Destinations that have successfully marketed to high-net-worth travellers — Mustique, Jumby Bay, Turks and Caicos, and premium properties in Barbados — typically see their strongest yield performance in this window. For property investors tracking yield data, the Christmas week performance will set an important early benchmark for the 2016-2017 season’s quality.

Caribbean Leaders This Month

Jamaica — PM Andrew Holness: Holness continued to press forward with Jamaica’s fiscal reform agenda while managing Matthew’s aftermath. The NHT’s expanded affordable housing programme represents a core pillar of the JLP’s social contract with Jamaican voters, and activity in this sector provides a measure of resilience to the domestic property market amid broader uncertainties.

Haiti — Transitional Government: Haiti’s political environment remained fluid, with the country facing the challenge of organising a presidential election in the shadow of Matthew’s devastation and ongoing institutional fragility. The reconstruction challenge continues to dwarf available institutional capacity, and international patience with Haiti’s governance difficulties shows ongoing signs of strain.

Trinidad and Tobago — PM Keith Rowley: The Rowley government continued to implement budget austerity in response to the extended period of low energy prices. With oil prices showing some signs of recovery following OPEC’s November production agreement, there is cautious hope in Port of Spain that the fiscal trajectory may improve through 2017, though the structural adjustment required remains substantial.

Barbados — PM Fruendel Stuart: Stuart’s government continued to face fiscal pressure and IMF scrutiny. Barbados’s debt-to-GDP ratio remained elevated, and the path to fiscal sustainability required sustained reform efforts that were testing the DLP government’s political capital. The tourism sector remained the primary engine of any economic recovery hope.

Dominican Republic — President Danilo Medina: The Dominican Republic continued to demonstrate the strongest growth trajectory among major Caribbean economies, with construction and tourism both performing solidly. International investors continued to direct capital toward DR resort and residential development projects at a pace unmatched elsewhere in the region.

Guyana — President David Granger: Granger’s government was managing the early phase of Guyana’s oil economy transition, with ExxonMobil and partners actively working the Stabroek Block. The government’s capacity to develop the institutional and regulatory architecture needed to manage oil revenues responsibly will be one of the defining governance challenges of the coming decade.

BVI and Cayman Islands: The UK’s overseas territories in the Caribbean were monitoring the post-Brexit political environment with particular attention, as any renegotiation of the UK’s relationships with European institutions could have implications for the financial services industries that underpin these territories’ economies.

Overall Performer This Month: Dominican Republic again demonstrates consistent momentum — tourism strong, construction active, foreign investment flowing, and the Medina government’s economic management generating comparative confidence at a moment when most of the region faces significant uncertainty.

Looking Ahead

The Trump transition period between now and the January 20 inauguration will be closely watched for signals about the new administration’s intended approach to immigration enforcement, trade policy, and US-Caribbean relations. Caribbean governments and diaspora advocacy organisations will be working to establish early lines of communication with the incoming administration and to make the case for the mutual benefits of the Caribbean-US relationship across tourism, investment, and security cooperation. The region’s voice in Washington will need to be both persistent and sophisticated to navigate the new political environment effectively.

The 2016-2017 winter tourism season will be the first major performance test for Caribbean property and hospitality markets since Matthew. A strong December and January — with good occupancy, visitor spending, and positive traveller sentiment — would provide important validation that the region’s recovery messaging has been effective and that the fundamental demand drivers for Caribbean tourism remain intact. Early indicators are encouraging, and the industry is well positioned to deliver a solid season if no further disruptions materialise.

Guyana’s oil development story will continue to unfold at its own pace through 2017 and beyond, with construction milestones, additional exploration results from the Stabroek Block, and growing commercial interest in Georgetown all pointing toward a structural transformation that will make Guyana an increasingly significant presence in Caribbean investment discussions over the coming years.

The Caribbean Property & Investment Review is published monthly for property professionals, investors, and development practitioners across the Caribbean region. All market assessments reflect conditions as of the coverage period end date. This publication does not constitute investment 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