Caribbean Property & Investment Review — Edition 114, February 2017

Publication Date: 3 February 2017  |  Coverage Period: 3 January – 2 February 2017

Morning Briefing

• Donald Trump was inaugurated as 45th US President on January 20, 2017, and within days signed executive orders on immigration enforcement and a controversial travel ban affecting seven Muslim-majority countries — generating significant concern across Caribbean diaspora communities in the United States.
• Caribbean governments have responded with diplomatic caution to Trump’s early executive actions, while privately assessing the potential impacts on remittance flows and the status of Caribbean nationals in the US.
• Trinidad Carnival 2017 is approaching fast — scheduled for February 27-28 — with the festival expected to generate significant economic activity and tourism revenue for Trinidad and Tobago despite its ongoing austerity environment.
• Jamaica’s property market shows continued stability with NHT mortgage activity supporting middle-market demand; commercial development interest on the north coast remains firm.
• Dominican Republic construction and resort development continues at a robust pace, with international investor interest in the DR market remaining strong despite global uncertainties.
• Guyana’s oil development progresses, with ExxonMobil’s Stabroek Block operations continuing to attract associated service industry investment to Georgetown.

Trump Presidency: The First Weeks and Caribbean Alarm

The first two weeks of Donald Trump’s presidency have moved with a pace and confrontational energy that has alarmed Caribbean governments and diaspora communities alike. The inauguration on January 20 was followed within days by a series of executive orders that touched directly on issues of acute concern to the Caribbean: immigration enforcement, border security, and a controversial travel ban targeting nationals of seven Muslim-majority countries. While Caribbean nations were not directly targeted by the travel ban — which initially affected Iran, Iraq, Libya, Somalia, Sudan, Syria, and Yemen — the signals about the new administration’s approach to immigration and executive authority sent a chill through communities across the diaspora spectrum.

The executive order on interior immigration enforcement, signed in the days following the inauguration, represented the more direct concern for Caribbean diaspora communities. The order directed federal agencies to prioritise the deportation of a broader category of undocumented immigrants than had been the case under Obama-era enforcement priorities. For the substantial populations of undocumented Jamaicans, Haitians, Trinidadians, Guyanese, and other Caribbean nationals living in the United States, many of whom have been resident for years or decades and have built businesses, raised families, and established deep community roots, the order created immediate anxiety and uncertainty.

Caribbean governments moved quickly to activate their consular networks in the United States, issuing information to diaspora communities about their rights and the channels through which consular assistance could be accessed. Several CARICOM governments issued formal diplomatic communications expressing concern about the immigration orders’ potential impact on their nationals. The CARICOM Secretariat coordinated a collective response that sought to balance diplomatic sensitivity toward the new administration with a clear articulation of Caribbean interests and concerns. Jamaica’s government, representing one of the largest Caribbean diaspora populations in the United States, was particularly active in its consular outreach.

The property market implications of this political turbulence operate through the remittance channel. Remittances from the Caribbean diaspora in the United States are, for many territories, a foundational source of household income, small business capital, and home construction and renovation financing. The World Bank’s estimates suggest that remittance flows to Caribbean countries from the United States run to billions of dollars annually in aggregate. Any significant disruption to those flows — whether through increased deportations reducing the diaspora’s earning capacity, through financial regulation that makes transfer more difficult, or simply through the psychological impact of increased insecurity causing diaspora members to reduce discretionary remittance sending — would have direct consequences for Caribbean property markets.

Remittances and Caribbean Property: The Diaspora Link

To understand why the Trump administration’s immigration posture matters so profoundly for Caribbean property markets, it is essential to appreciate the structural role that remittances play in financing Caribbean real estate. In Jamaica, remittances represent approximately 16-17 percent of GDP — a figure that exceeds the contribution of most individual sectors of the formal economy. These flows are not abstract macroeconomic statistics; they are the money that Jamaican families in Kingston and in the rural parishes use to build and improve their homes, to pay mortgages, and to invest in small rental properties. The same dynamic applies, in varying degrees, to Haiti, Guyana, Barbados, and other territories with significant diaspora populations in the United States.

The housing construction sector in Jamaica is particularly dependent on diaspora remittances. A substantial proportion of new residential construction in communities across the island is financed not through formal bank mortgages but through the accumulated savings of family members working abroad, channelled home through remittance networks. When a Jamaican household receives consistent remittances from a family member in New York or Miami, those funds often go first to rent, food, and education, but once basic needs are met, they flow disproportionately into housing improvement and construction. A 10 or 20 percent reduction in remittance volumes would be felt not just in household consumption but in lumber yards, hardware stores, and small construction crews across the island.

Caribbean commercial banks and mortgage lenders are also attentive to the remittance dynamic. In assessing mortgage applications from borrowers whose income includes regular remittance receipts, lenders have developed underwriting frameworks that account for this income stream. Any policy development that calls the reliability of that income stream into question — including US immigration enforcement that reduces the size or earning capacity of the diaspora — would eventually work its way into lending criteria and credit availability in Caribbean property markets. Financial sector supervisors in Jamaica, Barbados, and other remittance-dependent territories are monitoring this risk dimension carefully.

Trinidad Carnival 2017: Economic Bellwether

Against the backdrop of political turbulence emanating from Washington and Trinidad and Tobago’s own challenging economic environment, the approaching Carnival season offers a rare note of unambiguous vitality. Trinidad Carnival 2017 — with Jouvert and the main parade scheduled for February 27-28 — is drawing visitors from across the Caribbean diaspora in North America and Europe, as it does every year, and the economic activity it generates for Trinidad’s hospitality, retail, and entertainment sectors provides a meaningful boost to an otherwise subdued economic picture.

For property investors and hospitality operators in Trinidad and Tobago, Carnival is the year’s single most important tourism event. Hotels across Port of Spain, the East-West Corridor, and the regions within reach of the capital fill to capacity. Short-term rental properties — apartments, guesthouses, and private villas — achieve their annual peak occupancy and their highest nightly rates in the days surrounding Carnival. Operators who have invested in quality short-term rental stock in well-located Trinidad communities are able to achieve yields during Carnival week that can make a significant contribution to the full year’s return on their investment.

Beyond the immediate economic impact, Carnival serves as a global marketing platform for Trinidad and Tobago’s cultural brand. The international media attention that the festival attracts — and the social media amplification generated by the hundreds of thousands of participants and spectators — reinforces the destination’s profile in the minds of potential visitors and investors who may not be immediate travellers but who carry an image of Trinidad as a vibrant, culturally distinctive destination. For a country navigating austerity and working to diversify its economy beyond hydrocarbons, Carnival’s cultural capital represents a genuine economic asset that demands strategic investment and protection.

Caribbean Property Market Update: January 2017

Across the Caribbean’s established property markets, January 2017 has been characterised by a continuation of the cautious-but-active tone that marked the end of 2016. The winter tourism season is proving solid in most destinations, and the buoyancy of visitor activity in the January peak period has supported confidence among hospitality and resort property owners and operators. The uncertainty generated by the Trump administration’s early actions has not yet translated into measurable changes in property transaction volumes or prices, but it is a factor in the conversations that international investors, developers, and buyers are having about their Caribbean strategies.

Jamaica’s domestic property market has maintained reasonable activity levels through the January period, with the NHT’s mortgage programme continuing to support affordable and middle-market housing transactions. The Holness government’s fiscal management has maintained macroeconomic stability, providing a supportive backdrop for property market activity. New residential development projects in Greater Kingston and in the resort parishes continue to proceed, and commercial property in the New Kingston business district has seen some positive enquiry from companies attracted by Jamaica’s improving business environment and the government’s investment promotion efforts.

The Dominican Republic continues to be the most actively transacted market in the Caribbean from an international investor perspective. January saw continued evidence of strong demand for resort and residential product in Punta Cana and Cap Cana, with several significant transactions in the luxury villa and branded residence segments. The DR’s political and economic stability under the Medina government continues to distinguish it as the Caribbean destination of choice for investors seeking scale and liquidity in a regional property market.

Caribbean Leaders This Month

Jamaica — PM Andrew Holness: Holness’s government navigated the Trump inauguration period with measured diplomatic engagement, prioritising the welfare of Jamaicans in the United States through enhanced consular services while maintaining Jamaica’s position as a constructive partner for the new administration on security and trade matters.

Haiti: Haiti’s political situation showed signs of progress with the presidential election process advancing, though the country continues to grapple with Matthew’s reconstruction challenge and chronic governance weaknesses. International support remains essential but donor engagement requires ongoing diplomatic effort.

Trinidad and Tobago — PM Keith Rowley: Rowley’s government managed the January austerity environment while looking ahead to Carnival’s economic boost. The oil price improvement following OPEC’s November agreement has provided some relief to T&T’s fiscal position, though structural reform of the energy-dependent economy remains the medium-term priority.

Barbados — PM Fruendel Stuart: Stuart’s government continued its difficult navigation of fiscal consolidation, with the tourism sector’s winter performance providing some revenue support. IMF engagement on debt sustainability continued to be a defining feature of Barbados’s economic management environment.

Dominican Republic — President Danilo Medina: Medina’s government maintained the DR’s status as the Caribbean’s most dynamic investment destination, with January seeing continued strong hotel and resort project activity and positive foreign direct investment flows. The DR’s relationship with the new Trump administration will be worth watching given significant Dominican-American community interests in both countries.

Guyana — President David Granger: Georgetown continued to attract oil-sector-related investment enquiry, with the Stabroek Block development generating growing commercial property and residential demand from international companies establishing operational presences in Guyana ahead of first oil.

Cayman Islands and BVI: Both territories’ financial services sectors continued to monitor the Brexit process and Trump administration signals about offshore financial regulation. The new US administration’s approach to international tax enforcement and financial transparency will be an important variable for Caribbean financial centre business models.

Overall Performer This Month: Dominican Republic maintains its position as the region’s standout performer, with property investment activity, tourism revenue, and economic growth all continuing at rates that distinguish it from every other Caribbean market.

Looking Ahead

Trinidad Carnival at the end of February will provide an important data point for T&T’s hospitality sector and a broader signal about Caribbean cultural tourism’s resilience. Strong attendance and spending at Carnival 2017 would demonstrate that even in a challenging domestic economic environment, the Caribbean’s most internationally recognised cultural festival retains its power to draw visitors and generate economic activity. The property market implications of a strong Carnival for short-term rental investors in Port of Spain and surrounding communities are direct and positive.

The legal challenges to Trump’s travel ban executive order moving through the US courts in the coming weeks will be closely watched as a signal of the administration’s capacity to implement its immigration agenda and the extent to which judicial constraints will moderate its approach. Caribbean governments and diaspora organisations will be tracking these developments carefully, as the outcome will shape the operational environment for Caribbean nationals in the United States for months and years ahead.

The 2016-2017 winter tourism high season is entering its peak period, with February and March typically the strongest months for Caribbean hotel occupancy. An excellent performance through this period would provide the industry with the revenue base and the confidence to maintain investment in property development, refurbishment, and expansion. Property investors in Caribbean resort markets will be watching the occupancy and rate data emerging from January and February with considerable attention as they calibrate their 2017 investment decisions.

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.