Publication Date: May 3, 2017 | Coverage Period: April 3–May 2, 2017 | Category: Monthly Review
April in Brief
- Tourism sector posts strong Q1 visitor numbers; north coast property enquiries rising in tandem.
- Corporate Area apartment market sees accelerating pre-sales from professionals and diaspora buyers.
- NHT scheme allocation ballots oversubscribed across St Catherine and St James offerings.
- Bank of Jamaica maintains accommodative monetary stance; commercial mortgage rates steady.
- Construction materials prices stable; self-build sector active as dry season continues.
- US remittance flows tracking positively despite diaspora anxiety; BOJ data broadly reassuring.
Housing Market
April confirmed that Jamaica’s property market has entered an active phase, building on the momentum established in the weeks following the budget and sustained by a combination of low financing costs, improving consumer confidence and a macroeconomic backdrop that, while modest in growth terms, has provided more stability than most of the past decade. The Corporate Area — comprising Kingston and the urban communities of St Andrew — remains the single most active market by transaction value, though the breadth of activity across other parishes has been widening.
The apartment segment has been the standout performer. Developments targeting the 25–40 age professional cohort — one- and two-bedroom units priced in the J$12–25 million range — have continued to absorb buyers who might previously have deferred decisions. The combination of a NHT entitlement (which can be blended with a commercial loan) and an apartment product suited to the financial profile of a single professional or young couple has created a workable purchase pathway for a segment of the market that previously had limited options.
Tourism and Hospitality Investment
Jamaica’s tourism sector has entered 2017 on a trajectory that suggests another strong year for visitor arrivals following the record performance of 2016. The Caribbean travel market benefited in 2016 from the fading of Zika-related anxiety that had suppressed demand in the first half of the year, and the positive momentum has carried into 2017. Stopover arrivals, which are the category most directly linked to accommodation demand and the highest per-visitor expenditure, have shown particular strength.
For the property market, the tourism sector’s performance is relevant at multiple levels. Most directly, the expansion of resort capacity along the north coast — in Montego Bay, Falmouth, Ocho Rios and the Negril corridor — has generated substantial construction activity and employment, which in turn has created demand for residential accommodation near these employment centres. Developers and small landlords in communities within commuting distance of the major resorts have noted consistently tight rental vacancy rates and rising rents as workforce housing demand presses against limited supply.
At a second level, the success of Jamaica’s tourism brand has reinforced interest in villa and short-term rental investments along the north coast and in communities popular with returning diaspora. Airbnb’s presence in Jamaica has grown measurably over the past two years, and property owners who have repositioned residential units as short-term accommodation have generally reported strong occupancy during the winter high season and improving summer performance as domestic and Caribbean visitors fill the gap. Tourism Minister Edmund Bartlett’s engagement with Airbnb’s leadership during 2017 signals that the government is taking the platform seriously as a distribution channel for Jamaica’s tourism product.
NHT Activity
The National Housing Trust’s scheme ballot results from recent cycles have underscored the persistent mismatch between supply and demand in the affordable segment. Schemes in Portmore, Linstead and the greater St Catherine area have been heavily oversubscribed, with the ratio of applicants to available units running at multiples of two-to-one or higher in some offerings. St James schemes have attracted strong interest from tourism workers who have accumulated the minimum contribution history required for NHT borrowing eligibility.
The July 1 effective date for the new NHT benefit parameters announced in the budget is now approximately two months away, and would-be buyers are beginning to factor the enhanced limits into their planning. The Home Improvement Loan increase to J$2.5 million, in particular, is expected to generate a surge in applications from existing homeowners seeking to upgrade their properties — a category of NHT activity that has historically been less prominent than first-purchase lending but which the Trust has been working to develop.
Construction Sector
The construction sector is operating at levels consistent with a market in recovery rather than boom, but the trajectory is positive. The Jamaica Institute of Quantity Surveyors and industry contractors report that their pipelines are fuller than they were at this stage in 2015 or 2016. The absence of the sharp construction cost inflation that has characterised boom periods in some regional markets has been a moderating factor: cement prices, the most watched input cost metric for self-builders, have been relatively stable, and steel reinforcement costs, while subject to global commodity market fluctuations, have not spiked to levels that would materially suppress self-build activity.
In the formal development sector, the pipeline of medium-scale residential projects in the Corporate Area and in St Catherine’s peri-urban communities represents a meaningful addition to housing supply, though completion timescales for many of these projects stretch into 2018 and beyond. The gap between projects entering the construction pipeline and completed, deliverable units has been a persistent feature of Jamaica’s new housing supply dynamics.
Montego Bay Market
The Montego Bay market warrants specific attention as Jamaica’s second city and its primary tourism hub. Residential property in MoBay’s established middle-class communities — including Ironshore, Catherine Hall and Bogue — has seen steady appreciation driven by the combination of tourism employment and the growing MoBay professional class employed in the BPO sector. The Business Process Outsourcing industry, which has established significant operations in Montego Bay over the past decade, provides relatively stable employment for thousands of workers and has created a buyer cohort with formal wage income and growing NHT entitlements.
Gated community developments in and around MoBay continue to attract buyers from within Jamaica and from the diaspora. The security and amenity features of gated schemes command a premium over comparable standalone housing but have proven sufficiently attractive to sustain developer interest in new projects in this format.
Diaspora
Remittance flows through April appear broadly consistent with the levels that prevailed through 2016 — a relief to policymakers and housing sector stakeholders who had feared that Trump’s immigration enforcement posture might begin to suppress transfers from the US-based Jamaican community. The mechanisms that sustain remittances — settled diaspora members with stable employment, multi-generational family obligations to Jamaica, and access to increasingly efficient transfer platforms — appear to be holding, at least for now. The Bank of Jamaica’s remittance monitoring data, released with a lag, has not signalled a deterioration.
Macro Context
Jamaica’s Q1 GDP performance, while not yet officially published, is expected to reflect steady growth in tourism and services, partially offset by modest output from mining and agriculture. The exchange rate has held in a J$128–132 range against the US dollar, providing a degree of predictability that is helpful for developers pricing projects denominated in local currency while managing some imported input costs in dollars. Inflation has remained within manageable bounds, and the BOJ’s accommodative stance has not produced the price instability that some analysts had feared when rates were cut aggressively in the 2013–16 period.
Looking Ahead
The approach of the summer months brings both opportunity and seasonal adjustment to Jamaica’s property market. Tourism activity typically peaks in December–March and softens slightly in the April–June shoulder period, though 2017 is tracking as an unusually strong year across multiple segments. The July 1 NHT benefit enhancements will be the most significant near-term policy event for the housing market, and developers and lenders are positioning to absorb the demand impulse the changes are expected to create. The broader question of whether Jamaica’s housing supply can keep pace with the demand that improving macroeconomics and more accommodative financing have unlocked remains the defining challenge of the sector’s current phase.
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