Caribbean Property & Investment Review — Edition 107

Publication Date: 3 September 2017  |  Coverage Period: 3 August – 2 September 2017

Morning Briefing

• Caribbean summer tourism season 2017 records strong arrivals across Jamaica, Barbados, Trinidad & Tobago and the Dominican Republic, with hotel occupancy rates running well ahead of 2016 comparisons.
• Jamaica’s property market continues its steady upward trajectory, with Kingston commercial real estate and north-coast resort properties both attracting sustained investor interest throughout August.
• Guyana’s oil sector excitement builds as ExxonMobil and its partners advance appraisal drilling on the Stabroek block — economists project transformational revenue flows within five years, reshaping regional investment dynamics.
• Trinidad & Tobago’s LNG export revenues show modest recovery on improved global gas prices, providing some relief to a government budget under pressure from lower energy receipts since 2014.
• The 2017 Atlantic hurricane season, which runs through November 30, has been forecast by NOAA as above-normal, with the agency citing warm sea-surface temperatures and a weak La Niña pattern as key drivers of elevated activity.
• URGENT: As this edition goes to press on 3 September, meteorologists are tracking a rapidly intensifying tropical system east of the Leeward Islands. Early forecast models suggest an extremely dangerous hurricane-force threat to the northern Lesser Antilles within days. All property owners, investors and businesses in the region should review their hurricane preparedness plans immediately.

Caribbean Summer Tourism: A Season to Remember

The 2017 Caribbean summer tourism season has significantly outperformed expectations, with visitor arrival data from the Caribbean Tourism Organization pointing to gains across almost every major destination. Jamaica led the charge among the larger markets, recording a surge in stopover arrivals through July and August that has left hoteliers and villa operators scrambling to meet demand. The island’s north coast — anchored by Montego Bay, Ocho Rios and Negril — continued to attract both traditional leisure tourists and a growing cohort of property-seeking visitors who combine holiday travel with real estate reconnaissance.

Barbados maintained its reputation as the premium end of the Caribbean market, with its luxury villa segment performing particularly well. The island’s west coast property corridor — St James through to St Peter — has seen renewed inquiry from European buyers, particularly from the United Kingdom, where sterling weakness has been partially offset by price adjustments and attractive financing terms from local lenders. High-end resort operators report that forward bookings for the winter 2017–18 season are running comfortably ahead of the prior year.

The Dominican Republic consolidated its position as the Caribbean’s volume tourism leader, with Punta Cana alone generating visitor numbers that rival Jamaica’s entire island total. Construction of new hotel inventory continues at a pace that concerns some analysts, who question whether the market can absorb the additional supply without pressure on rates — but for now, the pipeline of major branded properties speaks to strong institutional investor confidence in the destination. The DR’s real estate market for foreign buyers remains buoyant, with beachfront and golf-course condominiums attracting consistent North American and European interest.

Smaller destinations have also enjoyed a productive season. St Lucia’s tourism authority reports occupancy levels at heritage plantation inns and boutique properties running above 80 percent through much of August, a figure that has encouraged several developers to advance plans for new boutique resort projects on the island’s south coast. Grenada, too, has benefited from its growing reputation as an authentic, less commercialised alternative, with the citizenship-by-investment programme continuing to funnel real estate investment into resort-linked residential projects around Grand Anse and the Lance aux Épines peninsula.

Caribbean Property Markets: Mid-Year Stocktake

The Caribbean residential and commercial property market entered September 2017 in broadly healthy shape, buoyed by the strong tourism season, improving regional macroeconomic conditions and continued interest from the international buyer community. Transaction volumes across the main markets — Jamaica, Barbados, Trinidad, the Dominican Republic and the Eastern Caribbean — are on track to match or exceed 2016 levels, with the high-end villa and luxury condo segment showing the greatest year-on-year improvement.

In Jamaica, the National Housing Trust has maintained its mortgage lending at pace, supporting first-time buyer activity in the mid-market price band. The government’s housing development agenda — including planned projects in Portmore, Clarendon and Spanish Town — has begun to attract private-sector co-investment interest, a trend that analysts regard as a positive structural shift. Commercial property in Kingston’s New Kingston financial district has seen a tightening of Grade A office vacancy rates as professional services firms, telecoms operators and financial institutions expand their footprints.

In Barbados, the property market has shown greater resilience than some commentators predicted during the island’s period of fiscal difficulty. The government’s engagement with the International Monetary Fund and multilateral lenders has provided a degree of macroeconomic reassurance to external investors, even as domestic economic conditions remain constrained. Prime beachfront and golf-adjacent properties on the west and south coasts have retained value well, with distress selling relatively uncommon at the top end of the market.

Trinidad & Tobago’s property market continues to be shaped by the energy sector cycle. Port of Spain commercial real estate has softened somewhat as energy company tenants rationalise their office footprints in response to leaner budgets, but suburban residential markets in Westmoorings, Maraval and Diego Martin have held up relatively well, supported by domestic end-user demand. Tobago’s tourism-linked property sector remains undersupplied relative to latent demand, and several boutique resort development proposals advanced through the planning system during August.

Guyana Oil Revenues and Regional Investment Implications

Few developments in the wider Caribbean economic landscape carry as much long-term significance as the continuing evolution of Guyana’s oil sector. ExxonMobil, operator of the Stabroek block in partnership with Hess Corporation and CNOOC, has now confirmed a discovered resource base of more than two billion barrels of oil equivalent — a figure that places Guyana among the most significant recent oil frontiers in the Western Hemisphere. The implications for regional investment flows are potentially transformational.

Georgetown is already experiencing the early signs of an oil-economy boom: expatriate accommodation demand has pushed residential rents sharply higher in the capital’s preferred neighbourhoods, while commercial real estate — particularly office and warehouse space — is under increasing pressure from the expanding network of oil-services companies and logistics providers supporting offshore operations. For property investors with an appetite for emerging-market exposure, Guyana presents a compelling case, albeit one accompanied by infrastructure, governance and currency risks that require careful due diligence.

For the broader Caribbean, Guyana’s oil wealth will eventually translate into increased regional trade, remittance flows and infrastructure investment — but the timeline remains extended. First oil production is not expected until 2020 at the earliest, and the revenue management framework that will determine how Guyana’s oil wealth is deployed remains a work in progress. Neighbouring Caribbean states are, nonetheless, already positioning themselves to participate in the supply chain and services economy that will accompany large-scale offshore production.

Caribbean Leaders This Month

Jamaica tops this month’s regional performance table, with its tourism sector recording August arrivals that have exceeded ministry projections by a meaningful margin. The north-coast resort corridor and Kingston commercial district both showed positive momentum throughout the coverage period, reinforcing the island’s position as the Caribbean’s most diversified major property market.

Dominican Republic sustained its extraordinary volume performance, with Punta Cana’s tourism ecosystem continuing to generate real estate investment across the full spectrum from budget condominiums to ultra-luxury villas. New hotel openings in the pipeline for late 2017 and 2018 suggest sustained institutional confidence in the market’s fundamentals.

St Lucia distinguished itself as the most improved market in the Eastern Caribbean for August, with both tourism arrivals and property inquiry volumes running ahead of prior-year comparisons. The island’s citizenship-by-investment programme — which requires a real estate investment component — has been a consistent source of demand for the upper end of the residential market.

Grenada continued its steady trajectory as the quiet achiever of the Eastern Caribbean property scene. Citizenship-by-investment real estate projects progressed through development and sales phases without the volatility seen in some competing programmes, and the island’s macroeconomic stability has reinforced buyer confidence.

Barbados demonstrated the resilience of its luxury property segment despite the ongoing fiscal challenges facing the Freundel Stuart administration. The island’s brand equity in the premium market remains intact, and several high-value transactions were completed during August in the St James corridor.

Trinidad & Tobago showed mixed signals, with Port of Spain commercial real estate under mild pressure while Tobago’s tourism-linked residential segment attracted renewed developer interest. The LNG revenue partial recovery is a net positive for market confidence, though the full restoration of fiscal headroom will take time.

Guyana earns a special commendation this month for the sheer scale of investment momentum its oil sector is generating. Georgetown’s property market is at an early but unmistakable inflection point, with expatriate and commercial demand beginning to reshape the capital’s real estate landscape in ways that are set to intensify significantly over the coming years.

Overall regional performer: Jamaica — for a combination of strong tourism arrivals, steady property market activity and the continued maturation of its investment environment.

Looking Ahead

We must be direct with our readers: as this edition is finalised on the morning of 3 September 2017, the Caribbean faces what meteorologists are describing as an extremely dangerous and potentially catastrophic threat. The system being tracked as Hurricane Irma has rapidly intensified to major hurricane status and is bearing down on the Leeward Islands on a west-northwesterly track. Forecast models — while still carrying uncertainty at this range — show a significant probability of a direct strike on the northern Lesser Antilles, the British and US Virgin Islands, and potentially the Turks and Caicos within the next 48 to 72 hours. Irma’s central pressure has dropped dramatically and its sustained winds are already at levels that place it among the most powerful Atlantic storms on record.

For property owners, investors and businesses across the threatened corridor — including Barbuda, Anguilla, the British Virgin Islands, the US Virgin Islands, St Maarten and the Turks and Caicos — we urge immediate action. Ensure your properties are shuttered and secured. Confirm that your insurance documentation is accessible and policies are current. Follow official evacuation orders without hesitation. The potential economic and humanitarian consequences of a storm of this intensity making landfall cannot be overstated, and no commercial consideration should take precedence over personal safety and community welfare.

Beyond the immediate threat, the Caribbean property and investment community will need to think carefully about what the 2017 hurricane season — now demonstrably above-normal — means for risk management, insurance coverage adequacy and development planning in hurricane-exposed locations. We will provide a full assessment in our next edition once the situation becomes clear. For now: prepare, protect, and stay safe.

The Caribbean Property & Investment Review is published monthly. All market data reflect conditions during the stated coverage period. This publication does not constitute financial, legal or investment advice. Readers should seek independent professional guidance before making property or investment decisions.