Caribbean Property & Investment Review — Edition 100

Publication Date: 3 April 2018  |  Coverage Period: 3 March – 2 April 2018

Morning Briefing

• Edition 100 of the Caribbean Property & Investment Review marks a milestone for our publication and arrives at a moment of genuine historical significance for the region — six months into the Caribbean’s post-Irma and Maria recovery, with reconstruction trajectories diverging sharply across the affected territories.
• Trinidad Carnival 2018’s full economic data is now available, confirming a record-breaking festival: visitor expenditure and accommodation revenues exceeded 2017 comparisons by double-digit percentages, validating the event’s growing international profile and the twin-island state’s position as the Caribbean’s premier cultural tourism destination.
• Puerto Rico’s power restoration is now reported at above 90 percent, a significant milestone that has begun to allow the island’s commercial property sector to resume more normal operations — though many rural communities and damage-affected properties still face an extended rehabilitation process.
• Caribbean foreign direct investment flows are showing resilience in the first quarter of 2018, with the unaffected islands — particularly Jamaica, Barbados, the Dominican Republic and Grenada — reporting sustained inbound investment interest across tourism and residential real estate.
• The spring tourism transition across the unaffected Caribbean is showing better-than-expected momentum retention from the exceptional winter season, with visitor numbers and hotel rates holding above prior-year levels through March.
• Barbados’s general election campaign is intensifying as PM Freundel Stuart and the DLP face the Mottley-led BLP in what polls consistently suggest will be a decisive contest — the election must be called by May 2018, and market participants are positioning for a potential change of government.

Six Months On: A Reconstruction Scorecard

Six months after Hurricane Irma struck the northern Leeward Islands on 6 September 2017, and six and a half months after Hurricane Maria devastated Dominica and Puerto Rico, the Caribbean’s reconstruction story is being written in sharply different chapters across the affected territories. The milestone invites a considered assessment of where the recovery stands, what has been achieved, what remains to be done, and which markets are likely to re-emerge as investment destinations within manageable timescales.

The British Virgin Islands has made the most visible and tangible progress. The territory’s financial services sector — which provides the economic foundation that tourism supplements rather than the reverse — has maintained operational continuity throughout the recovery period, and the physical rebuilding of residential and commercial property is well advanced. Road Town’s commercial district is functioning, essential utilities are restored across most of Tortola, and several smaller islands within the territory have completed their initial rebuilding phases. The tourism sector remains the outstanding challenge: the marina and charter boat infrastructure that defines the BVI’s international brand is still in active reconstruction, and the territory is not expected to be hosting visitors at pre-storm volume before 2019. However, the trajectory is positive, and the BVI’s underlying property market values — historically supported by the combination of British rule of law, financial centre status and extraordinary natural beauty — are being maintained at levels that suggest long-term investor confidence has not been permanently impaired.

Anguilla’s recovery is progressing at a pace that reflects both the island’s smaller scale and the particular character of its ultra-luxury property market. Several of the island’s landmark resort properties are in advanced stages of reconstruction, and the tourism authority is managing a carefully calibrated communications strategy with the island’s premium international audience — maintaining aspiration and loyalty while being honest about the timeline to full reopening. Some villa properties on the island are expected to be available for rental by the 2018–19 winter season, providing a partial test of whether Anguilla’s brand has survived the hurricane intact.

Barbuda remains the most concerning of the reconstruction territories from a social and economic perspective. Six months on from Irma’s near-total destruction of the island’s built environment, the population remains largely displaced to Antigua, and the physical rebuilding of even basic residential infrastructure is at an early stage. The political and legal dimensions of Barbuda’s reconstruction — particularly the debates about land tenure, foreign investment, and the terms of any redevelopment — continue to complicate the establishment of a clear rebuilding plan that commands broad community support. The island’s extraordinary natural environment — pristine beaches, unspoilt lagoons, remarkable wildlife — remains intact and will underpin its eventual recovery, but the timeline for that recovery now appears to be measured in multiple years rather than months.

Dominica’s reconstruction, six months after Maria’s near-total destruction of the island’s building stock, is advancing within the government’s ambitious climate-resilient nation framework. International funding is flowing at an increasing pace, with the Caribbean Development Bank, the EU and bilateral partners all active, and the government is managing the extraordinary challenge of rebuilding essentially an entire nation while simultaneously running a citizenship-by-investment programme, maintaining essential services and managing the political demands of a citizenry that has experienced profound trauma and is understandably impatient for visible results. The progress is real but the distance to full recovery remains enormous.

Caribbean Spring Tourism: Resilient Shoulder Season

The Caribbean’s spring shoulder season — the period from Easter through early June when the winter high season crowd has returned home but the summer family market has not yet arrived — is showing better-than-expected performance in 2018. Jamaica, Barbados, the Dominican Republic and the southern Eastern Caribbean islands are all reporting visitor volumes and accommodation rates that track ahead of 2017 comparisons, suggesting that the demand diversion from storm-affected destinations is persisting into the spring months rather than being purely a winter phenomenon.

Jamaica’s north-coast hotels and villa operators report a sustained flow of UK, North American and European visitors through March and into April that is maintaining the exceptional pace of the winter season better than most operators had anticipated. The island’s growing reputation as the Caribbean’s most complete destination — combining beach, culture, gastronomy and nature — is attracting visitors who might not previously have considered Jamaica as their primary Caribbean choice. Several major hotel groups have cited Jamaica as their top-performing Caribbean market in their first-quarter 2018 reporting, a designation that carries significant implications for future capital allocation and development decisions.

Barbados’s spring performance is being supported by the same displaced demand dynamic that characterised the winter season, with the island’s west coast villa and boutique hotel sector maintaining strong occupancy into April. The approaching general election is generating some degree of market uncertainty — a few high-value transactions have been deferred pending clarity on the political outlook — but the overall market tone remains positive, and most agents report that buyer and seller activity is broadly normal despite the electoral backdrop.

Caribbean Foreign Direct Investment: Q1 2018 Assessment

The first quarter of 2018 has delivered a more positive FDI picture for the Caribbean’s unaffected markets than some observers had anticipated in the immediate post-storm period. The concern that international investors might respond to the September 2017 disasters by reducing their Caribbean real estate exposure across the board has not materialised — instead, investment flows appear to be concentrating in the markets perceived as offering better hurricane risk profiles relative to the devastated northern island destinations.

Jamaica has been a significant beneficiary of this FDI reorientation. Several major hotel development projects that have been in planning for extended periods are now receiving firm investment commitments, with international hotel brands viewing Jamaica’s combination of tourism demand momentum, improving infrastructure and political stability as a compelling investment case. The government’s economic programme — which has maintained a consistent reform trajectory under IMF guidance since 2013 — has delivered a degree of macroeconomic stability that long-term investors find reassuring relative to some regional alternatives.

Grenada’s citizenship-by-investment programme continues to generate meaningful real estate FDI inflows, with approved development projects across the island advancing through sales and construction phases. The programme’s US E-2 visa treaty eligibility — which allows Grenadian citizens to apply for the US entrepreneur visa — remains a powerful differentiator relative to competing CBI programmes and continues to attract high-quality investor interest from Asia, the Middle East and beyond.

Caribbean Leaders This Month

Jamaica reclaims the regional performance lead in April, with the country’s tourism sector maintaining exceptional year-on-year growth into the spring shoulder season and its property market — across luxury, mid-market and affordable segments — all reporting positive indicators. The island’s emergence as the preferred alternative destination for displaced northern Caribbean luxury travel is now being consolidated into sustained brand equity gains.

Dominican Republic maintains its position as the Caribbean’s most active real estate transaction market, with Q1 2018 foreign buyer volumes running ahead of prior-year comparisons. The country’s development pipeline of branded hotel and resort projects continues to expand, underpinning long-term market confidence.

Trinidad & Tobago’s post-Carnival assessment confirms an exceptional festival performance. The economic data validates the Carnival’s status as a major regional economic driver, and the property implications — particularly for Tobago’s accommodation sector — are being reflected in increased development inquiry.

Grenada continues to deliver consistent citizenship-by-investment real estate activity, with approved developments progressing through sales and construction. The island’s macroeconomic stability and the quality of its CBI administration reinforce investor confidence.

Barbados is sustaining strong market performance through the pre-election period, with tourism and property both ahead of prior-year levels. The political uncertainty of the approaching election adds a note of caution but has not materially disrupted activity.

BVI earns recognition for its six-month reconstruction progress. The territory is on a trajectory that, while extended, gives genuine grounds for cautious optimism about its eventual full recovery. The resilience of the territory’s financial services sector throughout the crisis has been remarkable.

Puerto Rico marks a significant milestone with power restoration now above 90 percent, creating the conditions for a gradual resumption of more normal commercial and residential property activity in the urban centres. The recovery road remains long, but the direction of travel has improved.

Overall regional performer: Jamaica — for sustained top-of-market tourism performance and a property sector that continues to attract significant domestic and international investment across all segments.

Looking Ahead

The Caribbean’s property and investment community enters the second quarter of 2018 with cautious optimism for the unaffected markets balanced against ongoing concern for the territories still deep in recovery. The approaching end of the spring shoulder season will provide a clearer picture of whether the storm-diversion demand tailwind is genuinely structural or primarily concentrated in the winter peak, and the signals so far suggest greater persistence than the most pessimistic forecasts had allowed for.

The Barbados general election — which must be called within weeks — is the most significant near-term political event in the regional property calendar. The outcome will shape Barbados’s economic policy direction for the next five years and has implications for the island’s relationship with the IMF, its fiscal consolidation trajectory and its attractiveness to foreign investors. We will provide a full analysis of the electoral outcome and its property market implications in our next edition.

The 2018 Atlantic hurricane season opens on 1 June — just two months away. The Caribbean property and investment community is approaching this season’s opening with a heightened state of awareness and anxiety that reflects the extraordinary events of 2017. Preparedness investment — in structural reinforcement, emergency planning, insurance review and business continuity measures — should be treated as an urgent priority across all markets, not just those that experienced damage last year. The 2018 season will be watched with an intensity that has no recent precedent.

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.