Caribbean Property & Investment Review — Edition 99

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

Morning Briefing

• Barbados’s general election campaign is entering its final weeks as PM Freundel Stuart’s Democratic Labour Party government faces opposition leader Mia Mottley’s Barbados Labour Party in a contest that must produce a result by May 24 at the latest. Every credible poll points to a decisive BLP advantage, though the Stuart government is mounting an energetic defence of its record.
• Caribbean spring tourism across Jamaica, the Dominican Republic, St Lucia and the southern Eastern Caribbean is maintaining its strong year-on-year trajectory through April and early May, confirming that the storm-diversion demand tailwind is persisting beyond the winter peak season.
• Eight months on from Hurricane Irma’s 6 September 2017 strike, the British Virgin Islands’ tourism sector is cautiously beginning to plan for a partial reopening of some properties for the 2018–19 winter season, with several boutique hotels and villa complexes announcing target reopening dates.
• Dominica’s reconstruction, now seven and a half months after Maria’s 18 September 2017 strike, is advancing, with the government reporting meaningful progress on the rebuilding of housing and essential infrastructure across the island’s most severely affected communities.
• Jamaica’s National Housing Trust has reported its strongest quarterly mortgage disbursement figures in several years, reflecting sustained first-time buyer demand in the mid-market residential segment and continued confidence in the island’s property fundamentals.
• The 2018 Atlantic hurricane season opens on 1 June — less than four weeks away. Caribbean property owners, investors and businesses are being urged to complete their preparedness planning, insurance reviews and structural assessments before the season begins.

Barbados at the Polls: What the Election Means for Property and Investment

Barbados stands on the cusp of what may be one of the most significant political transitions in its modern history. Prime Minister Freundel Stuart’s Democratic Labour Party government, which has held office since January 2008, faces an election that must be held by mid-May 2018, and the polling picture that has developed over many months paints a consistent picture of a BLP opposition under Mia Mottley that commands a substantial lead across virtually every constituency. As of this publication date of 3 May, the election has not yet been called, but political observers across Bridgetown and the wider Caribbean expect an imminent announcement from the Stuart administration.

For the property and investment market, the approaching election carries significant implications regardless of outcome. A Stuart DLP victory — which the polls make appear unlikely but which cannot be entirely discounted, given the history of Caribbean electoral surprises — would represent a continuation of the current fiscal consolidation approach, with the government likely to maintain its cautious engagement with the IMF and multilateral lenders that has characterised the past several years. An Mottley BLP victory — which the polling data consistently suggests is the more probable outcome — would bring to power a leader with a strong personal brand, significant international credibility and a stated economic agenda that emphasises growth, investment attraction and a bold approach to Barbados’s fiscal challenges.

Mottley’s BLP has been explicit about its intention to seek a comprehensive restructuring of Barbados’s debt obligations if elected, alongside engagement with the IMF on a programme that addresses the island’s structural fiscal imbalances. This approach has been welcomed by some investors as a credible path to debt sustainability, while others have expressed concern about the short-term market impacts of a restructuring process. The property market’s sensitivity to this outcome is real: Barbados’s residential and commercial real estate, while performing well in the current winter-season demand environment, operates within an economy that has been under sustained fiscal pressure, and the question of how that pressure is resolved will have long-term consequences for property values, mortgage market conditions and the investment climate.

What the market does know with confidence is that Barbados’s underlying attractions as a Caribbean property destination — its extraordinary natural environment, the quality of its built stock, its rule of law, its educated workforce and its geographic beauty — will persist regardless of the election outcome. Property values at the premium end of the market have shown remarkable resilience through the period of fiscal difficulty, and the island’s brand equity in the international luxury real estate market remains among the strongest in the Caribbean. The election will determine the fiscal framework within which the market operates, but it will not fundamentally alter the reasons that buyers from around the world have consistently chosen Barbados as their Caribbean property destination of choice.

Caribbean Spring Tourism: Storm-Diversion Demand Persists

The Caribbean spring tourism season is delivering results that continue to exceed industry expectations, with visitor volume and expenditure data from Jamaica, the Dominican Republic, Barbados and the southern Eastern Caribbean all tracking meaningfully ahead of prior-year comparisons. The remarkable feature of this performance is its persistence: what many analysts had expected to be primarily a winter-season phenomenon — the diversion of luxury Caribbean travel demand from storm-affected northern island destinations to unaffected alternatives — is proving to have considerably more momentum than anticipated.

Jamaica’s tourism authority has reported April arrivals that exceed 2017 comparisons by a margin that has surprised even the most optimistic sector participants. The north-coast resort corridor is sustaining occupancy levels that would typically be associated with the peak December-to-March season rather than the April shoulder period, and accommodation operators are cautiously revising their full-year revenue projections upward in response. The property rental market is benefiting proportionately: villa and short-term rental operators are reporting a spring season that in some respects rivals the winter peak in terms of both occupancy and achieved rate.

The Dominican Republic’s all-inclusive resort machine continues to absorb demand at a pace that suggests the storm-diversion effect has been genuinely additive to the country’s already strong underlying tourism fundamentals. Several major properties in the Punta Cana and Baváro corridors are reporting spring occupancy rates that approach their winter levels, a pattern that is unusual for the April-May period and reflects the extraordinary reshaping of Caribbean travel patterns that the September 2017 storms have caused.

St Lucia and Grenada are both enjoying strong spring seasons, with boutique property operators in particular benefiting from an elevated level of inquiry from travellers who have decided to explore southern Caribbean alternatives following the disruption to their usual northern Caribbean itineraries. The citizenship-by-investment programmes of both islands are also seeing sustained activity, with real estate purchase inquiries accompanying the increased visitor traffic.

Reconstruction Progress: Eight Months On

As the Caribbean approaches the eighth month anniversary of Hurricane Irma’s 6 September 2017 strike and the seventh month anniversary of Maria’s Dominica landfall on 18 September, the reconstruction picture across the affected territories is one of meaningful but uneven progress. The BVI continues to lead the recovery among Irma-affected territories, with the territory’s tourism sector beginning to signal cautious optimism about a partial reopening for the 2018–19 winter season. Several boutique hotels and villa complexes on Tortola and the smaller islands are announcing target reopening dates in the November–December 2018 range, a timeline that, if achieved, would represent a remarkable recovery from the near-total destruction of the tourism infrastructure just eighteen months earlier.

Dominica’s reconstruction continues to advance, with the government’s climate-resilient nation framework beginning to deliver physical results in the form of rebuilt housing units, restored roads and reconstructed community facilities. International funding flows — from the Caribbean Development Bank, the EU, bilateral donors and the citizenship-by-investment programme — are providing a financial foundation for the rebuilding effort, and the island’s government has maintained a consistent and transparent communication with international partners about the status and requirements of the recovery. The challenge remains immense, but the direction of travel is encouraging.

Barbuda’s recovery, by contrast, continues to lag the other affected territories in a way that reflects the unique political and legal complexities of its situation. The island’s population — most of whom remain in Antigua eight months after the evacuation — has been engaged in a difficult and sometimes contentious public debate about the terms of reconstruction and the role of foreign investment in the island’s future. The Gaston Browne government in Antigua has advanced proposals for development that some Barbudans view as inconsistent with their communal land ownership traditions, creating tensions that are complicating the establishment of a clear and broadly accepted rebuilding framework. Progress on physical reconstruction has accordingly been limited, and the timeline for meaningful repopulation remains unclear.

Caribbean Leaders This Month

Jamaica maintains its position as the Caribbean’s most consistently strong performer, with spring tourism delivering exceptional year-on-year gains and the residential property market — supported by strong NHT disbursements — performing robustly across multiple segments. The island’s investment proposition is being recognised with increasing frequency by international capital as the region’s most compelling major-market opportunity.

Barbados is generating the most intense investor attention of any Caribbean market this month, driven by the approaching election and the consequent uncertainty and opportunity that political transition creates. The underlying property market — buoyed by the strong winter and spring tourism performance — remains in good shape, and the island enters the election period from a position of property market strength rather than weakness.

Dominican Republic sustains its strong Q1 2018 performance into April-May, with tourism and real estate both registering positive momentum. The country’s development pipeline continues to attract major international hotel brand investment, and the macroeconomic stability of one of the Caribbean’s largest economies provides a reliable foundation for sustained activity.

St Lucia is delivering one of its strongest spring tourism seasons in recent years, with the combination of improved airlift from North America and Europe and the storm-diversion tailwind producing visitor volumes that have energised the island’s boutique property and resort sector.

BVI earns continuing recognition for the pace of its reconstruction and the resilience of its financial services community. The announcement of target reopening dates for several tourism properties is a genuine milestone, signalling that the territory is beginning to see a path back to its pre-storm tourism economy.

Grenada continues its steady CBI-driven real estate performance, with the programme generating consistent foreign investment inflows into approved tourism and residential developments across the island.

Guyana maintains its position as the Caribbean’s most dynamic emerging investment market, with Georgetown’s commercial property sector reflecting continued oil-services sector demand and several significant mixed-use developments advancing through planning and construction.

Overall regional performer: Jamaica — for sustained excellence across tourism, residential property and commercial real estate in the most competitive period the Caribbean market has seen in years.

Looking Ahead

The Caribbean property market faces two defining events in the immediate weeks ahead. The first is the Barbados general election, which must be concluded by mid-May 2018. The outcome will be reported and analysed in full in our next edition, but the regional investment community is watching with considerable attention as one of the Caribbean’s most important and most admired markets prepares to make a decision that will shape its economic direction for the next parliamentary term. Whichever party forms the next government, the property community will be looking for clear signals on fiscal management, investment attraction and the regulatory environment.

The second major event is the opening of the 2018 Atlantic hurricane season on 1 June. Coming after the devastating 2017 season, this year’s season opening will be watched with an anxiety that the Caribbean investment community has not experienced since the aftermath of 2004 and 2005’s active seasons. NOAA and competing meteorological agencies will release their pre-season forecasts in the coming days, and those forecasts will be studied with unusual intensity by property owners, investors, lenders and insurers across the region.

For property investors across the region, the May–June transition period is the moment to complete preparedness planning, verify insurance coverage adequacy, and ensure that properties across the portfolio are as well-protected as possible before the tropical weather season begins. The experience of 2017 has demonstrated, with devastating clarity, the consequences of inadequate preparation and inadequate insurance. The Caribbean cannot be guaranteed another quiet season in 2018, and responsible property ownership and management must reflect that reality.

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.