Caribbean Property & Investment Review

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

Morning Briefing

• Mia Amor Mottley’s Barbados Labour Party won all 30 seats in the 24 May 2018 general election — the most comprehensive electoral victory in Barbados’s history — ending a decade of DLP rule under former PM Freundel Stuart and installing Mottley as the island’s first female prime minister. The investment community has responded with cautious optimism to the landslide and Mottley’s stated reform agenda.
• The 2018 Atlantic hurricane season opened on 1 June. Coming after the catastrophic 2017 season, the Caribbean property industry is approaching this new season with heightened vigilance and significantly improved preparedness protocols across most major markets.
• Caribbean tourism season 2017–18 has closed as one of the strongest on record for the unaffected islands, with Jamaica, the Dominican Republic, Barbados and the southern Eastern Caribbean all delivering full-year visitor arrival and expenditure records, substantially boosted by storm-diversion demand from the northern Caribbean.
• Nine months on from Hurricane Irma’s 6 September 2017 strike, the BVI is advancing toward a partial tourism reopening with several hotels and villa properties targeting winter 2018–19 for guests. Barbuda’s repopulation is beginning in a limited and contested form.
• Dominica’s reconstruction continues to advance on the climate-resilient nation framework, with nine months of international funding flows translating into visible physical progress in housing and road rebuilding across the island.
• Jamaica’s full tourism year 2017–18 data confirms record stopover arrivals, positioning the island to extend its tourism growth trajectory into 2018–19 and supporting strong demand for both resort accommodation and residential property investment.

Barbados: Mottley’s Historic Landslide and What It Means for Property

The Caribbean property and investment world was watching Barbados closely on the evening of 24 May 2018, and what it witnessed was an electoral result of genuinely historic proportions. Mia Amor Mottley’s Barbados Labour Party did not merely win the general election — it swept all 30 seats in the House of Assembly, delivering the most comprehensive single-party victory in Barbados’s democratic history. Former Prime Minister Freundel Stuart and his Democratic Labour Party, which had held office since January 2008, were reduced to zero parliamentary representation. Mottley was sworn in as Barbados’s first female Prime Minister, a historic personal achievement that carries genuine symbolic weight in the Caribbean’s gender-equality narrative.

The scale of the BLP victory was beyond what even the most optimistic polling had suggested. While every credible poll had pointed to a decisive BLP win, the complete elimination of DLP representation reflects a depth of voter frustration with the outgoing government’s economic management — particularly the sustained fiscal deterioration, the erosion of foreign exchange reserves and the failure to stabilise the Barbados dollar — that has no recent Caribbean precedent in its electoral expression. For the property and investment market, the clarity of the mandate matters enormously: Mottley arrives in office with the political capital to pursue bold reforms that a narrow victory would not have permitted.

The new Prime Minister has been explicit about her economic reform agenda: an immediate engagement with the International Monetary Fund for a comprehensive programme that will address Barbados’s fiscal imbalances and foreign exchange position; a restructuring of the island’s external and domestic debt obligations that places the country on a sustainable trajectory; and a programme of investment attraction and growth promotion that positions Barbados to return to the economic performance levels it maintained for much of the 1990s and 2000s. These are ambitious commitments, and their execution will require sustained political will, technical competence and international goodwill — all of which the Mottley government appears well-positioned to deploy.

For the property market specifically, the initial reaction has been cautiously positive. The luxury end of the Barbados market — which had been performing well through the winter and spring season despite the fiscal headwinds — is watching the new government’s approach to investor relations and tax policy with careful attention. Mottley has consistently positioned herself as pro-investment and pro-development, and several major property developers who had been holding back significant projects pending the election outcome are understood to be reconsidering their timelines in the light of the new political clarity. The process of debt restructuring, whenever it is formalised, may create some short-term market uncertainty, but the general view in the property investment community is that a sustainable fiscal path — even if it involves short-term pain — is preferable to continued drift toward an unmanaged fiscal crisis.

Caribbean Tourism Season 2017-18: Full-Year Verdict

As the 2017–18 Caribbean tourism season draws to its traditional close at the end of May and early June, the final data confirms what the monthly signals have consistently indicated throughout the year: this has been one of the most remarkable tourism seasons in Caribbean history for the unaffected destinations, driven by the extraordinary confluence of strong underlying market demand and the massive diversion of visitor flows from the devastated northern Caribbean islands.

Jamaica’s tourism authority has confirmed full-year stopover arrival records that exceed any prior year in the island’s tourism history. The north-coast resort corridor — Montego Bay, Negril, Ocho Rios — delivered occupancy rates and achieved room rates through December–May that have materially improved the financial position of resort operators who had been managing through a period of more modest growth. The implications for the property market are significant: resort-linked villa and condominium developments have reported their strongest-ever sales seasons, and the evidence of sustained, structural demand improvement — rather than a one-off storm-year anomaly — is encouraging investors to make longer-term capital commitments.

The Dominican Republic’s tourism machine has delivered another record year, with Punta Cana alone hosting a volume of visitors that places it among the Caribbean’s most significant single tourism destinations by any measure. Foreign property investment in the DR has been particularly strong through the second half of the season, with buyers from North America, Europe and increasingly from Latin America acquiring resort condominiums, golf-course villas and beachfront properties at a pace that has kept major development sales offices consistently busy. Several branded resort developments that were in early sales phase at the start of the season have reached sellout or near-sellout by May, enabling construction mobilisation and generating forward pipeline activity.

Barbados, despite the political uncertainty of the pre-election period, has delivered a winter and spring season that confounded pessimistic predictions. The luxury villa market has been the standout performer, with properties on the Platinum Coast achieving occupancy and rate levels that represent multi-year highs. Several long-listed villa properties have transacted during the season, with buyers attracted by the combination of exceptional short-term rental yields and what they perceive as an undervalued capital market given the island’s underlying quality. The Mottley government’s arrival provides a political clarity that some buyers had been waiting for before committing.

2018 Hurricane Season Opens: Caribbean on High Alert

The 2018 Atlantic hurricane season opened officially on 1 June, and the Caribbean property and investment community is approaching this new season with a heightened state of awareness that reflects the searing experience of 2017. NOAA’s pre-season forecast calls for a near-normal to above-normal season, citing warm Atlantic sea-surface temperatures and the current ENSO-neutral conditions as factors that do not provide the El Niño suppression of activity that had partially moderated some recent seasons. For the Caribbean, ‘near-normal’ means an expected 10 to 15 named storms, of which 5 to 8 may become hurricanes and 2 to 4 may become major hurricanes of Category 3 or above.

The property and investment industry has made meaningful improvements in its preparedness posture since September 2017. Across the BVI, Jamaica, Barbados and the wider Caribbean, major resort operators and property managers have invested in structural reinforcement, emergency supply pre-positioning and business continuity planning in ways that reflect the lessons learned from Irma and Maria. The insurance market, which has repriced Caribbean hurricane risk significantly at the January 2018 renewals, is now processing a new cycle of policy reviews ahead of the season opening, and the conversation about coverage adequacy — particularly for properties in the Eastern Caribbean’s most exposed zones — is more sophisticated and more urgent than at any point in recent memory.

The reconstruction territories — BVI, USVI, Anguilla, Barbuda, Dominica — face a particular anxiety as the new season opens. Properties that are still in reconstruction phases are, by definition, potentially more vulnerable than completed structures, and the prospect of a major hurricane striking any of these islands before reconstruction is complete would be a humanitarian and economic catastrophe of the first order. Emergency management agencies across the affected territories are working with international partners to ensure that reconstruction activities incorporate adequate temporary protection measures and that evacuation plans for construction workers and returning residents are in place.

Caribbean Leaders This Month

Barbados claims top billing this month by virtue of its historic electoral transformation. Mia Mottley’s BLP has arrived in office with a mandate of extraordinary clarity, and the investment community’s tentative optimism about what a reform-oriented, pro-investment government can achieve on the island is translating into increased property market inquiry and early transaction activity. The next several months will test whether the political promise translates into economic delivery.

Jamaica closes the 2017–18 tourism year with confirmed record stopover arrivals and a property market that has rarely been in such robust health. The full-season data confirmation of the island’s exceptional performance reinforces the investment case that has been building through the year, and several significant resort and residential development projects are expected to announce financing and construction commencements in the coming months.

Dominican Republic delivers its full-year tourism and real estate verdict as one of the most active and vibrant markets in the Caribbean’s history, with visitor records, property transaction volumes and development pipeline all at exceptional levels. The country’s position as the Caribbean’s safe-haven investment alternative — large island, diversified economy, hurricane-south position — has been cemented by the 2017–18 season.

BVI continues its determined recovery, with the announcement of target winter 2018–19 reopening dates for several tourism properties representing a genuine milestone in the territory’s 21-month post-Irma recovery narrative. The resilience and determination of the BVI community remain an inspiration.

Dominica marks nine months of recovery with visible progress in housing and infrastructure rebuilding. The government’s climate-resilient nation framework is attracting growing international interest and technical support, and the island’s determination to emerge stronger from Maria is being realised in tangible ways.

Trinidad & Tobago closes its tourism year with a post-Carnival performance that has been sustained through the spring, and the energy sector’s gradual LNG revenue recovery is providing modest macroeconomic relief. Tobago’s property sector is showing renewed development interest.

Guyana continues its oil-sector-driven investment momentum, with Georgetown’s commercial property market remaining active and the country’s profile as a transformational Caribbean investment story growing in international awareness. First oil moves ever closer on the 2020 horizon.

Overall regional performer: Barbados — for the historic political clarity delivered by the 24 May election and the transformational investment opportunity that a credible reform government represents for the Caribbean’s most admired premium property market.

Looking Ahead

The Caribbean enters June 2018 carrying the momentum of an exceptional tourism season and the political energy of Barbados’s historic transformation, while simultaneously navigating the first days of a hurricane season that everyone in the region approaches with the memories of September 2017 still fresh and sharp. The juxtaposition is characteristic of the Caribbean: a region of extraordinary beauty and economic potential that lives with the ever-present reality of its climate exposure.

The Mottley government’s first weeks in office will be watched with intense interest by investors, lenders and property market participants across the Caribbean and beyond. The speed and credibility of Barbados’s engagement with the IMF, the terms of any debt restructuring, and the early policy signals on investment, taxation and regulatory reform will collectively determine whether the cautious optimism that greeted the election result is vindicated. Barbados has the talent, the reputation and now the political mandate to make a genuine fresh start. The property market will be watching to see whether the government makes the most of its extraordinary opportunity.

For the reconstruction territories, the most urgent near-term priority is the safe navigation of another hurricane season while buildings are still incomplete, populations are still displaced, and infrastructure is still fragile. For the unaffected islands, the priority is sustaining the exceptional momentum of the 2017–18 season into 2018–19 while investing in the structural resilience improvements that 2017 made an urgent imperative. The Caribbean’s capacity to learn from catastrophe and rebuild stronger is, historically, one of its most remarkable characteristics. The test of 2018 is whether that capacity can be matched by the pace of institutional and physical investment that the scale of 2017’s losses demands.

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.

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