Caribbean Property & Investment Review — May 2019

Publication Date: 3 May 2019  |  Coverage Period: 3 April – 2 May 2019

Morning Briefing

• Caribbean Easter tourism delivered record or near-record visitor volumes across most major destinations, with Jamaica, Barbados, the Dominican Republic, and the Eastern Caribbean all reporting strong Easter week performance that has set an optimistic tone for the full 2019 tourism year and the property investment appetite it generates.
• Barbados marks approximately one year since Prime Minister Mia Mottley’s Barbados Labour Party government took office and initiated the Barbados Economic Recovery and Transformation (BERT) programme in partnership with the IMF — a year of necessary but difficult adjustment that is beginning to show measurable progress in fiscal metrics and cautious but genuine recovery in international investor confidence.
• Guyana’s Liza Phase 1 oil project excitement continues to build, with ExxonMobil maintaining its projection of first oil before year-end 2019, Georgetown’s commercial and residential property markets sustaining their extraordinary pre-production trajectory, and Caribbean investment professionals increasingly engaged with the question of how to position for the oil era’s implications.
• Jamaica’s National Housing Trust reports strong Q1 2019 mortgage disbursements, with first-time buyer applications running well ahead of the same period in 2018 as the government’s housing programme momentum builds and the Jamaican mortgage market benefits from continued low-interest conditions.
• Trinidad and Tobago’s post-Carnival economic assessment shows the festival delivered another strong commercial performance for Port of Spain’s accommodation and entertainment sectors, with the LNG-anchored economy providing a stable macroeconomic backdrop for commercial property activity.
• Caribbean Citizenship by Investment programmes are maintaining strong application volumes through the first months of 2019, providing a steady flow of approved real estate investment capital that is supporting hotel and resort development pipelines across the Eastern Caribbean.

Caribbean Easter 2019: Records Set, Season Strong

The Easter holiday period — which in 2019 centred on the April 19-21 weekend — delivered exceptional visitor volumes across the Caribbean, providing one of the strongest early data points for what is increasingly being projected as a record full-year tourism performance. The combination of favourable Easter timing (late April provides optimal travel conditions across the Caribbean), strong consumer confidence in key North American and European source markets, and continued airlift capacity expansion produced a holiday peak that has confirmed the tourism industry’s optimistic outlook for 2019.

Jamaica’s Easter performance was outstanding. Hotels across the north coast reported occupancy rates approaching 95 percent or above for the Easter week, with villa rental inventory fully committed and nightly rates at their highest Easter levels in at least five years. The Jamaica Tourist Board characterises the Easter 2019 performance as setting a new benchmark for the island’s shoulder-season capabilities, reflecting the success of sustained airlift development and destination marketing that has broadened Jamaica’s appeal beyond its traditional summer and winter peaks.

For Jamaica’s property investment community, the Easter data points reinforce a thesis that is becoming increasingly well-established: the island’s tourism is maturing from a seasonal to a year-round market, and the investment case for resort and villa property is correspondingly stronger than it was even five years ago. Year-round demand reduces the seasonal occupancy volatility that has historically been one of the primary risk factors in Caribbean resort property investment, improving the predictability of rental income streams and supporting higher capitalisation rates.

Barbados’s Easter season was also strong, particularly in the Platinum Coast villa segment that constitutes the island’s most internationally visible property market. The British visitor cohort that forms the backbone of Barbados’s Easter market — including a significant number of high-net-worth individuals and families for whom Barbados is a multi-generational holiday tradition — turned out in solid numbers, supporting villa rental rates and generating the investment inquiry that has historically accompanied the island’s major tourism peaks. Several significant villa transactions are understood to have been progressed through the Easter period, with completion anticipated in the weeks following the holiday.

Barbados: One Year of BERT — What the Record Shows

It is now approximately one year since Prime Minister Mia Mottley led the Barbados Labour Party to a historic landslide victory in the May 2018 general election and initiated the Barbados Economic Recovery and Transformation programme in partnership with the International Monetary Fund. The programme — designed to address Barbados’s severely deteriorated fiscal position, restore international creditor confidence, and create the conditions for sustainable economic growth — has been one of the most closely watched policy experiments in Caribbean economic history. A year in, the preliminary verdict is cautiously positive.

The fiscal adjustment has been substantial. Barbados undertook a debt restructuring that involved domestic creditors — holders of government bonds, treasury bills, and other instruments — accepting extended maturities and in some cases reduced coupons. The process, managed through the BERT framework, was conducted with a degree of transparency and creditor engagement that distinguished it from less orderly Caribbean fiscal adjustment episodes. The IMF’s successive programme reviews have confirmed that the primary fiscal targets are being met, and the Fund has expressed qualified confidence in the programme’s trajectory.

For Barbados’s real estate market, the BERT year has been one of careful holding rather than activity. International buyers who had been considering Platinum Coast purchases in the 2017-2018 period largely paused their plans as the debt restructuring process unfolded, unwilling to commit capital in an environment of macroeconomic uncertainty. The Barbadian property professionals who serve this market have operated through a challenging twelve months, maintaining client relationships and property portfolios while waiting for the confidence signal that the BERT programme’s successful execution would eventually provide.

That signal is now beginning to be received. International real estate portals tracking Barbados property inquiry report a measurable uptick in the volume and seriousness of inquiry from European and North American buyers through the first months of 2019. Several St James and St Peter properties that had been on the market for extended periods are now in active negotiation, with buyers who had been monitoring the situation over the past year now moving to transact. It is too early to declare a market recovery, but the directional shift is clear and the Easter season’s strong performance provides additional encouragement.

The Mottley government has also been active in its economic development agenda beyond the fiscal stabilisation programme. Initiatives to attract remote workers and digital nomads — the Barbados Welcome Stamp programme, which allows visitors to work remotely from the island for up to twelve months — are in development and reflect the government’s ambition to diversify Barbados’s economic base and create new categories of property demand beyond the traditional tourism and second-home segments. For the island’s real estate community, this represents a genuinely new demand source that merits careful attention.

Guyana Oil: Building to the Most Anticipated Caribbean Moment in Years

ExxonMobil’s Liza Phase 1 project is advancing through the sequence of commissioning and pre-production milestones that will culminate in the Caribbean’s most anticipated economic announcement in years: Guyana first oil. The Destiny FPSO is in position offshore Guyana, systems commissioning is proceeding, and ExxonMobil’s stated production timeline — first oil before the end of 2019 — continues to be maintained. The Caribbean investment community is watching with a combination of excitement and strategic calculation about how to position for the economic transformation that production will accelerate.

Georgetown’s commercial real estate market has been in a state of sustained extraordinary activity for the better part of two years. The initial wave of energy company arrivals — ExxonMobil, Hess, CNOOC, and their respective contractor and services ecosystems — has been followed by professional services firms (law, accounting, consulting), financial institutions (regional and international banks expanding their Guyana operations), logistics and freight companies, and a growing hospitality sector serving the business travel market. Each of these categories generates real estate demand — for office space, logistics facilities, corporate accommodation, and hotels — that has consistently run ahead of available supply.

The residential market in Georgetown’s better-located suburbs has also been transformed. Areas such as Bel Air Park, Prashad Nagar, and Lamaha Gardens — which have historically housed Guyana’s professional and diplomatic community in comfortable but not extravagant surroundings — are now commanding rents and purchase prices that reflect the extraordinary demand from expatriate energy sector professionals seeking accommodation comparable in quality to what they might expect in Houston, Aberdeen, or Singapore. The premium for quality — well-maintained properties with reliable utilities, security, and modern finishes — is substantial and growing.

For Caribbean investors and developers with the capital and appetite to enter the Guyana market, the window of early-mover advantage is narrowing but has not yet closed. The development pipeline required to meet the medium-term commercial and residential demand will take years to execute, and developers who commit to quality product in well-located Georgetown sites are entering a market that their due diligence suggests will sustain elevated demand levels for the foreseeable future. The risks are real — Guyana’s institutional framework, legal system, and construction sector are all less developed than more established Caribbean markets — but for investors prepared to manage those risks appropriately, the return potential is commensurately compelling.

Jamaica Residential Market: NHT Momentum and the First-Time Buyer

Jamaica’s residential property market is performing solidly across multiple segments, anchored by the National Housing Trust’s continued provision of mortgage financing to qualifying Jamaican employees and the government’s broader affordable housing programme. The NHT’s Q1 2019 disbursement data — showing year-on-year growth in first-time buyer applications and loan approvals — reflects both the underlying demand for housing in Jamaica’s growing urban population and the trust’s improved operational efficiency in processing applications and disbursing funds.

The affordable housing segment that the NHT principally serves has been a consistent area of focus for the Holness government, with the New Social Housing Programme and related initiatives targeting the significant backlog of housing demand that exists across the Kingston Metropolitan Area and in the resort communities of the north coast. The government’s housing targets are ambitious, and execution has been uneven, but the direction of policy is clear: increasing supply at the affordable end of the market while facilitating private development at the upper and tourism-linked segments.

The upper segment of Jamaica’s residential market — resort villas, luxury condominiums, and premium homes in gated communities — is being supported by the intersection of several demand drivers: continued diaspora investment from the large Jamaican communities in North America and the United Kingdom, growing interest from international buyers attracted by Jamaica’s improving security situation and lifestyle offering, and the rental demand from the tourism sector that makes villa ownership increasingly attractive as both a lifestyle and an investment proposition. North coast villa prices in the Montego Bay and Ocho Rios areas have appreciated modestly but consistently over the past two years, reflecting the tightness of quality supply against sustained demand.

Caribbean Leaders This Month

Guyana (Georgetown Commercial): The pre-production oil environment has created a commercial real estate market in Georgetown unlike anything else in the Caribbean — sustained, structural demand running consistently ahead of supply, with the most significant demand phase still to come when production begins.

Jamaica (Easter Performance): Record Easter occupancy across the north coast and Kingston, strong NHT disbursements, and a hotel development pipeline that is the most active in the region make Jamaica the Caribbean’s most comprehensively positive market entering the summer season.

Barbados (Recovery Signals): One year of BERT is beginning to translate into measurable buyer confidence recovery. The international property market is tentatively re-engaging with the Platinum Coast, and the trajectory is positive.

Grenada (CBI Programme): Healthy application volumes continue to channel approved investment into Grenada’s hotel and resort development pipeline. The E-2 Treaty differentiator maintains the programme’s competitive advantage for American applicants.

Dominican Republic (Spring Momentum): Strong Easter performance across Punta Cana and other resort zones confirms the island’s continued tourism momentum going into the summer season, ahead of the hotel safety concerns that will emerge in May.

Trinidad (Post-Carnival Assessment): Carnival 2019 delivered strong commercial returns for Port of Spain’s accommodation and entertainment sectors. The LNG economy provides a stable platform for commercial property despite natural gas production headwinds.

Turks and Caicos (Luxury Strength): Providenciales continues to attract ultra-high-net-worth buyer interest, with capital values and rental yields both performing strongly and the development pipeline advancing carefully within the territory’s rigorous planning framework.

Overall Regional Performer — May 2019: Guyana. The combination of an approaching first oil milestone, an already-transformed Georgetown commercial real estate market, and the most compelling growth story in Caribbean economic history makes Guyana the region’s defining investment story of 2019 — and beyond.

Looking Ahead

The Caribbean enters the summer of 2019 with a genuine sense of optimism that is grounded in real performance data rather than wishful thinking. Tourism is tracking toward what may be a record year. The Guyana oil story is approaching its defining moment. Barbados’s recovery programme is proceeding as planned. Jamaica’s housing and tourism markets are both delivering. And Caribbean interest rates remain at levels that support both local buyer affordability and the return mathematics of international investment.

The near-term calendar brings two important transition moments for Caribbean property professionals. The June 1 opening of the Atlantic hurricane season is the annual prompt for the insurance and preparedness review that responsible property ownership requires. And the approaching peak summer tourism season — the Caribbean’s highest-volume period for international visitor arrivals — will provide the next major dataset on the region’s 2019 tourism momentum and the investment confidence it generates.

For the longer view, the Guyana first oil announcement — expected sometime in the second half of this year — will be the moment at which the Caribbean’s investment story acquires a new and powerful dimension. The region that built its modern prosperity on tourism is adding energy as a second economic pillar, and the property and investment implications of that addition will compound for decades. The professionals and investors who understand this transformation earliest will be positioned to benefit most substantially from it.

The Caribbean Property & Investment Review is published monthly. Edition 87 covers the period 3 April – 2 May 2019. All market data represents conditions during the coverage period. This publication does not constitute investment advice.

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