Caribbean Property & Investment Review — Edition 86

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

Morning Briefing

• The 2019 Atlantic hurricane season officially opens on 1 June, with NOAA forecasting a near-normal season — 9 to 15 named storms, 4 to 8 hurricanes, 2 to 4 major hurricanes
• Jamaica’s Tourism Minister Edmund Bartlett announces the island is on track for its best-ever year, with April arrivals confirming continued double-digit growth in stopover visitor numbers
• Barbados Prime Minister Mia Mottley’s economic reform agenda advances as IMF staff complete their second review, noting progress on fiscal targets and praising the government’s commitment
• Caribbean Development Bank approves funding for infrastructure projects across three member states during May, underscoring multilateral confidence in regional development priorities
• Grenada’s Citizenship by Investment programme reports strong Q1 2019 uptake, with approved applications translating directly into hotel and resort investment commitments across the island
• Renewable energy capacity in the Caribbean continues to expand, with solar and wind projects advancing in Barbados, Jamaica, and Antigua as governments pursue energy security and cost reduction goals

Hurricane Season 2019 Opens: Caribbean Property Sector on Alert

The formal opening of the 2019 Atlantic hurricane season on 1 June placed the Caribbean’s property and insurance sectors on their annual footing of heightened vigilance. NOAA’s seasonal forecast, released in late May, called for a near-normal season with 9 to 15 named storms and the possibility of 2 to 4 major hurricanes reaching Category 3 or above. While the forecast was less alarming than the pre-season outlooks that had preceded the catastrophic 2017 season — which produced Irma and Maria — the memory of those storms remained fresh in the minds of Caribbean property owners, developers, and insurers.

Property insurance across the Caribbean had experienced significant market hardening following the 2017 season, with premiums rising sharply and some insurers withdrawing coverage from the most exposed island markets. By mid-2019 the insurance market had partially stabilised, though costs remained elevated compared to the pre-Irma environment. Reinsurance capacity was available but priced at levels that continued to put pressure on hotel and resort operators, particularly those on smaller islands with limited ability to diversify risk. Several major resort groups operating across the region had begun to self-insure portions of their exposure or to structure captive insurance arrangements that offered greater cost predictability.

For residential property owners, particularly in the Windward Islands and Leeward Islands, the cost of adequate hurricane insurance remained a significant burden. The Eastern Caribbean Insurance Corporation and private market carriers had seen claims from the 2017 and 2018 seasons run well above historical averages, and the resulting premium adjustments made comprehensive cover increasingly unaffordable for middle-income households. Policy debates in several island states around mandatory building codes, improved public-private risk-sharing mechanisms, and the potential role of parametric insurance products were ongoing, though translating discussion into affordable solutions remained challenging.

Caribbean CBI Programmes: Driving Hotel and Resort Investment

Citizenship by Investment programmes across the eastern Caribbean continued to serve as a significant engine for hotel and resort development in the first half of 2019, with Grenada, Saint Kitts and Nevis, Dominica, Antigua and Barbuda, and Saint Lucia all operating active schemes that channelled international investment into approved real estate and development projects. The programmes operated on a fundamental alignment of interests: governments received foreign exchange inflows and economic activity, developers received a reliable pipeline of qualified pre-sale investors, and applicants received a second passport that came with specific travel or residency advantages.

Grenada’s programme maintained a strong reputation among the eastern Caribbean CBI offerings through the coverage period, partly because of its unique position as the only Caribbean CBI programme whose passport holders can apply for US E-2 investor visas. This distinctive feature made Grenada’s programme particularly attractive to investors from countries whose nationals cannot themselves apply for E-2 visas directly, opening a market segment that other Caribbean programmes were unable to access. Developer-approved projects in Grenada’s south coast and St George’s area reported strong pre-sales activity through May 2019, with several boutique resort developments approaching full subscription at the pre-construction stage.

The overall competitiveness of the eastern Caribbean CBI landscape was keeping programme administrators alert to pricing and due diligence standards. Caribbean financial regulators and the Caribbean Financial Action Task Force had maintained pressure on governments to apply rigorous vetting to applicants, and jurisdictions seen as cutting corners on due diligence risked reputational damage that could undermine their programmes’ marketability. This dynamic had produced a general improvement in compliance standards across the region’s CBI offerings, with programme marketing increasingly emphasising transparency, processing integrity, and the quality of approved investment projects rather than simply speed or price.

Jamaica’s Hotel Pipeline: Major Brands Continue to Commit

Jamaica’s hotel construction pipeline remained one of the Caribbean’s most active through May 2019, with international hotel brands continuing to commit to new and expanded properties along the island’s north coast tourism corridor. Montego Bay’s hotel capacity was expected to increase materially over the next two years as projects already under construction moved toward completion, adding inventory across multiple price points from the affordable all-inclusive segment to boutique luxury. The Jamaica Tourist Board had consistently supported this expansion with data confirming that airlift capacity — a critical constraint on any island tourism market — was keeping pace with room supply growth.

The rise of the boutique and lifestyle hotel concept was visible in Jamaica’s development pipeline alongside the island’s established dominance in all-inclusive formats. Younger travellers increasingly sought accommodation with a stronger sense of place and local character than the traditional all-inclusive product offered, and several developers were responding by proposing smaller, design-led properties in areas outside the main resort zones. Ocho Rios, Portland, and the Blue Mountains foothills were all mentioned in development discussions during the coverage period as locations where alternative tourism product could complement Jamaica’s mainstream offer.

The spillover effects of Jamaica’s hotel expansion on the residential property market remained significant. The island’s established dynamic — in which tourism growth drives demand for staff housing, vacation rentals, and supporting commercial real estate — was operating as expected, with communities surrounding the main resort zones experiencing increased property values and rental rates. For local residents, this dynamic brought wealth creation opportunities but also affordability pressures, and community planning bodies were increasingly engaged in conversations about how residential development should be managed alongside tourism growth.

Caribbean Renewable Energy: Investment Accelerating

Investment in renewable energy infrastructure across the Caribbean accelerated through the first half of 2019, with solar, wind, and geothermal projects advancing at various stages of development from feasibility through construction across multiple islands. The underlying drivers were powerful: Caribbean islands pay among the highest electricity costs in the world when relying on imported fossil fuels, and the declining cost of solar and wind technology had made renewable projects increasingly cost-competitive. Governments across the region had set ambitious renewable energy targets — Jamaica aimed for 50% renewable by 2030, Barbados for 100% by the same date — and the pipeline of projects reflected growing confidence that these goals were achievable.

For the property sector, the progression of Caribbean renewable energy had direct implications. Hotels and resorts with on-site solar generation capacity were insulated from the volatility of fuel-dependent electricity pricing, reducing operating costs and improving the predictability of utility bills — a material advantage in the economics of hospitality investment. Residential developments incorporating solar installations were beginning to emerge in several markets, and advisers noted that energy-efficient properties were commanding modest premium valuations in the sales market as buyers became more aware of long-term running cost differences.

Barbados’s commitment to 100% renewable electricity by 2030 represented the most ambitious target in the English-speaking Caribbean and had attracted attention from international renewable energy developers and financiers. Under Prime Minister Mottley, the government had moved swiftly to engage the private sector in delivering renewable capacity, with reverse auctions for solar IPP contracts drawing competitive bids from both local and international developers. The revenue certainty offered by long-term power purchase agreements underpinned the bankability of these projects, making them attractive to infrastructure-focused institutional investors seeking stable long-term returns.

Caribbean Leaders This Month

Jamaica maintained its position as the Caribbean’s leading tourism market by volume among English-speaking islands, with April arrivals data confirming the island’s trajectory toward a record full year. Hotel investment commitments from international brands underscored structural confidence in Jamaica’s long-term appeal.

Barbados secured a standout result as the IMF completed its second programme review with positive findings. The government’s renewable energy ambitions added a forward-looking narrative to what had previously been primarily a stabilisation story, attracting a new category of international investor interest.

Grenada continued to lead among the eastern Caribbean CBI jurisdictions for programme quality and developer project activity. The E-2 visa pathway remained a unique competitive advantage, driving applications from market segments that competing programmes could not access.

Dominican Republic sustained its tourism volumes through May despite the early-year headwinds around isolated incidents in the hotel sector, demonstrating the resilience of demand for the country’s resort product among its core European and regional source markets.

Antigua and Barbuda recorded progress in its Barbuda reconstruction efforts following Hurricane Irma in 2017, with new housing units completed and the island beginning to resume limited tourism activity. The recovery arc remained long but the direction of travel was encouraging.

Saint Kitts and Nevis maintained a strong CBI programme performance, with programme revenues continuing to contribute a material share of government income and funding infrastructure investment that benefited the wider population.

Trinidad and Tobago reported stable commercial property activity in Port of Spain, supported by the energy sector’s sustained demand for office and industrial space. Tobago’s tourism product continued its incremental improvement with new hotel capacity under construction.

Overall May performer: Barbados, for combining strong IMF programme results with ambitious renewable energy commitments — a combination that positioned the island as both a reformed fiscal story and a forward-thinking investment destination.

Looking Ahead

The summer months will determine whether Caribbean tourism can sustain the exceptional momentum of the first quarter into the traditionally softer mid-year period. Early forward booking indicators for June through August are encouraging, particularly for Jamaica and the Dominican Republic, and airlift from North America remains healthy. Hotel operators across the region are well placed to maximise summer occupancy if current demand trends hold.

Hurricane season monitoring will remain a constant backdrop throughout the summer. Caribbean property and tourism stakeholders have become increasingly sophisticated in their hurricane preparedness practices following the 2017 season, and the industry’s resilience planning — from physical hardening of structures to business interruption contingencies — is materially stronger than it was two years ago. The season’s early weeks are traditionally quiet, but the peak risk period from August through October will focus minds.

Investment activity is expected to remain robust through the second half of 2019, with CBI programme inflows, hotel development commitments, and the approaching Guyana oil era all contributing to a broadly positive regional investment climate. The Caribbean’s attraction as both a tourism destination and an investment location appears durable, and the structural trends underpinning property demand — growing middle classes in source markets, strong diaspora connection, and the region’s unmatched lifestyle credentials — show no sign of diminishing.

The Caribbean Property & Investment Review is published monthly. All market data and commentary reflect conditions during the stated coverage period. This publication does not constitute investment advice.