Caribbean Property & Investment Review — Edition 75: Tourism Complete Halt, Oil Price Collapse Hits T&T, Economic Emergency Deepens

Publication Date: 3 May 2020  |  Coverage Period: 3 April – 2 May 2020

Morning Briefing

• WTI crude oil futures briefly turn negative on April 20 — an extraordinary historic first — as storage capacity fills and global demand collapses; Brent falls below $20 per barrel
• Caribbean tourism records zero meaningful arrivals for the entire month of April; cruise operations suspended industry-wide with no restart date
• Trinidad and Tobago government faces severe budget pressure as energy revenues collapse alongside tourism — Heritage and Stabilisation Fund being drawn down
• Dominican Republic maintains limited internal operations as the only major Caribbean destination still nominally open, though international arrivals are negligible
• IMF approves emergency financing for Barbados, Jamaica and several Eastern Caribbean nations under Rapid Financing Instrument
• Caribbean property market: all transaction activity frozen; mortgage deferral programmes now widely activated across the region

The Oil Price Shock: A Second Body Blow

Just as Caribbean governments were beginning to quantify the scale of tourism revenue collapse, April delivered a second shock of historic proportions. On April 20, 2020, front-month WTI crude oil futures turned negative for the first time in history, briefly trading at minus $37 per barrel as physical storage in the United States approached capacity and producers had nowhere to send their output. While this extraordinary intraday extreme was partly technical — driven by futures contract mechanics — it reflected a genuine and catastrophic collapse in global energy demand. Brent crude, the benchmark for most Caribbean-relevant oil trade, fell below $20 per barrel during April, levels last seen in 2002.

For Trinidad and Tobago, which depends on energy exports for approximately 40% of government revenues, the oil price crash compounded an already severe economic crisis. The energy sector — including petrochemicals, LNG, and upstream oil production — is the foundational pillar of T&T’s economy and finances the public services and social programmes that buffer the population from external shocks. With prices at these levels, the fiscal arithmetic is brutal. Finance Minister Colm Imbert has confirmed that the Heritage and Stabilisation Fund, built up over years of energy booms, is being drawn upon to maintain government operations.

Guyana’s new oil producer status, celebrated with such optimism when Liza Phase 1 production commenced in December 2019, is now generating far less revenue than the ambitious projections that surrounded the discovery. ExxonMobil’s operations at Liza are continuing — the company has confirmed it is maintaining production — but at oil prices below $25 per barrel, the royalties and profit-sharing proceeds flowing to the Guyanese government are a fraction of what was anticipated. The long-term transformative potential of Guyana’s oil wealth is unchanged, but the near-term revenue windfall that Georgetown had hoped would fund public services and development is severely diminished.

Tourism Complete Halt: The Economic Scale of Collapse

April 2020 represents, by every measurable metric, the worst month in Caribbean tourism history. Where March saw the collapse of existing bookings and the emptying of hotels as borders closed, April was characterised by absolute zero: no arrivals, no cruise calls, no villa rentals, no resort openings. The Caribbean Tourism Organization reports that stopover visitor arrivals for April 2020 across all member states are down by approximately 99% against April 2019. This is not a downturn. It is the effective cessation of the industry.

The economic consequences are being rapidly tabulated by regional and international institutions. The IMF’s World Economic Outlook projects GDP contractions of 10–15% for the most tourism-dependent Caribbean small states in 2020 — figures that would represent the most severe economic contractions since these nations gained independence. The Economic Commission for Latin America and the Caribbean (ECLAC) has issued similarly alarming projections. For islands like Antigua and Barbuda, St Lucia, and the Bahamas, where tourism accounts for 60–80% of economic activity, the duration of the shutdown is directly correlated with the depth of economic scarring.

Emergency food security concerns are emerging across several islands. The Caribbean imports a large proportion of its food, and the combination of reduced fiscal revenues, disrupted shipping, and mass unemployment is creating vulnerability among lower-income households. Regional food security organisations and the Caribbean Agricultural Research and Development Institute (CARDI) are calling for accelerated investment in local food production — a structural recommendation that has been made for decades but has taken on new urgency.

Property Market: Frozen but Fundamentally Sound

Caribbean property markets remain effectively frozen for the second consecutive month. Transaction volumes are at historic lows across all segments. The luxury market, which had been tracking towards another record year in early 2020, is in suspended animation: buyers are unable to travel, vendors are not motivated to discount in distress, and agents are maintaining contact with clients but conducting no viewings. The market is not breaking; it is waiting.

Mortgage deferral programmes are now operational across the region. Jamaica’s commercial banks and the National Housing Trust have both implemented 90-day payment moratoriums for affected borrowers. Barbados’s Central Bank has coordinated with commercial lenders to implement similar relief. In the Dominican Republic, the Superintendency of Banks has mandated a moratorium on mortgage foreclosures. These measures are preventing the kind of forced sales that could trigger price declines, and they represent sound policy for preserving the post-pandemic integrity of property markets.

One emerging bright spot, noted by property agents in Jamaica, Barbados and the Cayman Islands, is a meaningful increase in online property searches from diaspora buyers in North America and the UK. The lockdown has caused many Caribbean-born professionals living abroad to contemplate relocation or second-home acquisition in a newly urgent way. Several agents report that virtual property tours and video consultations are increasing, even if they are not yet converting to transactions. This diaspora interest represents a potential reservoir of demand that could accelerate the post-pandemic market recovery.

Caribbean Leaders This Month

Barbados PM Mia Mottley continues to lead the regional response with distinction. Barbados secured IMF Rapid Financing Instrument support in April, adding to the international financial resources available for the government’s emergency programme. Mottley has been outspoken internationally about the need for multilateral debt relief for small island states, arguing forcefully at virtual G20 meetings that Caribbean nations face a unique vulnerability that standard facility terms do not adequately address.

Jamaica PM Andrew Holness navigated a politically sensitive national election context while managing the pandemic emergency. The government’s CARE programme — providing cash transfers to displaced workers — represents one of the largest social protection interventions in Jamaica’s history. The NHT’s mortgage relief programme is protecting the homeownership gains made over the previous decade.

Dominican Republic President Danilo Medina announced an ambitious US$1.3 billion economic stimulus package in April, including direct cash transfers, credit facilities for small businesses, and support for the hospitality sector. The DR’s relatively larger domestic economy provides somewhat greater fiscal flexibility than smaller island states.

T&T PM Keith Rowley announced emergency economic measures including food voucher programmes and business support packages even as government revenues were simultaneously collapsing from both the energy sector and tourism. The dual crisis is without precedent in T&T’s recent economic history.

CARICOM Secretary-General Irwin LaRocque coordinated a landmark regional procurement exercise to source PPE and medical equipment collectively — demonstrating that Caribbean regional cooperation can deliver practical benefits in crisis conditions where individual small states would struggle to compete in global medical supply chains.

Cayman Islands Premier Alden McLaughlin implemented one of the Caribbean’s strictest lockdowns, including a brief shelter-in-place order in early April. The Cayman Islands’ strong fiscal reserves and financial sector — independent of tourism as a primary revenue source — provide considerably greater economic resilience than most Caribbean neighbours.

Guyana President Irfaan Ali is managing the early months of his presidency under extraordinary conditions: pandemic, oil price collapse, and the need to build governance credibility following the disputed 2020 election. His administration’s handling of these overlapping crises will shape international investor confidence in Guyana’s emerging economy.

Overall regional performer this month: Jamaica’s National Housing Trust, whose rapid mortgage deferral programme protected the homeownership of hundreds of thousands of NHT contributors at the moment of maximum economic vulnerability. This is exactly what a national housing institution should do in a crisis.

Looking Ahead

The critical variable for the next sixty days is the trajectory of COVID-19 in North America and Europe. If infection curves continue to flatten in key source markets through May, there is a possibility that some Caribbean governments could begin planning cautious, structured reopening in June or July — potentially with testing protocols, health attestations, and capacity-limited resort operations. Several Caribbean tourism ministers have begun consulting with health authorities about what a safe reopening framework could look like, though no firm dates are being publicly committed to.

Oil markets will take considerably longer to recover. Even if the extraordinary negative price episode of April 20 was partially technical, the fundamental supply-demand imbalance in global oil markets — with production running far ahead of consumption during global lockdown — will take months to rebalance. T&T and Guyana will need to manage through a prolonged period of depressed energy revenues, with implications for public investment and social spending programmes that also support real estate and construction activity.

For Caribbean property investors with a horizon of three to five years, the fundamentals of the region’s appeal — climate, lifestyle, diaspora connection, constrained supply — remain intact. The question is not whether Caribbean property values will recover but when and how quickly. The speed of economic reopening and the depth of mortgage and business support over the next two to three months will be the primary determinants of how many property owners survive the crisis without being forced into distressed sales — and therefore how orderly the post-pandemic market recovery will be.

The Caribbean Property & Investment Review is published for information purposes only and does not constitute investment advice. All data sourced from publicly available regional and international sources. © 2020 Caribbean Property & Investment Review.