Caribbean Property & Investment Review — Caribbean Tourism at Standstill, Emergency Economic Support, Property Market Frozen

Publication Date: 3 July 2020  |  Coverage Period: 3 June – 2 July 2020

Morning Briefing

• The Dominican Republic has confirmed it will reopen its borders to international tourism on July 1, becoming one of the first Caribbean destinations to attempt a restart under a comprehensive health protocol framework that includes mandatory mask-wearing, temperature checks, and enhanced sanitisation at resorts.
• Jamaica has also confirmed a July 1 border reopening for international visitors, operating under a rigorous COVID-19 testing and health monitoring protocol that designates approved tourism zones and requires tested-negative status for entry.
• Tourism arrivals across the non-reopened Caribbean remain effectively at zero, with the June figures expected to show a full-year decline trajectory that will exceed 65–75 percent for 2020 as a whole when final numbers are compiled.
• The CDB’s US$722 million emergency facility is being deployed across member states, with disbursements beginning for the most fiscally stressed economies including those dependent almost entirely on tourism revenue.
• Property transactions remain minimal across most Caribbean markets, with prices broadly holding due to absence of distressed selling rather than any positive demand dynamic — a fragile equilibrium that depends on the continued effectiveness of loan deferral programmes.
• Guyana’s Liza Phase 1 oil production is continuing at approximately 100,000 barrels per day, providing the Guyanese government with a revenue stream that its Caribbean neighbours, entirely dependent on tourism, would desperately welcome.

Jamaica and Dominican Republic: The Pioneer Reopeners

The most consequential Caribbean tourism development of the past month — and arguably of the entire 2020 crisis so far — is the confirmed decision by both Jamaica and the Dominican Republic to reopen their borders to international visitors on July 1. These two destinations, which together account for a significant proportion of the Caribbean’s total tourism capacity, have decided that the economic cost of continued closure outweighs the health risks of a managed, protocol-governed reopening.

Jamaica’s approach, developed by the Tourism Ministry under Minister Edmund Bartlett with input from the Ministry of Health and from hotel operators, centres on the concept of a ‘tourism bubble’ or ‘resilient corridor.’ Visitors will be required to present a negative COVID-19 PCR test taken within a specified period before departure, will be subject to health screening on arrival, and will initially be required to remain within approved accommodation and attraction zones. The Montego Bay tourism corridor — which concentrates the majority of Jamaica’s hotel capacity in the Ironshore and Rose Hall areas — is the primary focus of the initial reopening phase.

The Dominican Republic’s reopening, which has been in planning for longer given the DR’s earlier move into the pandemic cycle, is centred on the massive Punta Cana resort zone and the established resort corridors of La Romana and the north coast. The DR’s framework includes mandatory health insurance for all visitors, health screening on arrival, and a comprehensive contact tracing system. The government has worked closely with the major all-inclusive operators — Bahia Principe, Iberostar, AMR Collection, and others — to develop resort-level protocols that meet international health standards while allowing for meaningful guest experience quality.

The Economics of a Frozen Property Market

The Caribbean property market has now been in effective suspension for three and a half months. Understanding the dynamics of this suspension is important for investors trying to assess what comes next. The key observation is that the absence of transactions does not necessarily signal a market in freefall: in many cases, sellers who might otherwise have come to market have simply chosen not to, reasoning that accepting a pandemic-period price would crystallise a loss that waiting might avoid. Similarly, buyers who were in active search mode before the crisis have generally paused, waiting for more visibility on economic conditions before committing capital.

The mortgage deferral programmes that have been implemented across Jamaica, Barbados, Trinidad & Tobago, and the Eastern Caribbean have been critical to preventing forced selling. Banks that would otherwise have begun foreclosure proceedings on non-performing loans after 90 days have been encouraged by regulators to extend forbearance, and most have done so. This regulatory forbearance is what is preventing a wave of distressed sales that would set prices. The question that looms increasingly large is what happens when forbearance periods end: if the tourism industry has not restarted sufficiently by then to restore incomes for hospitality workers, the deferral-to-default pipeline could become a serious threat to property values.

The National Housing Trust in Jamaica has been navigating this environment with particular care. The NHT occupies a unique position as both a mortgage lender with a large existing loan book and a continuing provider of new mortgage facilities for eligible contributors. Its decisions on forbearance, new lending, and loan book management during this period will have lasting implications for Jamaica’s residential property market. The trust’s financial resilience — built on a mandatory contribution base from Jamaican employees and employers — provides a degree of structural security that purely commercial lenders lack.

Emergency Financing Architecture: CDB and IMF Deployments

The Caribbean Development Bank’s US$722 million emergency support facility has moved from announcement to deployment phase, with disbursements beginning to the most fiscally stressed member states. The facility encompasses several instruments: budget support loans to sovereign borrowers, emergency lines of credit for governments to on-lend to businesses, and technical assistance for economic recovery planning. The terms of CDB emergency lending are concessional relative to commercial rates, which provides genuine fiscal relief to governments that would otherwise face deteriorating debt dynamics.

Multiple Caribbean nations have also successfully accessed the IMF’s Rapid Financing Instrument, which provides emergency balance-of-payments support without the conditionality typically attached to IMF programmes. Barbados, which is already under an existing IMF programme, has worked with the fund to adapt its programme commitments to reflect the pandemic reality. Jamaica has maintained its Extended Fund Facility programme with the IMF while accessing additional emergency support. The IMF has shown considerable flexibility in its engagement with Caribbean member states during this crisis, recognising the exogenous nature of the shock.

Regional development partners beyond the CDB and IMF have also mobilised. The Inter-American Development Bank has deployed emergency facilities to Caribbean member states; the World Bank has activated its Caribbean Catastrophe Risk Insurance Facility disbursements for eligible countries; and bilateral donors including the United States, the European Union, and Canada have announced emergency assistance packages. The aggregate international support, while insufficient to fully replace lost tourism revenue, has provided an important bridge for the most vulnerable island economies.

Guyana: An Oil Producer in a Low-Price World

Guyana continues to occupy a unique position in the Caribbean regional economy. While every other significant Caribbean economy has seen its primary revenue source — tourism — effectively eliminated, Guyana’s Liza Phase 1 oil production continues to flow at approximately 100,000 barrels per day. At current Brent crude prices of approximately US$40 per barrel (having recovered from the extraordinary April lows), this production generates meaningful government revenues that provide a degree of fiscal stability unavailable to tourism-dependent neighbours.

The oil revenues are not without complications. The Guyanese economy was premised on significantly higher oil prices, and the Natural Resource Fund legislation that governs the use of oil revenues imposes rules on how funds can be spent. The domestic economy has also been affected by pandemic-related disruptions, particularly in the services and retail sectors. And the country’s political situation — which has been affected by a disputed March 2020 election result and ongoing legal and constitutional processes around vote certification — has added uncertainty to the investment environment. Nevertheless, the existence of an oil revenue stream distinguishes Guyana’s position from every other Caribbean economy at this moment of regional crisis.

Caribbean Leaders This Month

Jamaica Tourism Minister Edmund Bartlett deserves particular recognition for steering Jamaica to its July 1 border reopening — a decision that required extraordinary coordination across government ministries, the hotel sector, and international airline partners, executed while maintaining rigorous health protocol standards.

Dominican Republic President Luis Abinader, who took office in August 2020 following elections, inherited a government that had already committed to the July 1 reopening framework — but his administration’s continued support for this approach reflects pragmatic economic leadership in a crisis.

Caribbean Development Bank has moved from emergency facility design to active disbursement, with funds beginning to flow to member governments. The quality of its crisis response has reinforced the institution’s credibility as the region’s primary multilateral development vehicle.

National Housing Trust Jamaica continues to provide a stabilising function in Jamaica’s property finance market. Its maintained lending activity and forbearance on existing loans represent a significant positive contribution during the most stressful period in the institution’s history.

ExxonMobil Guyana maintains Liza Phase 1 at approximately 100,000 bpd, a production achievement that provides Guyana with revenues no other Caribbean nation can access in this environment. The operational resilience of this project is remarkable.

Barbados Tourism Authority has used the closure period to develop one of the most innovative recovery initiatives in the region — the Welcome Stamp programme for remote workers, which is expected to be formally launched imminently and has already generated enormous global media interest.

Caribbean Airlines has restored some inter-island routes in preparation for the reopening of Jamaica and the Dominican Republic, providing vital connectivity for the nascent tourism restart and for diaspora travellers seeking to reach family members in the region.

Overall regional performer this month: Jamaica’s tourism reopening leadership, executed with meticulous health protocol preparation, earns the island’s tourism and government sector collective recognition as the month’s standout performer in the regional recovery effort.

Looking Ahead

The July reopening of Jamaica and the Dominican Republic will be the most significant test of Caribbean tourism recovery credibility since the pandemic began. The key metrics to watch in the coming weeks will be airlift restoration — how quickly airlines restore routes and capacity to both destinations — and early hotel occupancy data, which will provide the first real-world indication of whether travellers are willing to return under health protocol conditions.

For the property market, the reopening of borders is a necessary precursor to any meaningful recovery in transaction volumes. International and diaspora buyers who have been conducting remote research will need to visit properties before committing to purchases, and the resumption of air travel makes those visits possible. The August–October period, when travel activity typically picks up after the summer, may see the first meaningful property transaction activity since the pre-pandemic freeze.

The hurricane season remains a constant background threat. August and September are historically the peak months of Atlantic hurricane activity, and the 2020 season has already shown signs of above-normal activity. For a tourism industry attempting to restart, a major hurricane strike on a key destination in this period would be a catastrophic setback. Risk managers across the region are watching the Atlantic Basin with the same anxiety that they are watching COVID-19 case numbers in source markets.

The Caribbean Property & Investment Review is published fortnightly for professionals and investors active in Caribbean real estate and tourism markets. All market data and assessments reflect conditions as of the publication date. This publication does not constitute investment advice.

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