Jamaica Real Estate Roundup — Q3 2020: The Island Reopens, and the Market Begins to Stir

• Jamaica’s borders reopened June 15; Q3 is the first full quarter of limited tourism.
• BOJ holds at 0.50% — pandemic emergency floor supporting economic recovery.
• Residential transactions resuming as the market’s pandemic freeze begins to thaw.
• Diaspora enquiries accelerating; remote purchase interest rising from overseas.
• Economy in deep contraction; construction sector showing early stabilisation.

The third quarter of 2020 was the first full three-month period in which Jamaica’s economy had begun, however tentatively, to operate under the conditions of the COVID-19 era rather than the emergency shutdown conditions of the pandemic’s most acute phase. The government had reopened Jamaica’s borders to international tourists on June 15, 2020, implementing the Resilient Corridor system that confined arriving visitors to resort zones in the western and northern parishes and subjected them to PCR testing, health monitoring and movement restrictions. It was a partial, protocol-laden reopening — not the full resumption of tourism activity that the island’s economy depended on — but it was the beginning of the process through which the sector would work its way back.

The Bank of Jamaica held its overnight policy rate at 0.50 per cent through Q3 2020, maintaining the emergency accommodation floor that the Monetary Policy Committee had established in the pandemic’s acute phase. The BOJ’s Q3 2020 communications acknowledged the depth of the economic contraction — the GDP data for the April-June quarter would ultimately record a decline of more than ten per cent year-on-year, the steepest in Jamaica’s modern economic history — while expressing cautious optimism about the recovery trajectory that the reopening and the domestic economy’s relative resilience outside of tourism were making possible. Inflation remained well within the target range, giving the Bank no reason to complicate the recovery with any premature rate movement. The rate floor would hold, and the low commercial lending rates it supported would continue to provide whatever stimulative monetary contribution was available to a property market navigating the pandemic’s disruptions.

Tourism Under the Corridor System

The Resilient Corridor’s Q3 2020 performance was modest by the standards of pre-pandemic tourism seasons but meaningful as a proof of concept. The major all-inclusive resort operators — Sandals, Beaches, Iberostar, Royalton and others whose properties anchored Jamaica’s resort economy — had reopened under the corridor protocols and were receiving guests whose willingness to travel, despite the pandemic’s ongoing risks and the testing and monitoring requirements, was more robust than the most pessimistic tourism forecasters had projected. The North American market, particularly US travellers in drive-to vacation mode and those willing to fly with enhanced health precautions, was proving more resilient than the European long-haul market, whose travellers faced greater regulatory uncertainty and longer journeys.

The revenue generated by Q3 2020’s limited visitor activity was a fraction of the comparable 2019 quarter’s contribution to the island’s foreign exchange earnings and employment income. Hotel occupancy rates were well below the levels that operators needed to maintain full profitability — a reality that the government’s awareness of translated into the retention of some of the support measures — wage subsidies, utilities relief, loan deferral accommodations — that had been extended to the hospitality sector in the pandemic’s emergency phase. But the corridor was demonstrating that international tourism to Jamaica could operate during the pandemic, and that demonstration was important for the forward planning of operators, developers and the resort-area property market whose fundamentals were tied to the visitor economy’s health.

Residential Market: The Thaw

The residential property market’s Q3 2020 trajectory was one of gradual thawing from the near-freeze that the pandemic’s Q2 acute phase had produced. The deep uncertainty of April and May 2020 — when the island’s curfew and movement restrictions had effectively suspended non-essential economic activity, including in-person property viewings, lawyer office visits and the administrative processes that conveyancing requires — had created a backlog of transactions that were delayed rather than abandoned. As Q3 progressed and the government’s public health measures adapted to a longer-term pandemic management footing, those delayed transactions began to clear.

The character of the market that was re-emerging from the pandemic freeze was already displaying some of the features that would define the boom of 2020-2021. The buyers who were returning to the market in Q3 were, in notable proportion, buyers for whom the pandemic had accelerated rather than deferred a purchase decision. The experience of lockdown in inadequate or cramped accommodation had crystallised the value of homeownership for many Jamaican households whose pre-pandemic attitude had been to defer the decision to a more convenient moment. The more convenient moment had arrived, in the form of historically low financing costs, in the middle of a global health crisis. The counterintuitive logic of a pandemic-era property market — buy now, when conditions have created an opening — was beginning to assert itself in the transaction data.

Diaspora Buyers: A New Engagement

One of the most structurally significant Q3 2020 market features was the acceleration of diaspora buyer engagement with the Jamaica property market. The pandemic had, for Jamaicans living abroad in North America and the United Kingdom, created a set of conditions that increased both the motivation and the means for Jamaica property investment. The motivation had been sharpened by the pandemic’s reminder of mortality and the importance of connection to home: months of pandemic isolation in cities whose appeal had been substantially based on the social, cultural and professional opportunities that the shutdown had reduced or eliminated had prompted a reassessment of the value of a Jamaican property base. The means had increased because pandemic-era savings accumulation — reduced expenditure on travel, entertainment, dining and the other consumption categories that the lockdown had suspended — had left many diaspora earners with deposit savings that had been building faster than in a normal year.

The practical mechanics of diaspora property purchase — always a challenge when the buyer was thousands of miles from the property and the relevant legal and administrative systems — were being adapted to the pandemic’s reality. Virtual property viewings, online document submission, video consultations with attorneys, and the use of trusted local intermediaries for physical inspection and oversight were all becoming more standard. Developers who had built effective online marketing capabilities and were willing to work with buyers through remote purchase processes were capturing demand from overseas buyers who, in the pre-pandemic market, would have been expected to visit Jamaica in person before committing to a major purchase. The pandemic had, paradoxically, reduced some of the friction in the diaspora purchase process by normalising the remote transaction model.

NHT and Affordable Housing

The National Housing Trust’s Q3 2020 operations were navigating the competing demands of its social mandate and the operational realities of the pandemic environment. On the social mandate side, the acute housing need of the island’s working population had not diminished during the pandemic — if anything, the lockdown experience had intensified awareness of housing inadequacy among households whose cramped, poorly ventilated or structurally deficient accommodation had become inescapably visible during months of extended home occupation. On the operational side, the pandemic had disrupted the NHT’s conveyancing pipeline, introduced uncertainty about the employment stability of contributors whose qualifying income was at risk from pandemic-related job loss, and required the Trust to implement COVID-safe processes that affected its service delivery speed.

The NHT’s Q3 2020 response balanced these competing demands through a combination of operational adaptation — digitising processes where possible, implementing safe distancing measures in its service centres — and continued commitment to its development pipeline. Scheme housing projects that had been in progress before the pandemic were advancing toward completion on timelines that the construction disruptions of Q2 had delayed but not abandoned. The Trust’s communication with its contributor base through the period emphasised the continuity of its services and the ongoing accessibility of its mortgage products, maintaining the confidence of contributors who were the primary beneficiaries of the affordable housing supply.

Construction: Stabilising but Challenged

The construction sector’s Q3 2020 position was one of stabilisation after the acute disruption of Q2. The sector had been significantly affected by the pandemic’s operational restrictions: site access constraints, health and safety compliance requirements that reduced the productivity of site operations, the absence of some skilled labour that had been displaced or unable to work under the pandemic conditions, and the supply chain delays that were affecting the availability and cost of imported building materials. By Q3, the sector had adapted to these constraints with enough competence to resume meaningful activity, but the costs of adaptation — reduced output per site, extended project timelines, higher unit costs for materials and safety compliance — were being absorbed by developers whose project budgets had not anticipated them.

Outlook: A Market Rebuilding

The third quarter of 2020 closes with Jamaica’s property market in the early stages of a recovery that none of its participants are yet willing to characterise as assured. The tourism sector’s limited Q3 activity has demonstrated survival capacity without demonstrating a path to the pre-pandemic volumes that the island’s economy — and the resort-area property market — depend upon. The residential market’s thaw is real but incomplete: transactions are resuming, demand is visible, but the volume and value of activity is below the 2019 baseline across most metrics. The NHT is operational but operating at reduced throughput. The construction sector is working but at a higher cost and lower speed than its pre-pandemic capacity allowed.

What is also visible in the Q3 data, for those reading it carefully, is the seedbed of what will become the 2021 demand surge. The diaspora buyer engagement is intensifying. The domestic buyer whose pandemic experience has crystallised a homeownership aspiration is beginning to act. The financing conditions — the 0.50 per cent overnight rate, the commercial mortgage rates it has enabled — are more favourable than any experienced Jamaica property professional has encountered in their career. The conditions for a property market recovery that goes beyond the restoration of pre-pandemic norms are assembling. Q4 will begin to reveal whether the harvest from those conditions is as significant as the seedbed implies.

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