Caribbean Property & Investment Review — Edition 67 — January 2021

Publication Date: 3 January 2021  |  Coverage Period: 3 December 2020 – 2 January 2021

Morning Briefing

• Caribbean tourism suffered an estimated 65–70% decline in stayover visitor arrivals in 2020 compared to 2019 — the most severe annual contraction ever recorded for the region — as international travel restrictions, border closures, and consumer pandemic anxiety combined to all but eliminate leisure travel for most of the year.
• Despite the tourism collapse, Caribbean property markets have demonstrated a resilience that surprised many market observers, with prices broadly maintaining across most segments and the anticipated wave of distressed selling failing to materialise at the scale many analysts predicted.
• COVID-19 vaccines — Pfizer-BioNTech, Moderna, and AstraZeneca — have received emergency authorisation and initial rollout has begun in the United States and United Kingdom, offering the most tangible basis for optimism about Caribbean tourism and property market recovery in 2021 and beyond.
• Guyana’s oil production continued its expansion trajectory through 2020, with the ExxonMobil-led Liza Phase 1 development providing a structural growth driver entirely disconnected from the pandemic disruption that has so heavily affected the rest of the Caribbean.
• Caribbean diaspora remittances achieved record levels in 2020, defying the pandemic shock and providing crucial support to household incomes and domestic property demand across Jamaica, Barbados, and the eastern Caribbean.
• The Barbados Welcome Stamp, launched in July 2020, has attracted over 4,000 applications by year-end, establishing a template for Caribbean digital nomad programmes that several other jurisdictions are studying and preparing to replicate.

2020 Year in Review: Tourism’s Darkest Year

The Caribbean tourism industry entered 2020 with strong momentum — record arrivals in 2019, full hotel pipelines, buoyant investment in new resort developments, and growing international recognition of the region as a premier leisure destination. By mid-March 2020, that momentum had been utterly reversed. The declaration of COVID-19 as a global pandemic by the World Health Organization on 11 March, followed by cascading national lockdowns, border closures, and the suspension of international commercial aviation across North America and Europe, effectively ended the Caribbean’s 2019–20 winter season in its final and most lucrative weeks.

The full-year 2020 data, now becoming available, confirm the scale of the catastrophe. Caribbean stayover visitor arrivals fell by an estimated 65 to 70 per cent compared to 2019 across the region as a whole, though the range across individual destinations is significant. The Dominican Republic, which reopened to international visitors in July 2020 and maintained a functioning airport and resort complex through the latter part of the year, fared relatively better than fully closed neighbours. The Cayman Islands, which implemented some of the Caribbean’s strictest border controls and effectively eliminated visitor arrivals for the entire year, sits at the other extreme. Most destinations fall somewhere in between, with the majority recording reductions of 60 to 75 per cent in annual stayover arrivals.

The economic consequences of this collapse have been severe. Tourism accounts for between 30 and 80 per cent of GDP in most Caribbean island economies, and its near-total elimination for much of 2020 transmitted across the economy in waves: hotel and resort closures eliminated direct hospitality employment; the closure of hotels reduced demand for local food and beverage supply chains; grounded aircraft eliminated airlift revenues; empty resorts reduced demand for local retail, entertainment, and services of every kind. The multiplier effects of tourism’s collapse were felt by virtually every sector of Caribbean island economies.

The fiscal consequences for Caribbean governments are equally severe. Tourism-generated tax revenues — accommodation taxes, departure taxes, and the income and payroll taxes generated by tourism employment — have fallen sharply, while public health expenditures on pandemic response have increased. Several Caribbean governments have drawn down reserves, borrowed from international financial institutions, and curtailed capital expenditure programmes. The fiscal challenge of pandemic recovery will shape Caribbean economic policy for years to come.

Property Market 2020: The Remarkable Resilience Story

Against this backdrop of tourism catastrophe and economic disruption, the Caribbean property market’s performance in 2020 is one of the year’s more remarkable economic stories. The simple version: prices held, in most markets, most of the time. The distress wave that would have been predicted from a collapse of this magnitude in a lesser market simply did not arrive in the Caribbean.

The structural explanation begins with the financial profile of the market’s participants. International property buyers in the Caribbean are predominantly wealthy individuals acquiring secondary residences, lifestyle assets, or long-term investment properties. They are, as a category, among the most financially robust property owners in the world. The typical luxury Caribbean property buyer in Cayman Islands, Barbados, or Turks and Caicos is not a leveraged speculator dependent on short-term rental yields to service a maxed-out mortgage. They are, more often, individuals with substantial liquid wealth who acquired their Caribbean property as part of a broader asset portfolio that can absorb a period of reduced rental income without triggering a forced sale.

This demographic characteristic of the buyer base translates directly into seller behaviour in a crisis. When income evaporated from rental properties in 2020, the owners of those properties — for the most part — held. They did not sell. They recognised that selling into a disrupted market at a distressed price would crystallise a loss from which recovery would take years; they chose instead to absorb the cash flow interruption and wait. This decision, made individually by thousands of Caribbean property owners across the region, collectively prevented the supply surge that would have driven prices down.

The second major structural support came from the Caribbean diaspora. Diaspora communities — particularly large concentrations of Caribbean nationals in the United States, the United Kingdom, and Canada — maintained and in many cases increased their remittance flows to family members in the Caribbean through 2020. Many diaspora members work in essential services sectors that not only maintained employment through the pandemic but in some cases expanded — healthcare, logistics, and food production. The result was a record year for remittances to the Caribbean, providing a floor to household incomes and sustaining domestic property market activity in the sub-premium segments.

Vaccines: The Foundation for 2021 Hope

The most significant development for the Caribbean property and tourism market outlook as the year turns is the arrival of effective COVID-19 vaccines and the commencement of vaccination programmes in key source markets. The United States began vaccinations on 14 December 2020, with the Pfizer-BioNTech vaccine receiving Emergency Use Authorisation from the FDA. The United Kingdom began its vaccination programme on 8 December 2020 — the first country in the world to do so with a fully authorised vaccine — using the Pfizer-BioNTech product before adding the AstraZeneca vaccine in early January 2021. The Moderna vaccine has also received authorisation and is being deployed in the United States.

For the Caribbean, the vaccination programmes in source markets — particularly the United States and United Kingdom — are perhaps even more important than vaccination within the Caribbean itself for the speed of tourism recovery. The Caribbean’s ability to attract visitors depends fundamentally on those visitors feeling confident enough about their own health, and their country’s position on travel, to book and travel. As US and UK vaccination rates rise through 2021 and consumer confidence returns, the demand for Caribbean leisure travel will recover. The question is how quickly this happens, and whether Caribbean destinations will be ready to receive visitors when demand returns.

Caribbean governments are actively planning for vaccine delivery, with COVAX agreements being finalised and bilateral procurement discussions underway with multiple vaccine manufacturers. The Cayman Islands, as a British Overseas Territory, is expected to benefit from UK-procured vaccine supplies. Several other territories are negotiating their own procurement. The timeline for broad Caribbean vaccination — reaching healthcare workers, the elderly, and ultimately the general adult population — will span much of 2021, but the first doses should be arriving in the Caribbean within the first quarter of the year.

Guyana’s Oil Revolution: A Caribbean Outlier

Guyana’s story in 2020 stands entirely apart from the pandemic narrative that defined the rest of the Caribbean. While tourism-dependent island economies were contracting by double-digit percentages, Guyana’s economy was expanding, driven by the commencement of commercial oil production from the ExxonMobil-operated Liza Phase 1 development on the Stabroek Block in late 2019 and its ramp-up through 2020. By year-end 2020, Guyana is producing in the order of 120,000 barrels per day — a remarkable achievement for a country that had no meaningful petroleum production just three years earlier.

The economic transformation that this oil production is enabling is visible in Georgetown’s real estate market. Commercial property demand from the expanding international oil sector workforce and supply chain has driven occupancy and rental rates for quality office and accommodation space to levels that are exceptional by Caribbean standards. Residential property in Georgetown’s established middle-class suburbs is being actively sought by domestic oil sector professionals whose incomes have improved dramatically with the sector’s expansion. Infrastructure investment — roads, utilities, and public facilities — is accelerating as government oil revenues begin to flow through the budget.

The Liza Phase 2 development, which is expected to add another 220,000 barrels per day of production capacity when it reaches its design output in the early 2020s, is under active construction. The scale of investment flowing into Guyana’s offshore sector from ExxonMobil, Hess Corporation, and CNOOC is creating a construction and engineering boom that will sustain property demand in Georgetown and surrounding areas for years. Regional investors who have identified Guyana as a unique Caribbean property opportunity are already active in the market; those who have not yet examined it are advised to do so.

Remittances and the Domestic Market Foundation

The record remittance flows to the Caribbean in 2020 — running counter to economic intuition given the global recession — have been one of the most important stabilising factors for domestic Caribbean property markets through the pandemic year. World Bank preliminary data indicate that remittance flows to Latin America and the Caribbean actually increased in aggregate through 2020, with Jamaica, the Dominican Republic, Haiti, and several eastern Caribbean nations all reporting above-average diaspora transfers.

The mechanism is straightforward but significant. Caribbean diaspora communities in North America and the United Kingdom are disproportionately employed in essential services — the healthcare, logistics, food production, and utilities sectors that not only maintained employment through the pandemic but faced unprecedented demand pressures. These communities had employment, and they transferred a portion of their earnings to family members at home who were experiencing the economic disruption of the tourism collapse. In some cases, diaspora transfers increased as community members recognised the severity of the economic shock facing their home countries and increased their support accordingly.

For the property market, these remittances have functioned as a floor under domestic demand, particularly in the affordable and mid-market residential segments that serve working-class and middle-class Caribbean families seeking to purchase or improve their homes. Jamaica’s National Housing Trust, Barbados’s housing finance market, and the domestic residential sectors of Guyana, Trinidad, and the eastern Caribbean have all benefited from this sustained flow of family capital.

Caribbean Leaders This Month

Guyana stands alone as the Caribbean’s economic growth story of 2020, with oil production providing a structural expansion driver that is entirely insulated from the pandemic disruption. Georgetown property demand remains exceptional, and the investment pipeline for 2021 and beyond is robust.

Dominican Republic has demonstrated the most commercially pragmatic pandemic management of any major Caribbean destination, reopening in July 2020 and sustaining the highest visitor volumes in the region through the second half of the year. The property market has maintained greater transaction activity than any peer market.

Barbados ends 2020 with the Welcome Stamp programme as its most significant legacy of the pandemic year — an innovative policy response that has attracted international attention and sustained rental demand from a new market segment. Property values on the island have held, and the Welcome Stamp is functioning as a buyer discovery pipeline.

Jamaica closes the year with its property market broadly intact, supported by strong remittances and NHT programme activity. Tourism has begun a cautious restart through the latter part of 2020, and the island is positioning for a more substantial recovery in 2021 as vaccination enables increased airlift connectivity.

Cayman Islands has protected its population through strict border controls at the cost of near-total visitor elimination. The luxury property market, however, has maintained a remarkable level of buyer inquiry from the United States, and the eventual reopening — expected when vaccination rates permit — is anticipated to trigger a surge in transaction activity.

Turks and Caicos Islands reopened to visitors in July 2020 and benefited from strong demand from US buyers and visitors seeking a familiar, high-quality Caribbean experience with minimal travel complexity. Grace Bay’s villa and condo market has been among the most active in the region during the second half of 2020.

Trinidad and Tobago has managed the pandemic with reasonable effectiveness but faces the prospect of Carnival cancellation and continued energy sector revenue uncertainty. The property market is primarily domestic and stable, supported by the energy sector’s income base.

Antigua and Barbuda has sustained its Citizenship by Investment programme through 2020, with real estate applications providing a consistent source of development finance. The programme has demonstrated its value as a demand mechanism that is partially insulated from the short-term disruptions of the tourism cycle.

Looking Ahead

2021 opens with the Caribbean property and tourism market at a pivotal moment. The vaccines that began to be administered in December 2020 represent the most tangible basis for optimism since the pandemic began, but their translation into Caribbean tourism recovery will take time — many months of vaccination rollout in source markets and in Caribbean destinations, followed by a gradual rebuilding of consumer travel confidence, airlift restoration, and operational restart by the hospitality sector. The most realistic expectation is that 2021 will see meaningful improvement relative to 2020 but will not deliver a full return to 2019 levels.

For the property market, 2021 is likely to be a year of transition from resilient holding to active recovery. Transaction volumes, which were compressed throughout 2020, should improve as vaccination reduces uncertainty and travel restrictions ease — allowing buyers who have been conducting their research remotely to visit properties in person and convert their interest into completed purchases. The pent-up demand from buyers who have deferred decisions through 2020 is real and should begin converting through the year.

The risks to this outlook are real: new variants could undermine vaccine effectiveness, vaccination programmes could fall behind schedule in source markets or in the Caribbean, and consumers could prove slower than expected to return to international leisure travel. But the structural case for Caribbean property investment — limited supply, global aspiration demand, diaspora support, and the enduring appeal of the Caribbean as a lifestyle destination — has survived the most severe test in living memory. As 2021 begins, the Caribbean property market is battered but unbroken, and the fundamentals for recovery are assembling.

The Caribbean Property & Investment Review is published monthly, providing analysis of real estate markets, investment trends, and economic developments across the Caribbean region.