Omicron Wave Tests Caribbean Tourism Recovery — February 2022

Publication Date: 3 February 2022  |  Coverage Period: 3 January – 2 February 2022

Morning Briefing

• The Omicron variant drove a significant but short-lived surge in COVID-19 cases across the Caribbean and in major source markets during January 2022, with several islands reporting elevated community transmission even as the severity of illness in vaccinated populations proved generally mild.
• Jamaica reported January tourism arrivals approximately 20–25% below the same month in 2019, representing a meaningful step back from the progress achieved in Q3 and Q4 2021, though the Tourism Ministry emphasised that the decline was substantially driven by Omicron-related hesitancy rather than destination-specific factors.
• Barbados maintained its open-border approach through the Omicron wave, welcoming vaccinated travellers without quarantine and continuing to position the Welcome Stamp programme as a draw for long-stay remote workers and property buyers.
• The Bank of Jamaica raised its policy rate by 100 basis points in January 2022 to 1.5%, beginning a monetary tightening cycle in response to rising domestic inflation, with implications for the mortgage market and first-time buyer affordability that will materialise over coming months.
• Geopolitical tensions between Russia and Ukraine continued to mount through January, with NATO nations and Russia exchanging diplomatic warnings and military posturing that is creating unease in global commodity and energy markets, though the situation has not yet escalated to open conflict.
• Caribbean property markets showed continued resilience in January, with diaspora buyer activity and digital nomad demand sustaining transaction volumes even as Omicron travel restrictions temporarily crimped in-person property viewing and decision-making.

Omicron’s Impact: A Wave That Is Cresting

January 2022 will be remembered as the month the Omicron variant tested Caribbean tourism’s recovery to its limits. The wave that began building in late November 2021 following the WHO’s identification of the new variant reached its peak across most Caribbean islands and major source markets during December and January, causing significant disruption to what should have been the industry’s best holiday season since the pandemic began.

The impact was felt most acutely in the luxury hotel and villa rental sectors, where international travellers — particularly from the UK and Canada, where domestic restrictions were tightened in response to Omicron — represented a disproportionate share of cancellations. Jamaica’s tourism authority reported that January arrivals were down approximately 20–25% on 2019 comparators, a significant reversal from the progress achieved in the October–November 2021 period. Barbados similarly saw a pullback, with hotel occupancies falling below budget through much of January before beginning to recover as Omicron case counts declined in source markets.

However, there are important reasons for cautious optimism as the Omicron wave appears to be cresting. The variant’s impact on vaccinated individuals has proved broadly milder than feared, with Caribbean health authorities reporting that severe illness and hospitalisation rates remained manageable even at peak transmission. This is a crucial distinction from earlier pandemic waves: the health system impact of Omicron has not forced Caribbean governments to consider the kind of sweeping tourism restrictions that devastated 2020. Most Caribbean islands maintained open-border policies for vaccinated travellers throughout January, and the consensus among health authorities that Omicron represents a transition toward endemic COVID management is providing a basis for renewed travel confidence as February begins.

The short-term rental market has proven somewhat more resilient than the hotel sector through the Omicron period. Smaller private villa rentals, where guests have greater isolation from other travellers, have seen a lower cancellation rate, and Airbnb and VRBO platforms report that Caribbean listings are beginning to see a recovery in bookings for March and April as travellers who deferred January and February holidays look to reschedule.

Bank of Jamaica Rate Rise: Implications for the Property Market

The Bank of Jamaica’s decision to raise its policy rate by 100 basis points to 1.5% in January 2022 was significant and somewhat more aggressive than some market participants had anticipated. The BOJ cited rising inflation — driven by a combination of global supply chain pressures, elevated commodity prices, and recovering domestic demand — as the primary motivation for beginning its tightening cycle. The decision aligns Jamaica with a broader global trend of central bank policy normalisation as economies emerge from the ultra-accommodative stances adopted during the pandemic.

For the Jamaican property market, the rate rise has two primary implications. First, commercial bank mortgage rates — which are typically priced at a spread above the BOJ policy rate — will gradually adjust upward, increasing the monthly servicing cost of new mortgages and potentially reducing the purchasing power of first-time buyers. Second, the NHT’s own mortgage product pricing will come under review, with the Trust needing to balance its mandate to support affordable homeownership against the reality of a rising rate environment. The NHT has historically maintained below-market mortgage rates through cross-subsidy, and this capacity should allow it to absorb some of the rate cycle impact for its core borrower base.

The immediate impact on property market activity is likely to be modest. The BOJ’s 1.5% rate remains historically very low, and mortgage rates in Jamaica are still supportive of property transactions across most price bands. However, the direction of travel is now firmly toward higher rates, and the cumulative effect of further BOJ tightening — which most analysts anticipate through 2022 — will need to be factored into buyer affordability calculations and developer pre-sales assumptions as the year progresses.

Russia-Ukraine Tensions: An Emerging Commodity Risk

The escalating tensions between Russia and Ukraine represent an emerging risk that Caribbean economic planners are beginning to monitor carefully. Through January 2022, Russian military forces massed in large numbers along Ukraine’s borders while diplomatic efforts by NATO nations, the EU, and individual European governments to de-escalate have yielded limited results. As of this publication’s date, the situation has not escalated to open military conflict, but the risk premium embedded in global energy markets is already evident: Brent crude oil has been trading above $85 per barrel through much of January, driven in part by geopolitical uncertainty alongside strong demand recovery.

For the Caribbean — a region that is heavily import-dependent for fuel and deeply exposed to global commodity price movements — sustained elevated oil prices are an unwelcome development. Fuel costs represent a significant proportion of electricity generation costs for most Caribbean islands, and pass-through to consumers and businesses happens relatively quickly. Several Caribbean electricity utilities are already operating under tariff structures set when oil was substantially cheaper, creating financial strain that will require either tariff adjustments or government subsidy to resolve.

The construction sector is also watching global commodity markets carefully. Steel, which is closely correlated with energy input costs, has already seen significant price inflation through 2021. A further leg of commodity price inflation driven by geopolitical disruption in Eastern Europe would compound the construction cost pressures that are already the Caribbean property market’s most significant supply-side constraint. At this stage, however, the Russia-Ukraine situation remains a risk factor rather than a realised shock, and the Caribbean region is managing on the basis that diplomatic resolution remains possible.

Caribbean Property Markets in January: Resilience Through Disruption

Despite the Omicron headwind, Caribbean property markets showed notable resilience during January 2022. The diaspora buyer segment — Jamaicans, Barbadians, and Trinidadians in the UK, US, and Canada who have been accumulating savings during the pandemic and are now actively reinvesting in Caribbean real estate — continued to transact at elevated levels. Conveyancing practitioners across Jamaica, Barbados, and Trinidad report that January completion volumes held up reasonably well, with many transactions that had been agreed in late 2021 moving through to completion despite the Omicron disruption.

The digital nomad and remote-work buyer category also continued to generate activity. Barbados’s Welcome Stamp programme has generated a cohort of long-term residents who, having tested Caribbean living for extended periods, are now making permanent property purchase decisions. Several property law firms in Barbados report that Welcome Stamp holders represent a meaningful share of their 2022 buyer enquiries, with a preference for two- and three-bedroom apartments in the Saint James and Christ Church corridors offering beach or sea access.

In the Dominican Republic, the real estate market showed its customary resilience, with Cap Cana continuing to attract North American and European buyers at strong prices. The DR’s relative insulation from the Omicron shock — enabled by its geographical advantage as a large market with strong US airline service and a visitor base that tends toward longer stays — meant that January property viewings and transaction activity held up better than in smaller island markets.

Guyana: Oil Output Growth and Real Estate Pressure

Guyana’s oil sector entered 2022 with optimism. The ExxonMobil consortium’s Liza Phase 1 development is producing at capacity, and the Liza Phase 2 FPSO vessel is progressing toward its expected commissioning, which should add materially to national output. At current oil prices above $85 per barrel, Guyana’s revenue generation from the Stabroek Block is substantially above the assumptions underpinning the 2022 national budget, providing fiscal headroom that the government will need to manage prudently.

Georgetown’s real estate market continues to reflect the oil boom’s disruptive effects. Commercial rents in the capital’s main business districts have reached levels that were unimaginable a decade ago, and the residential market for quality housing accessible to expatriate oil workers remains acutely tight. The government’s accelerated housing programme, funded partly from oil revenues, is beginning to add supply to the market, but the pace of delivery remains insufficient relative to demand. Pressure on housing affordability for ordinary Guyanese families in the Georgetown metro area remains acute and represents a significant policy challenge for the Ali administration.

Caribbean Leaders This Month

Barbados continues to lead on the tourism-recovery narrative, maintaining its open-border stance through the Omicron wave and continuing to demonstrate that the Welcome Stamp approach attracts a high-value, long-stay visitor who contributes disproportionately to the property market and local economy.

Dominican Republic posts another month of relative outperformance — its scale and infrastructure mean that even during Omicron disruption it maintains higher absolute visitor volumes than most Caribbean neighbours, and its property market continues to attract strong foreign investment.

Guyana is managing a productive dilemma: oil revenues are growing faster than budget assumptions at current prices, but the challenge of converting that wealth into broadly shared prosperity while managing real estate and living cost pressures in Georgetown requires careful governance.

Jamaica faces a more complex month — Omicron has dented January tourism numbers and the BOJ rate rise marks the beginning of a tightening cycle that will gradually affect mortgage affordability. But the structural fundamentals of the property market — diaspora demand, NHT support, luxury tourism sector investment — remain intact.

Trinidad and Tobago is benefiting from elevated global LNG prices that are providing fiscal relief, though the island’s domestic economy is recovering more slowly than tourism-dependent neighbours. The property market is quiet relative to Jamaica and Barbados.

Cayman Islands continues to build toward a full reopening, with the luxury property market showing strong interest from buyers and renters who have been unable to visit during the long period of border restrictions.

St Kitts and Nevis reports continued strength in its Citizenship by Investment programme, which continues to generate significant real estate investment linked to its hotel and approved property inventory.

Overall Performer of the Month: Dominican Republic. The DR’s consistent performance through the Omicron disruption — maintaining stronger relative arrivals and property market activity than most regional peers — makes it the standout market for January 2022.

Looking Ahead

February is traditionally a strong month for Caribbean tourism, drawing visitors from cold-weather markets in North America and Europe. The critical question is how quickly Omicron case counts decline in source markets and whether travel confidence recovers in time for the Valentine’s Day travel period and the broader February peak. Early booking data for the second half of February and for March are showing a recovery from the January trough, which is an encouraging signal.

The Russia-Ukraine situation will be closely watched by Caribbean economic authorities. If tensions escalate to the point of military conflict and associated sanctions, the impact on global energy and commodity prices could be substantial and would represent a significant adverse shock for Caribbean import-dependent economies. Caribbean central banks and finance ministries are monitoring the situation but are appropriately cautious about making policy adjustments to a risk that has not yet materialised.

The Bank of Jamaica’s rate tightening cycle will be a recurring theme for the Caribbean property market through 2022. Buyers, developers, and mortgage lenders should all be factoring a higher rate environment into their planning assumptions. The pace of BOJ tightening will depend significantly on how quickly domestic inflation responds to monetary tightening and whether global supply chain pressures ease sufficiently to reduce imported inflation over the course of the year.

The Caribbean Property & Investment Review is published monthly and covers developments during the preceding calendar month. All factual statements reflect information publicly available at the time of publication.