Caribbean Property Markets Head Into Year-End Strong as Tourism Bookings Surge and Luxury Demand Holds Firm

Publication Date: 3 December 2023  |  Coverage Period: 3 November – 2 December 2023

Morning Briefing

• Caribbean destinations report Christmas and New Year advance booking rates running 10 to 15 percent ahead of 2022 levels, with Jamaica, Barbados and the Dominican Republic all at or near capacity for the peak holiday fortnight, sustaining exceptional momentum heading into 2024.
• Jamaica’s residential property market showed continued price resilience through November 2023, with the Kingston metropolitan area recording average residential transaction values approximately 8 percent above year-ago levels despite constrained mortgage market conditions.
• Barbados’s luxury villa market recorded its strongest November on record, with high-net-worth buyers from the UK, US and Canada completing transactions in the US$2 million to US$8 million range as the Platinum Coast maintained its global reputation as a premier second-home destination.
• The Dominican Republic’s construction sector continued to expand in November, with the Punta Cana corridor accounting for a significant portion of new residential unit completions as the country’s property market maintained its momentum as one of the Caribbean’s most dynamic.
• Cayman Islands property registered another month of ultra-premium transactions, with Seven Mile Beach condominiums achieving US$1,500 to US$2,500 per square foot in recent sales — levels that put the Caymans among the highest-value property markets in the Americas.
• Guyana’s Georgetown commercial real estate market continued to see extraordinary demand from energy sector operators and associated businesses, with Class A office space achieving rental rates that would have seemed implausible just five years ago.

Caribbean Property Markets in November 2023: Resilience Amid Rate Headwinds

November 2023 delivered a picture of Caribbean property markets demonstrating impressive resilience in the face of the most challenging interest rate environment in two decades. While elevated borrowing costs continue to suppress transaction volumes in the middle market and affordable housing segments, the upper and luxury tiers of most Caribbean property markets have remained active, supported by cash buyers, overseas purchasers and the structural demand created by the region’s sustained tourism performance.

The divergence between market segments has been the defining feature of Caribbean property in 2023. At the luxury end — Barbados’s Platinum Coast, Cayman’s Seven Mile Beach, Jamaica’s Round Hill and Discovery Bay, the Dominican Republic’s Casa de Campo and Punta Cana resort communities, St Lucia’s Cap Estate — transaction volumes have been sustained by buyers who are either cash purchasers or financing through foreign mortgage products benchmarked to their home countries. These buyers are responding to the Caribbean’s enduring appeal as a lifestyle and investment destination, and their purchasing decisions are driven by long-term considerations that transcend short-term rate cycles.

In the middle market, the story is less encouraging. The combination of high commercial mortgage rates and construction cost inflation that has pushed new-build prices significantly above what middle-income households can comfortably finance has created a severe supply-demand disconnect. The homes that would-be first and second-home buyers in the J$10 to J$25 million range in Jamaica, or the EC$300,000 to EC$700,000 range across the OECS, are demanding are simply not being built at the scale required — and those that are available are priced in ways that, at current borrowing costs, generate monthly payment obligations that exceed affordability thresholds for the target demographic.

Tourism advance bookings for the Christmas and New Year season provide a positive backdrop for the property market narrative. When regional tourism performs strongly, the economic ripple effects — employment income, government revenues, hospitality sector investment — support property market activity in adjacent and downstream ways. Strong bookings also provide confidence signals to investors in hotel and short-term rental assets, reinforcing valuations and transaction activity in those segments.

Jamaica Property Market: Resilience at the Top, Pressure Below

Jamaica’s residential property market in November 2023 presented its characteristic bifurcated picture with unusual clarity. In the Kingston metropolitan area — particularly in the premium neighbourhoods of Cherry Gardens, Norbrook, Barbican, Stony Hill and the rising Jack’s Hill corridor — property values continued to appreciate, with transaction prices running approximately 8 percent above year-ago levels in nominal terms. This appreciation has been driven by constrained supply — the pipeline of new developments at this price level is thin — and sustained demand from the professional class, diaspora returnees and investors targeting the premium rental market.

The Jamaican north coast market — Montego Bay, Ocho Rios, Runaway Bay, Negril — remained active driven by a mix of tourism-sector investment, diaspora purchases and short-term rental investors. The performance of north coast Airbnb and VRBO listings through 2023 has been strong enough to attract a new wave of investors who are explicitly targeting the short-term rental income model, purchasing properties specifically to list on platforms rather than for long-term residential occupation or conventional letting.

The affordable housing segment, by contrast, remains in crisis. New two-bedroom units in the Kingston metropolitan area are now routinely priced at J$20 million and above, a level that requires mortgage financing that is simply beyond the reach of the majority of Jamaican workers at current interest rates. The National Housing Trust continues to function as the critical safety valve, but even NHT loan ceilings are insufficient to bridge the entire gap between what middle-income buyers can access and what new homes cost. The result is a growing number of households who remain in the rental market longer than they would wish, contributing to upward pressure on rents in the formal rental market.

Barbados Luxury Market: An Enduring Asset Class

November is typically the launch of the prime Caribbean season for the luxury villa market, and Barbados delivered emphatically. The Platinum Coast — Sandy Lane, Paynes Bay, Fitts Village, Speightstown — saw a wave of transaction completions as buyers who had been in negotiation through the summer closed deals ahead of the peak rental season. The vendor expectation in this market remains firmly anchored: premium Barbados beachfront villas are trading at US$3 million to US$12 million, with the most exceptional properties — those with direct beach access, large pool terraces and mature tropical landscaping — attracting values at or above the top of this range.

What drives this market’s resilience is instructive. Barbados’s premium property market is largely detached from Barbadian economic conditions and Barbadian mortgage rates — it functions as a segment of the global luxury second-home market, competing with the South of France, Tuscany, the Algarve and the Greek islands for a pool of internationally mobile wealthy buyers. These buyers are attracted by Barbados’s combination of British Commonwealth legal traditions (giving familiar title and conveyancing processes for UK buyers), tropical climate, proximity to North American markets and, increasingly, the island’s reputation for political stability and quality infrastructure relative to its Caribbean peers.

The Barbados Welcome Stamp — introduced in 2020 and refined since — has attracted a meaningful cohort of long-stay digital nomads and remote workers who, while not purchasing property at the outset of their stays, frequently become buyers after experiencing island life for an extended period. Several estate agents report that a notable proportion of their 2023 buyer inquiries originated from former Welcome Stamp holders who decided to commit to a more permanent Barbados presence — a conversion funnel that the government has been quietly effective at building.

Cayman Islands and Dominican Republic: Contrasting Market Leaders

The Cayman Islands and Dominican Republic represent the two poles of the Caribbean property investment universe in terms of market positioning, yet both demonstrated strong momentum through November 2023. In Cayman, the story is one of extreme value and limited supply: the Cayman government’s land use policies maintain tight controls on development, and the island’s financial services sector generates an unusually high concentration of high-income residents and second-home buyers. Seven Mile Beach condominiums — the market’s most liquid and transparent segment — have been transacting at US$1,500 to US$2,500 per square foot, placing Cayman property values among the highest in the Americas outside of Manhattan and comparable global urban luxury markets.

The Dominican Republic’s property market operates at the opposite end of the value spectrum while offering some of the Caribbean’s most dynamic growth characteristics. The Punta Cana corridor, fed by eight million-plus annual tourists and a global pipeline of investors attracted by favourable foreign ownership laws and competitive pricing, has seen sustained new construction activity through November. Pre-sale condominium projects continue to attract international buyers seeking yields that significantly exceed what comparable tourism-adjacent property produces in more mature Caribbean markets. In Santo Domingo’s upscale residential districts — Piantini, Naco, La Esperilla — domestic demand from the Dominican professional class drives a more conventional residential market, with values that remain accessible by regional standards even as they have risen substantially over the past three years.

Caribbean Insurance Market: Stress Building Ahead of 2024

One of the less-discussed but increasingly consequential pressures on Caribbean property markets is the deteriorating conditions in the regional insurance market. Caribbean property and casualty insurers — and their international reinsurers — have been confronting rising loss experience from climate-related events, combined with rising reinsurance costs in the international market that followed from the global reinsurance repricing of 2022–23. The practical result, visible across the region in November 2023, is rising property insurance premiums and, in some exposed coastal markets, the withdrawal of coverage by specific insurers from the highest-risk zones.

For property investors, the insurance market dynamics represent an increasingly material cost consideration that must be factored into investment underwriting. Coastal properties — which typically command the highest tourism rental premiums and thus the most attractive gross yield potential — also face the highest insurance costs and the most acute coverage risk. The economics of coastal property investment in the Caribbean are becoming more complex as insurance premiums rise and, in some markets, insurers begin to explicitly price for modelled hurricane risk in ways that make certain coastal assets significantly more expensive to hold than their purchase prices suggest.

Caribbean Leaders This Month

Barbados leads this month’s review for delivering the strongest November luxury transaction volume in recent memory, cementing its position as the Caribbean’s most consistently high-performing premium property market. The convergence of Welcome Stamp-converted buyers, UK and North American second-home demand and strong rental season forward bookings created an exceptionally active November market.

Cayman Islands maintained its extraordinary market metrics, with Seven Mile Beach property values sustaining levels that reflect the island’s unique combination of financial centre demand, constrained supply and ultra-affluent buyer profile.

Jamaica demonstrated the resilience of its premium residential market despite mortgage rate headwinds, with Kingston’s top neighbourhoods posting positive price performance and the north coast investment market remaining active.

Dominican Republic continued its position as the Caribbean’s highest-volume construction and transaction market, with Punta Cana and Santo Domingo both contributing to a property sector that is among the most dynamic in the broader Latin American and Caribbean region.

Guyana sustained its extraordinary commercial real estate momentum, with Georgetown office market rents continuing their upward trajectory as energy sector expansion drives insatiable demand for premium commercial accommodation.

St Lucia saw Christmas season hotel bookings reach capacity levels that underscore the island’s growing reputation as a premium Caribbean destination, supporting the investment case for resort and villa assets in key tourism zones.

Trinidad and Tobago maintained stable commercial property market conditions in Port of Spain, with the approaching Carnival season beginning to generate short-term rental interest in the capital and surrounding areas.

Grenada benefited from continued CBI-linked resort investment and growing recognition as an Eastern Caribbean second-home destination of increasing appeal to buyers seeking value relative to Barbados and St Lucia. Overall November regional performer: Barbados, for a luxury market that continues to outperform across all metrics and attract globally significant transaction values.

Looking Ahead

December will be dominated by the peak Christmas tourism season, which is shaping up as the strongest since at least 2019 based on advance booking data. Hotel operators, villa managers and short-term rental hosts across the region are reporting full bookings through the Christmas and New Year fortnight, with premium accommodation commanding rates that will drive record December revenue for the hospitality sector.

The year-end will also bring a wave of retrospective analysis and 2024 outlook commentary from Caribbean development institutions, central banks and property market analysts. The Caribbean Development Bank annual meeting results and CARICOM summit communiqués will be closely watched for signals on the regional consensus around housing policy, climate adaptation finance and infrastructure investment priorities that will shape the property market landscape in the year ahead.

Insurance market developments will warrant close attention through the first quarter of 2024, as insurers and reinsurers finalise their 2024 underwriting positions for Caribbean risks. The outcome of the January reinsurance renewal season — which sets capacity and pricing for the year ahead — will determine whether the insurance cost pressures that have been building through 2023 intensify further or begin to stabilise, with direct implications for the all-in cost of holding Caribbean coastal property.

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.

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