Caribbean Property & Investment Review: Year-End 2023 Six-Month Special Edition

Publication Date: 4 January 2024  |  Coverage Period: 4 July – 3 January 2024  |  Special Edition: Six-Month Review

Morning Briefing: Key Developments, July–December 2023

• Federal Reserve holds at 22-year high — 5.25–5.5%: The Fed raised rates to 5.25–5.50% in July 2023 and then held there through the remainder of the year, allowing higher rates to work through the economy. By late 2023, with US inflation continuing to fall toward the 3% range and the labour market remaining resilient, markets were beginning to price in the prospect of rate cuts in 2024. Caribbean mortgage markets absorbed the plateau: tough but no longer deteriorating.
• Hurricane season 2023 relatively quiet for Caribbean islands: The 2023 Atlantic hurricane season, while delivering major activity including Hurricane Lee (Category 5 in the open Atlantic) and Hurricane Idalia (devastating parts of Florida’s Big Bend region in August), was notably sparing of major Caribbean island strikes. Lee tracked through the Atlantic without a direct Caribbean island landfall. This relative reprieve was welcomed by Caribbean property and insurance markets still carrying the scars of post-Ian repricing.
• Caribbean tourism achieves record year — 2023 best ever: By year-end 2023, the Caribbean Tourism Organisation and individual island tourism authorities were reporting that 2023 had been the best year on record for visitor arrivals and tourism revenue across multiple major destinations. Jamaica surpassed 4.2 million stopovers. The Dominican Republic exceeded 10 million visitors. Barbados reported its strongest year for visitor expenditure per capita. The post-COVID tourism renaissance was complete and exceeding prior peaks.
• Guyana oil production approaching 400,000 bpd: The Stabroek Block’s combined output from Liza Phase 1 and Phase 2 was approaching, and in some months reaching or surpassing, 400,000 barrels per day. The Yellowtail (Payara) development remained on track for first oil in 2024–25. Georgetown’s property market was experiencing its tightest supply conditions yet, and the government’s infrastructure spending was beginning to make visible progress on road and utility upgrades.
• Dominican Republic luxury property market hits new records: Cap Cana and Punta Cana’s branded residences market posted some of the highest per-unit transaction values in the property’s history. International buyers from the United States, Latin America, and Europe continued to drive strong demand, and the DR’s 2023 FDI in tourism and real estate was tracking toward new highs.
• Barbados luxury market at sustained peak: The Barbados West Coast — Sandy Lane, Royal Westmoreland, Platinum Coast — reported villa and luxury condominium transactions at prices at or above 2022 record levels. The island’s combination of political stability, republic identity, and premium visitor profile continued to sustain international investor confidence.
• Caribbean mortgage market under sustained pressure: With interest rates at 22-year highs for the full second half of 2023, Caribbean domestic mortgage markets faced sustained affordability challenges. The NHT in Jamaica remained the primary lifeline for working homebuyers. Housing supply deficits across the region showed no sign of closing at the pace required.
• Caribbean short-term rental market generates policy action: Several Caribbean governments moved beyond consultation to actual STR regulatory frameworks in H2 2023. Registration and licensing requirements, along with discussions about zoning restrictions for STR activity, were advancing in Barbados, Jamaica, and several Eastern Caribbean states.

Interest Rates at the Plateau: Caribbean Property in a Sustained High-Rate World

The Federal Reserve’s decision to raise rates to 5.25–5.50% in July 2023 and hold them there for the remainder of the year marked a pivotal moment in the global monetary tightening cycle. For Caribbean property markets, the plateau was preferable to continued rate increases — but it was not the same as relief. With borrowing costs at their highest levels in more than two decades, the financing environment for Caribbean property purchases remained significantly more challenging than anything buyers or developers had navigated in the decade prior to 2022.

The US 30-year fixed mortgage rate, which had climbed above 7% in 2022 and remained elevated through 2023, was a persistent headwind for North American buyers of Caribbean second homes and investment properties. While cash buyers — who account for a significant proportion of high-end Caribbean property transactions — were less directly affected, the broader pool of US and Canadian buyers who would typically finance a Caribbean property purchase was demonstrably smaller at 7% mortgage rates than it had been when rates were below 3.5% in the pandemic era. This was moderating transaction volumes in the mid-range of the investment property market, even as the ultra-luxury segment remained relatively insulated.

Within Caribbean domestic mortgage markets, the H2 2023 environment was characterised by sustained pressure on affordability. In Jamaica, commercial banks maintained elevated lending rates, and the differential between NHT concessionary rates and market rates remained wide. The Trust was managing record levels of demand for mortgage products while navigating the challenge of deploying its capital equitably across a large and growing contributor base. The government was exploring legislative and regulatory mechanisms to expand the range of housing solutions that NHT capital could support, including rental housing and shared equity programmes that might serve households unable to reach full outright ownership.

The silver lining for the Caribbean was visible on the horizon. By December 2023, US inflation had fallen to approximately 3.1% year-on-year — dramatically below its June 2022 peak of 9.1% and approaching the Fed’s 2% target. Futures markets were pricing in the beginning of a rate-cutting cycle in 2024, with some forecasters projecting 75–100 basis points of cuts during the year. If those expectations materialised, the Caribbean property financing environment in 2024 would be measurably more supportive than in 2023, potentially releasing pent-up buyer demand that had been waiting on the sidelines.

Hurricane Season 2023: A Relative Reprieve for Caribbean Islands

After the insurance market turbulence triggered by Hurricane Ian’s catastrophic Florida landfall in 2022, the Caribbean property and insurance community had entered the 2023 hurricane season with significant anxiety. NOAA’s pre-season forecast had warned of above-normal activity, and warm Atlantic sea surface temperatures created favourable conditions for powerful storm development. The season did deliver significant activity — but in ways that, while damaging in some areas, spared the major Caribbean island chains from catastrophic strikes.

Hurricane Idalia struck Florida’s Big Bend region in late August 2023 as a Category 3 storm, causing significant damage in a relatively sparsely populated coastal area. The storm’s impact on US insurance markets was notable, but considerably smaller than Ian. For Caribbean property and reinsurance markets, Idalia was relevant but not transformative — it did not trigger the same scale of reinsurance repricing that Ian had produced.

Hurricane Lee, which developed into a powerful Category 5 storm in the open Atlantic in September 2023, tracked in a manner that generated widespread concern across Caribbean island communities before ultimately veering northward and making landfall in Nova Scotia, Canada. Lee’s passage through the Atlantic was associated with significant wave action and some effects in the Lesser Antilles, but the catastrophic direct Caribbean island impact that the storm’s intensity had made possible did not materialise. The relief in Caribbean tourism and property circles was palpable.

The net effect of the relatively benign 2023 season for Caribbean islands was to provide some breathing room in the property insurance market. While the fundamental reinsurance repricing that had driven premium increases since Ian had not reversed — and would not reverse in a single benign season — the absence of a major Caribbean island event in 2023 at least prevented further material deterioration. Caribbean property owners faced another challenging renewal cycle at the start of 2024, but the rate of premium increase appeared to be stabilising rather than accelerating.

Caribbean Tourism: The Record Year That Exceeded All Expectations

If 2022 had been the Caribbean’s comeback year and 2021 the first steps of recovery, 2023 was the year that made the industry sit back and recalibrate its sense of what the new normal looked like. Multiple major Caribbean destinations delivered visitor arrival and revenue statistics in 2023 that exceeded not just post-pandemic projections but also their pre-pandemic all-time records. The tourism boom was not a rebound — it was genuine structural growth.

Jamaica’s tourism performance in 2023 was exceptional by any metric. The island surpassed 4.2 million stopover visitors — a figure that, even a few years earlier, would have been considered an ambitious medium-term aspiration rather than an achieved reality. Hotels across the north coast corridor were reporting average annual occupancy levels that sustained strong average daily rates without the aggressive discounting that had sometimes characterised prior competitive seasons. The Jamaica Tourist Board’s sustained investment in destination marketing, particularly in North American markets, was clearly contributing to these results.

For the Jamaican property market, the tourism strength translated into continued momentum in resort-adjacent residential and hospitality real estate. The Montego Bay area hosted several new hotel openings and expansions in H2 2023, and the branded residences pipeline was growing. A number of international hotel brands that had been evaluating Jamaica market entry for several years were moving from evaluation to active development planning. The north coast’s long-anticipated emergence as a truly premier international resort destination was feeling more tangible than at any point in recent memory.

The Dominican Republic’s achievement of more than 10 million visitor arrivals in 2023 was a landmark moment for Caribbean tourism. The island had become not just the Caribbean’s largest tourism economy but a genuinely global-scale destination that competed directly with established mass-market sun and beach markets in Europe, Asia, and the Pacific. The investment implications were clear: with a visitor base of this scale generating the spending power to justify continued hotel development, the DR’s construction and property investment pipeline was set to remain active for years to come. International capital from the United States, Spain, and Latin America was flowing into the country’s hospitality and residential real estate sectors at rates that were making the DR one of the most active property investment markets in the entire Latin American and Caribbean region.

Guyana: Approaching 400,000 Barrels Per Day

Guyana’s oil production story entered yet another chapter in H2 2023, with output from the Stabroek Block approaching and in some periods reaching 400,000 barrels per day. The combined production of Liza Phase 1 (from the Destiny FPSO) and Liza Phase 2 (from the Prosperity FPSO) was operating near or at design capacity, and the Yellowtail development (Phase 3, to be produced from the One Guyana FPSO) was advancing through its construction and development timeline with a first oil target anticipated in the 2024–25 window.

The economic transformation of Georgetown continued at a pace that was genuinely without Caribbean precedent. The city’s commercial property market remained among the tightest in the hemisphere by any metric of supply-demand imbalance. Quality office space was commanding rents that reflected the extraordinary demand from oil sector operators and their service company ecosystem. Several purpose-built commercial developments that had been under construction through the year were completing or approaching completion, providing some incremental relief to a market that had been operating in severe shortage for years.

On the residential side, the government’s housing programmes were delivering increasing volumes of homes, particularly in the East Bank and East Coast Demerara development corridors. New planned communities — with more systematic provision of roads, utilities, and community facilities than had characterised earlier phases of Georgetown’s growth — were being developed to absorb the expanding population of oil-economy workers, professionals, and their families. The government’s Natural Resource Fund was accumulating oil revenues that gave it the fiscal capacity to invest at scale in these programmes, and the political incentive to do so was strong.

Regional property investors were increasingly active in the Guyanese market. Developers from Trinidad and Tobago, Jamaica, and Barbados — markets with well-developed real estate industries and capital bases — were bringing expertise and capital to Guyana’s development scene. The opportunity to apply Caribbean-standard residential and commercial development practices to a market with extraordinary demand and relatively underdeveloped supply was attracting serious professional interest. Local Guyanese developers and international partners were working to address the quality gap between the premium expatriate-grade stock and the affordable housing segment that ordinary Guyanese needed.

Caribbean Short-Term Rental Regulation: From Debate to Action

The STR regulatory story that had been developing across the Caribbean for several years moved into a more concrete phase in H2 2023. Several jurisdictions shifted from consultation and policy development to actual regulatory implementation, introducing registration requirements, licensing frameworks, and in some cases limitations on the types of properties that could operate as short-term rentals.

In Barbados, a registration system for short-term rental operators was advancing toward implementation. The framework required hosts to register their properties, pay applicable taxes (including the Tourism Development Levy), and comply with minimum standards for safety, cleanliness, and guest communications. The intent was to bring the STR sector within a formal regulatory framework that both generated government revenue and created minimum quality standards for visitors — while stopping short of the outright restrictions on STR that some European cities had introduced.

Jamaica was developing its own STR framework, with discussions touching on the appropriate licensing structure for different scales of STR operation — from the homeowner renting a spare room to the professional operator managing multiple entire-property listings. The Jamaica Tourist Board, which had an interest in maintaining quality control over the visitor accommodation experience, was engaged in these policy discussions, as was the Real Estate Board and the Ministry of Tourism. The outcome was likely to be a tiered licensing system that recognised the diversity of STR operation types rather than treating them as a homogeneous category.

For property investors with exposure to the Caribbean STR market, the regulatory evolution represented both a compliance burden and, for well-managed operations, a potential competitive advantage. Professional operators who could meet and demonstrate compliance with emerging regulatory standards would be better positioned than informal hosts whose operations did not meet the new requirements. The formalisation of the STR market — inevitable as the sector grew in economic significance — was expected to improve average quality standards while filtering out the least professionally managed properties.

Barbados Luxury Market: Sustained Excellence

Barbados’s luxury property market in H2 2023 continued the sustained excellence that had characterised the island’s premium segment for several years. The West Coast — stretching from Speightstown in the north through Sandy Lane and Paynes Bay to Bridgetown in the south — remained the most coveted address in the English-speaking Caribbean, commanding price levels that reflected the island’s exceptional combination of natural beauty, cultural sophistication, institutional stability, and international accessibility.

Several notable transactions in the luxury villa segment were reported in H2 2023 at prices that placed Barbados firmly in the same tier as established ultra-luxury markets such as the Hamptons, Tuscany, and the French Riviera. The island’s appeal to the globally mobile ultra-high-net-worth cohort had been reinforced by Barbados’s republic transition of 2021, its successful management of the pandemic, and its government’s sophisticated approach to positioning the island as a premier lifestyle and investment destination.

The Barbados Welcome Stamp — now in its fourth year of operation — was continuing to generate a cohort of high-income medium-term residents who contributed to demand for furnished rental accommodation, contributed significant spending to the local economy, and in some cases made the transition from Welcome Stamp holder to property purchaser. The programme had attracted several hundred high-earning remote workers over its lifetime, and the government was assessing its future shape in light of the global normalization of hybrid work arrangements.

Caribbean Leaders This Half

Dominican Republic delivered a year-end performance that matched the extraordinary benchmark it had set throughout 2022 and 2023. Crossing 10 million visitor arrivals, sustaining the Caribbean’s most active hotel and branded residences development pipeline, and delivering strong FDI in tourism and real estate made the DR the clear regional leader for the third consecutive half-year period.

Jamaica had its best tourism year on record, surpassing 4.2 million stopovers and generating visitor expenditure at new highs. The north coast property market was responding with renewed hotel investment and branded residential development. The NHT continued to be the cornerstone of affordable homeownership, and the government was pursuing housing supply expansion with greater urgency as the affordability gap widened.

Guyana remained the Caribbean’s most extraordinary economic growth story. Approaching 400,000 bpd of oil production, the country’s fiscal capacity was transforming its ability to invest in housing, infrastructure, and social services. Georgetown’s property market remained the tightest in the region, and regional developers were increasingly treating Guyana as a serious investment destination.

Barbados delivered another excellent year in its luxury and premium property segment. The West Coast villa market remained the Caribbean’s price leader in the English-speaking world, and the island’s governance narrative — stable, outward-looking, innovative — continued to resonate strongly with international investors and high-net-worth buyers.

Turks and Caicos sustained its position as the Caribbean’s ultra-luxury capital. Grace Bay and the broader Providenciales market continued to attract North American buyers at price points that regularly exceeded any other Caribbean market. The territory’s commitment to high-quality, environmentally sensitive development was attracting a cohort of buyers who valued sustainability credentials alongside luxury.

Bahamas continued to develop its Nassau luxury corridor and was seeing growing investor interest in Family Island real estate. The Out Islands — particularly Abaco (recovering from Hurricane Dorian), Exuma, and Eleuthera — were offering compelling propositions for buyers seeking authentic Caribbean lifestyle at significant cost savings compared to New Providence.

St. Kitts and Nevis maintained its CBI programme performance. The federation continued to attract applicants from Asia, the Middle East, and Europe, with real estate investment options generating sustained demand for approved hospitality developments. The island’s small scale and carefully managed development ethos remained strong selling points for high-net-worth buyers seeking an exclusive address.

Cayman Islands delivered another year of strong performance across residential and commercial real estate. George Town’s financial centre continued to generate demand for Class A commercial space, and the residential market — particularly in Seven Mile Beach and surrounding areas — remained among the most liquid and best-priced luxury markets in the Caribbean.

Trinidad and Tobago showed continued improvement in its fiscal position and progress on Tobago tourism infrastructure. Several new hospitality projects were advancing in Tobago, and the island’s potential as a more commercially developed tourism destination was beginning to attract international hotel operator interest alongside the boutique and eco-resort investors who had been its primary development constituency.

The overall performer for H2 2023 was the Dominican Republic, which closed the year having achieved historic visitor arrival milestones, sustained its regional property investment leadership, and demonstrated a development momentum that positioned it as one of the Caribbean’s most compelling long-term investment stories.

Looking Ahead: The 2024 Outlook

As we enter 2024, the Caribbean property and investment community has genuine grounds for optimism that have been largely absent over the preceding two years of rate hikes, inflation, and post-pandemic turbulence. The two most anticipated positive developments — a moderation of interest rates and the continuation of strong tourism numbers — both appear credible based on the conditions prevailing at year-end 2023. The question is the pace and magnitude of these improvements, and whether any new shocks will emerge to complicate the picture.

Markets were pricing in Federal Reserve rate cuts beginning in the first half of 2024, with futures contracts suggesting 75–100 basis points of cuts during the year. If this materialises, the 30-year US mortgage rate — which had remained above 6.5% through much of H2 2023 — could retreat meaningfully, reducing the financing cost of Caribbean property purchases for North American buyers and potentially releasing pent-up demand from buyers who had been waiting for rate conditions to improve. For Caribbean domestic mortgage markets, any signal of a lower-rate environment ahead would also be supportive, even if the direct transmission of Fed policy into Caribbean local rates is imperfect and lagged.

The Caribbean tourism outlook for 2024 is constructive. Forward booking data from Caribbean hotel groups and destination marketing organisations was, at year-end 2023, pointing to another strong winter season. If the macroeconomic environment for North American consumers remains broadly supportive — as it appeared to be heading into 2024, with resilient employment and moderating inflation — the demand underpinning Caribbean tourism is unlikely to fade. Hotel investment decisions being made in 2024 will shape the region’s accommodation capacity for the remainder of the decade, and the current pipeline suggests that developers share this constructive demand outlook.

The persistent challenge of Caribbean housing affordability will remain the defining domestic property policy issue of 2024. For working families across the region — in Jamaica, Barbados, Trinidad, the Eastern Caribbean — the dream of homeownership has become further from reach during the inflation and rate-hike cycle of 2022–2023. Any improvement in the financing environment will be helpful, but the structural supply deficit that characterises most Caribbean housing markets will not be resolved by lower rates alone. Sustained government investment in affordable housing supply, land market reform, and innovative financing mechanisms will be required over a multi-year period if working Caribbean families are to see meaningful improvement in their housing situations.

Guyana’s trajectory into 2024 is exciting and consequential. With Yellowtail approaching first oil and production volumes expected to continue growing, the fiscal resources available to the Guyanese government will expand substantially. The challenge — as it has been throughout the oil era — is one of governance, institutional capacity, and political commitment: ensuring that the wealth generated from Guyana’s extraordinary natural endowment translates into lasting improvements in the lives of all Guyanese. The property market will be one of the clearest indicators of how well that translation is being achieved.

The Caribbean Property & Investment Review is an independent editorial publication covering property markets, investment trends, and economic developments across the Caribbean region. This Six-Month Special Edition covers the period 4 July 2023 to 3 January 2024. All analysis reflects information available at the time of publication. This review does not constitute financial or investment advice. Readers should conduct their own due diligence and consult qualified advisers before making investment decisions.