Caribbean Summer 2017: Tourism Records, Property Gains — and a Dangerous Storm on the Horizon

Publication Date: September 3, 2017  |  Coverage Period: August 3 – September 2, 2017

Morning Briefing

• Jamaica tourism arrivals for July 2017 set a new monthly record, with stopover visitors up 9% year-on-year, confirming a landmark summer for the island’s hospitality sector.
• Guyana’s oil development programme advances as ExxonMobil and its Stabroek Block partners complete additional appraisal drilling, with commercial production timelines firming up for the early 2020s.
• Trinidad and Tobago’s LNG export sector posts improved Q2 2017 figures as global gas prices recover, providing welcome relief for the twin-island republic’s strained fiscal position.
• Dominican Republic hotel room inventory surpasses 75,000 keys as new all-inclusive resort developments in Punta Cana and La Romana reach completion, cementing the country’s position as the Caribbean’s largest tourism market.
• Barbados reports a 7% increase in long-stay visitor arrivals for the first half of 2017, driven by strong UK and North American demand, with luxury villa rentals performing particularly well.
• WEATHER ALERT: Meteorologists are closely tracking Tropical Storm Irma, which formed in the eastern Atlantic on August 30 and has been intensifying rapidly. By the time of publication, the system is tracking west-northwest toward the Lesser Antilles and is expected to reach major hurricane status. Caribbean governments and property owners are being urged to monitor forecasts closely.

Caribbean Tourism Property: A Summer of Records

The summer of 2017 has delivered exceptional results across the Caribbean’s key tourism and property markets, reinforcing investor confidence at a moment when the region’s appeal as both a leisure destination and an investment platform has never been stronger. From Jamaica’s north coast to Barbados’s platinum west coast, visitor numbers have repeatedly eclipsed prior-year benchmarks, and the hospitality property sector — hotels, branded residences, villa rentals and boutique guesthouses — has responded with occupancy rates and average daily rates that are the envy of other tropical destinations worldwide.

Jamaica has been the standout performer. The Jamaica Tourist Board reported that July 2017 arrivals were the highest ever recorded for a single month, with the north coast resort belt — Montego Bay, Ocho Rios and Negril — driving the bulk of the gains. Hotels in the Montego Bay Hotel Zone reported average occupancy above 85% through the core summer weeks, and the pipeline of new branded residence developments along the Rose Hall corridor continues to attract serious buyer interest from North American and European markets. A number of pre-construction projects reported sell-through rates above 70% by late August, a level of pre-sale absorption that developers and agents describe as highly unusual for a summer cycle.

The Dominican Republic’s tourism property machine continued its remarkable expansion through the August coverage period. Punta Cana International Airport processed a record number of passenger movements in July, and hotel developers in the Cap Cana integrated resort community reported strong fractional ownership and whole-unit sales to North American buyers seeking a combination of lifestyle and rental yield. The government’s supportive foreign investment framework, anchored by Law 158-01 on tourism incentives, continues to provide meaningful tax concessions that make the DR an attractive entry point for investors who might find Barbados or St Barts priced beyond their initial ticket size.

Barbados maintained its premium positioning through the summer. The west coast luxury villa market — sometimes described as the most expensive stretch of real estate in the English-speaking Caribbean — saw a number of significant transactions in the US$3 million to US$8 million range during August, with buyers predominantly from the United Kingdom and Canada. The island’s reputation for political stability, excellent connectivity, and a well-regulated real estate sector continues to underpin values even as neighbouring markets compete aggressively on price and incentive packages.

Guyana Oil and Caribbean Investment Momentum

Guyana’s emergence as a major oil producer remains the most consequential structural shift in the Caribbean economy over the medium term. The Stabroek Block, operated by ExxonMobil in partnership with Hess Corporation and CNOOC, has now confirmed recoverable resource estimates that place Guyana among the world’s most significant new oil frontiers. While commercial production is not expected until around 2020, the downstream effects on Guyana’s economy, property market, and infrastructure are already visible.

Georgetown’s commercial real estate market has tightened considerably as oil-service companies, engineering contractors, and multinational consultancies have taken up office space in anticipation of the development phase. Residential rents in Georgetown’s better neighbourhoods have risen sharply over the past eighteen months as an influx of expatriate oil-sector workers competes with local demand for quality housing. For property investors in Guyana, the combination of low entry prices relative to regional comparators and the prospect of sustained oil-driven demand creates a compelling long-term thesis, albeit one that carries the execution risks characteristic of frontier markets.

Trinidad and Tobago, the Caribbean’s established hydrocarbon producer, has reported a modest improvement in its fiscal position as global LNG prices recover from the lows of 2015-16. The government’s efforts to stabilise the economy following the commodity price shock of recent years have included measured property tax reform and a rationalisation of housing incentive programmes. Confidence in the Port of Spain commercial market appears to be stabilising, though the residential sector remains cautious, with buyers and sellers alike taking time to assess the durability of the recovery.

Caribbean Property Markets: Mid-Year Assessment

Across the broader Caribbean property landscape, the mid-2017 picture is one of measured optimism. The region has benefited from a sustained period of low global interest rates, which have kept mortgage financing accessible in major source markets and maintained appetite for second-home and investment property purchases from North American, European, and Latin American buyers. Values in the prime segments of established markets — Jamaica’s Rose Hall, Barbados’s west coast, St Lucia’s Soufrière region, Turks and Caicos’s Grace Bay — have held firm or advanced modestly, while more affordable segments have attracted growing interest from first-time regional buyers priced out of their home markets.

Jamaica’s National Housing Trust has continued to expand its loan portfolio through the first half of 2017, enabling more Jamaicans to access formal mortgage finance and participate in the property market. New NHT-supported developments in the Kingston metropolitan area and in parishes outside the capital have been well received, and waiting lists for NHT benefit schemes remain long — a sign both of pent-up demand and of the trust’s central role in the island’s housing ecosystem.

One structural challenge that Caribbean markets share is the difficulty of insuring property against natural hazards at affordable premiums. The 2017 Atlantic hurricane season was always forecast to be above average, and as the season has progressed, the region’s insurers and reinsurers have been watching developments carefully. Premium rates, which had been softening following several years of below-average hurricane activity, began to firm in 2017 ahead of the peak season months. Property owners — particularly on smaller, lower-lying islands in the Lesser Antilles — have been managing an increasingly difficult trade-off between the cost of comprehensive insurance cover and the risk of going underinsured.

Caribbean Leaders This Month

Jamaica leads the region’s performance table for August with another month of record-breaking tourism arrivals and continued strong pre-sale absorption in hospitality real estate developments along the north coast corridor.

Dominican Republic maintains its position as the Caribbean’s largest tourism economy, with Punta Cana recording its highest-ever July passenger throughput and new hotel and branded residence inventory continuing to find ready buyers.

Barbados delivers a solid summer for the luxury villa segment, with multiple seven-figure transactions on the west coast and consistently strong occupancy at the island’s premier hotels underpinning property values.

Guyana continues to attract oil-sector investment, with Georgetown’s commercial and residential rental markets tightening as the Stabroek Block development programme gathers momentum.

St Lucia reports encouraging mid-year tourism figures, with the Soufrière and Cap Estate areas seeing renewed buyer interest in luxury villa and boutique resort properties.

Trinidad and Tobago posts a stabilising performance as LNG prices recover, with the commercial property market in Port of Spain showing tentative signs of returning confidence following two difficult fiscal years.

Turks and Caicos delivers strong summer occupancy on Providenciales, with Grace Bay hotels reporting above-average rates and villa rental demand robust from North American families.

Overall Performer: Jamaica takes the honours for August 2017 — record tourism arrivals, strong pre-sale real estate activity, and continued institutional investor interest in the north coast hospitality corridor combine to make it the region’s standout market this month.

Looking Ahead

The immediate and overriding concern for every market in this review is the track and intensity of Tropical Storm — now very likely Hurricane — Irma. As of the time of writing, on September 3, 2017, Irma has been intensifying at an alarming rate in the eastern Atlantic and is forecast by the National Hurricane Center and other global models to become an extremely dangerous Category 4 or Category 5 hurricane before it reaches the Lesser Antilles in the coming days. The models are converging on a track that takes the storm through or very near the northern Leeward Islands — Barbuda, Anguilla, the British Virgin Islands — before curving toward the Greater Antilles. If those forecasts verify, the consequences for property, infrastructure, and human welfare across the affected islands could be severe. We urge all readers with property or business interests in the potentially affected areas to take protective action immediately, review their insurance cover, and follow official guidance.

Beyond the immediate hurricane threat, the autumn season will bring the Caribbean’s traditionally quieter shoulder months, though the region’s strongest markets — Jamaica, Dominican Republic, Barbados — are well booked relative to prior years. The fourth quarter pipeline of new property developments coming to market in Jamaica and the DR remains substantial, and demand from foreign buyers appears to have been sustained through the summer. Any significant hurricane damage to Caribbean destinations this season could paradoxically benefit the unaffected markets by redirecting visitor and investor attention; conversely, widespread regional damage could suppress overall Caribbean sentiment through late 2017.

On the investment side, the Federal Reserve’s signalled path of gradual interest rate normalisation will be watched closely by Caribbean mortgage lenders and property developers who have enjoyed an extended period of historically low base rates. The timing and pace of any rate increases will have implications for buyer affordability across the region, particularly in markets where USD-denominated or USD-linked mortgage finance is the norm. For the moment, however, financing conditions remain supportive, and the fundamental demand drivers — limited supply of premium beachfront land, strong global appetite for Caribbean lifestyle assets, and growing regional middle-class homeownership aspirations — remain firmly in place.

The Caribbean Property & Investment Review is published monthly. All market data and observations reflect conditions during the stated coverage period. This publication is for informational purposes only and does not constitute investment advice.

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