Caribbean Property & Investment Review — January 2020

Publication Date: 3 January 2020  |  Coverage Period: 3 December 2019 – 2 January 2020

Morning Briefing

• HISTORIC MILESTONE: ExxonMobil’s Liza Phase 1 project achieved first oil on December 20, 2019, making Guyana an oil-producing nation and triggering one of the most significant economic transformations in Caribbean history — a moment the region’s investment community has been anticipating for years.
• Caribbean Tourism Organisation preliminary figures confirm 2019 as the best year in the region’s history, with stayover arrivals surpassing 31 million — a record that cements the Caribbean’s status as a genuinely global tourism powerhouse and drives exceptional hotel and villa investment confidence.
• Jamaica closes 2019 with its strongest tourism performance on record, visitor arrivals up significantly year-on-year, and the National Housing Trust reporting robust year-end lending that sets a strong platform for 2020 residential market activity.
• Dominican Republic’s tourism sector closes the year firmly, with December resort occupancy well ahead of mid-year concerns and major hotel operators confirming their 2020 investment programmes are proceeding on schedule.
• Barbados reports measurable progress on its IMF-backed BERT economic recovery programme, with fiscal metrics improving and the island entering the new year with restored international confidence that is beginning to translate into real estate market activity.
• Caribbean Citizenship by Investment programmes delivered another strong year in 2019, with St Kitts, Antigua, Grenada, Dominica, and St Lucia all reporting healthy application volumes that supported real estate development pipelines through the year.

The Day Caribbean History Changed: Guyana First Oil, December 20, 2019

At 11:59 PM on December 20, 2019, crude oil began flowing from ExxonMobil’s Liza Phase 1 project in the Stabroek Block, offshore Guyana. In that moment, Guyana joined the ranks of the world’s oil-producing nations — and the Caribbean entered a new era. For those of us who have followed the progression of the Stabroek Block discoveries since ExxonMobil’s 2015 Liza-1 well, this moment has been a long time coming. Its arrival carries implications that extend far beyond Georgetown, reshaping the economic geography of the entire Caribbean basin.

The Liza Phase 1 project, developed on a floating production, storage and offloading vessel — the Destiny FPSO — is designed to produce up to 120,000 barrels of oil per day at plateau. Production will ramp up through the first months of 2020 as the facility reaches its design capacity. ExxonMobil, its partners Hess Corporation and CNOOC, and the Guyanese government through the Guyana-based authorities have been preparing for this moment for years, and the technical execution of the project has been widely praised within the energy industry.

President David Granger’s government welcomed the milestone with celebrations that reflected the profound significance of the moment for Guyanese society. The country, long one of South America’s poorer nations despite its considerable natural resources, has been transformed in prospect by the scale of the Stabroek Block discoveries — now estimated at more than eight billion barrels of recoverable oil equivalent. The International Monetary Fund has projected that Guyana’s economy will be among the fastest-growing in the world over the next several years as oil revenues flow.

For Caribbean property markets, the immediate effect is most visible in Georgetown itself. Commercial real estate in the capital has been on a trajectory of rising demand and escalating rents for the past two years as the energy services industry, international financial institutions, legal firms, logistics companies, and hospitality operators have moved to establish or expand their Guyana presence. First oil transforms that trajectory from anticipatory to operational: the demand is now anchored in the reality of a functioning oil industry rather than in the expectation of one. Office and warehouse space, corporate accommodation, and premium residential property serving the expatriate community are all facing supply constraints that new development will take years to fully address.

Beyond Georgetown, the implications are regional. Trinidad and Tobago’s substantial energy services and petrochemical expertise positions it as a natural beneficiary of Guyana’s oilfield development. Regional banks — Republic Bank, Scotiabank Caribbean, and others with Guyana operations — are seeing increased transaction volumes. The Guyana story is also reshaping how international investors perceive Caribbean economic risk: a region that has sometimes been characterised as overly dependent on tourism now has a major diversification narrative to tell.

2019: The Caribbean’s Best Tourism Year on Record

Alongside the Guyana milestone, the close of 2019 brought confirmation of what the Caribbean tourism industry had been tracking with growing excitement through the year: 2019 was, by every meaningful measure, the best year for Caribbean tourism in recorded history. The Caribbean Tourism Organisation’s preliminary data puts regional stayover arrivals north of 31 million — a figure that would have seemed aspirational even five years ago and that reflects a decade of sustained investment in airlift, product quality, marketing, and regional air connectivity.

Jamaica’s performance was especially strong. The island recorded record visitor arrivals for the full year, driven by expanded airlift from North America and Europe, the continued strength of the all-inclusive resort product, and the growing appeal of Jamaica’s adventure and cultural tourism offering alongside the traditional beach experience. The government’s tourism-adjacent infrastructure investment — road improvements in resort areas, the north coast highway progress, airport capacity management — supported the volume growth without the service quality degradation that has occasionally troubled other high-growth Caribbean destinations.

The Dominican Republic’s tourism sector demonstrated remarkable resilience through what had been a genuinely challenging middle portion of the year. The deaths of American tourists at Dominican Republic hotels in May and June 2019 prompted serious concern and elevated US State Department scrutiny, but the government’s rapid and comprehensive response — emergency inspections, certification overhauls, and sustained engagement with international media and the US government — was effective. December occupancy data from the Punta Cana and Puerto Plata resort zones confirms the recovery is substantive rather than merely statistical.

The Bahamas faced the most difficult tourism year of any major Caribbean destination, with Hurricane Dorian’s catastrophic impact on Grand Bahama and the Abaco Islands creating both a humanitarian crisis and a severe disruption to the tourism product in those areas. However, Nassau and Paradise Island — which account for the majority of Bahamian tourism receipts — were unaffected by the storm and continued to perform strongly. The recovery and reconstruction of the affected islands is a multi-year undertaking, but the fundamentals of the Bahamian tourism proposition remain intact.

Caribbean Property Markets: 2019 in Review, 2020 in Prospect

As the Caribbean property community takes stock at year-end, the overall picture for 2019 is one of solid performance underlined by genuine structural progress. The region’s residential and commercial markets have benefited from a supportive macro environment — the US Federal Reserve’s three rate cuts during the year, which brought the federal funds rate from 2.5% to 1.75%, reduced borrowing costs and supported both local mortgage activity and the appetite of international buyers financing through US-dollar instruments.

Jamaica’s residential market closed 2019 on a positive note, with the National Housing Trust maintaining strong disbursement volumes through the year and the government’s housing programme providing a meaningful supply of affordable product for first-time buyers. The upper end of the market — resort villas, beachfront homes, and luxury condominiums — performed well, supported by sustained diaspora investment and growing North American and European buyer interest attracted by Jamaica’s improving security situation and lifestyle offering.

Barbados navigated 2019 in the context of its IMF-backed Barbados Economic Recovery and Transformation programme, which has involved difficult but necessary fiscal adjustments including debt restructuring. The real estate market was understandably cautious through much of the year as international buyers awaited clarity on the programme’s trajectory. By year-end, however, confidence is clearly returning: the Platinum Coast market — St James and St Peter — saw increased inquiry in the October-December period, and agent feedback suggests 2020 could see a meaningful uptick in transaction volumes as buyers re-engage.

Caribbean Citizenship by Investment programmes delivered consistently through 2019, underpinning development pipelines in St Kitts and Nevis, Antigua and Barbuda, Grenada, Dominica, and St Lucia. The programmes have become a reliable financing mechanism for hotel and resort development, and their continued healthy application volumes provide confidence that the development pipeline will remain active through 2020. Grenada’s unique advantage — its CBI programme’s access to the US E-2 Treaty investor visa — continues to attract particular interest from applicants seeking US market access alongside their Caribbean residence.

Holiday Season Market Activity: A Snapshot

The December holiday season brought the customary uplift to Caribbean resort and tourism property markets. Across the region, resort communities from Montego Bay to Gustavia to Gustavia reported strong occupancy through the Christmas and New Year period, with many premium villa and resort properties fully committed well in advance of the season. Short-term rental platforms reported Caribbean performance among their strongest globally, with nightly rates in premium locations achieving record levels.

The investment inquiry that traditionally accompanies the holiday season — visitors who stay in Caribbean properties and begin to consider ownership — appears to have been robust. Real estate agents in Jamaica, Barbados, St Lucia, and the Turks and Caicos all report elevated inquiry from prospective international buyers during December, with several noting that the quality of inquiry — financially qualified buyers with clear investment criteria — is running ahead of previous holiday seasons.

For the commercial real estate segment, December was characterised by the completion of several significant transactions that had been in negotiation through the autumn. Hotel acquisitions, resort refinancing, and commercial property sales in Jamaica, the Dominican Republic, and Trinidad all contributed to a December that exceeded expectations in terms of transaction volume. The pipeline of deals anticipated to complete in the first quarter of 2020 is healthy, providing confidence that activity levels will be sustained as the new year gets properly underway.

Caribbean Leaders This Month

Guyana (National): The undisputed story of the moment. First oil on December 20 transforms the country’s economic trajectory and creates a commercial real estate market in Georgetown that is growing faster than any comparable Caribbean city. The investment implications will unfold for years.

Jamaica (Full Year): Record tourism arrivals, strong NHT lending, and an improving security and infrastructure picture make Jamaica’s 2019 one of the most comprehensively positive years in recent property market history. The 2020 platform looks strong.

Barbados (Recovery Trajectory): The BERT programme’s progress is translating into measurable real estate market improvement. Platinum Coast inquiry in Q4 2019 signals that international buyers are returning with renewed confidence.

Dominican Republic (Resort Recovery): The speed and effectiveness of the government and industry response to the mid-year tourism safety concerns has been impressive. December occupancy data confirms the recovery is genuine and the 2020 investment pipeline is intact.

Grenada (CBI Programme): Consistent CBI application volumes through 2019 are funding a meaningful pipeline of approved real estate projects. The E-2 Treaty differentiator continues to attract high-quality applicants.

Turks and Caicos (Luxury): Providenciales continues to deliver exceptional performance in the ultra-luxury segment, with villa rental yields and capital values both tracking positively through the holiday season.

St Lucia (Cap Estate): Luxury villa and condominium inquiry is running at elevated levels following a strong 2019 tourism season, positioning the northern development corridor well for 2020 activity.

Overall Regional Performer — January 2020: Guyana. No other candidate is credible this month. The achievement of first oil on December 20 is the defining Caribbean economic event of the decade, and its reverberations across regional property and investment markets are only beginning to be felt.

Looking Ahead

The Caribbean enters 2020 with a combination of tailwinds that is genuinely rare in the region’s modern economic history. A record tourism year provides the platform for continued hotel and resort investment; Guyana’s oil production adds a new and powerful engine of regional economic growth; US interest rates at accommodative levels support mortgage affordability and investment returns; and CBI programmes continue to channel development capital into the region. The outlook for 2020 is, by any honest assessment, notably positive.

The months immediately ahead will be shaped by several developments worth monitoring. Guyana’s production ramp-up through the first quarter will provide the first operational data on the Liza Phase 1 project’s performance — and any variance from ExxonMobil’s projections will attract close attention from a watching world. Trinidad’s Carnival in late February will deliver the traditional short-term rental revenue spike and provide a gauge of the twin-island republic’s tourism momentum. And the spring buying season — February through April — will be the first real test of whether Barbados’s recovering investor confidence translates into transaction volume.

For Caribbean property professionals, the message of the year’s opening is clear: the fundamentals are strong, the macro environment is supportive, and the region’s profile as a destination for tourism, investment, and residence has never been higher. 2020 begins with the Caribbean’s best hand in a generation, and the task now is to play it well.

The Caribbean Property & Investment Review is published monthly. Edition 79 covers the period 3 December 2019 – 2 January 2020. All market data represents conditions during the coverage period. This publication does not constitute investment advice.

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