Jamaican real estate market is underpriced — Realtors Association

BY KARENA BENNETT Business reporter bennettk@jamaicaobserver

Saturday, May 02, 2015

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DESPITE beliefs that Jamaica's real estate market is significantly overpriced, president of the Realtors Association of Jamaica (RAJ) Edwin Wint says the quality of the market has deemed it to be undervalued.


In fact, Wint who was among guests from the RAJ at the Jamaica Observer Monday Exchange, stated that if Jamaica was to fix its security concerns, including crime and violence, the real estate market would have an 'immediate knock-on effect'.


"In any market you go, you can find some evidence of properties being overpriced. But if properties are in fact overpriced then they are not going to sell, and we are certainly not seeing that here because the properties are selling well," he stated. "The quality of the market would suggest that it is underpriced."


Wint added that Jamaica is currently in a balanced real estate market situation, where neither the buyer nor the seller can take advantage of each other.


"In general terms, if the properties are overpriced then we would probably be looking at a buyer's market, meaning the customer can dictate the price. But we are certainly not in a buyer's market here. The criteria for buyer's market would not be satisfied when you apply the principles," according to Wint.


Last year, a report from Century 21 indicated that roughly 9,286 property transactions worth US$711 million (J$81.7 billion) were recorded during the year ending March 2013. The listings were boosted by investors seeking alternatives to low interest rates and, instead, focusing on returns of up to 15 per cent from real estate investments.


"Investors look at the income the properties can derive, and when you calculate the income and the yield that it will bring, you'll find that the return is above what other investment medium can give. And that's why money is still being placed in real estate," Wint told Sunday Finance.


He stated that the implementation of Multiple Listing Service -- a database which enables 700 real estate practitioners to showcase listing information globally -- has analysed on a more intelligent level that Jamaica's real estate industry on the global market is very stong. At the same time, the country is currently the most searched site on the National Realtors Association.


Also speaking at the Exchange, Howard Johnson Jr, chairman of the MLS Committee of the RAJ, stated that many of these international investors are seeking residential units over US$350,000 ($40.2 million), while returning residents seek properties of up to US$200,000 ($23 million).


"The national statistics that we have indicate there is more money out there for investment than is apparent, and real estate is a preferred investment medium," he said.


According to Wint, the economic meltdown over the last five to 10 years had resulted in the industry trending towards to a buyer's market. But the situation has now changed as corrections have since taken place.


 


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