While residential real estate prices in Kingston have slowed, the tourist destinations in and around the north coast are benefiting from luxury developments.

Real estate experts suggest that high net worth real estate investors are flocking to Jamaica's shores in search of bargains as Jamaica's real estate is priced at one-third to one-half less than properties in the wider Caribbean.

Developments such as the Palmyra in Montego Bay and
Golden Eye in Oraccabessa are being hailed as the beginning of a structured move to make Jamaica a premier resort destination. Prices for these developments start at US$600,000 for a one-bedroom apartment at Golden Eye and US$300,000 for a studio at the Palmyra.

"Jamaica is catching up to the other islands," says Andrew Issa, managing director of Coldwell Banker Jamaica. "Sales are going very well for Palmyra with its focus on access to golf courses and Golden Eye comprising of 40 units tucked away in the trees. Jamaica is a real value, in terms of the price and size of the units, along with the mountains, the rivers and the landscape."

First Caribbean International Building Society (FCIBS) general manager Lenworth Tracey agrees. "When investors think about resort properties, they tend to think about traditional destinations such as Florida, the Bahamas, Belize, and the Cayman Islands. However, with the formal introduction of two major resort properties, the market is saying that pound for pound, Jamaica is giving better value for money than the rest of the Caribbean," he says. "This is because in the mature markets, prices would be higher."

"The value of real estate in Jamaica is that it is at least one-half to one-third cheaper than real estate in Cayman and Barbados. For example, a 500 square foot apartment selling for US$200,000 in Jamaica would be selling for US$300,000 - US$400,000 in Barbados."

Adds Tracey, "There are resort properties on the north coast, but before, it was just one off houses being sold. Now, we are going after it in a structured way."

But it is not just the high rollers who are benefiting, Caribbean Business Report has learnt. There is the spinoff value for the surrounding communities.

"Given the success of major developments, then people will demand more land around these areas to build similar properties," says Tracey. "This increased demand will send the cost of land up and translate into higher values for finished properties. So even areas further away from Palmyra and Golden Eye will still have ripple effect."

Real estate prices slowing in Kingston

Although the north coast real estate prices are enjoying a renaissance, Kingston is experiencing a tapering off of the increase in prices, especially in the $30-million and up region, experts say.

George Cumming of Century21 Heave Ho properties says, "Demand has slowed a bit in the higher end because it is a finite number of people who can buy into those. Investors in this category are very concerned about the return on their investment as US dollar rentals have slowed in growth.
Another market is older people who have moved from larger houses into luxury townhomes. But again, it is a very small market and that keeps prices in check."

Issa adds, "Supply for the $30-million has been absorbed, but I wouldn't say prices have completely softened, because prices haven't come down."

The real demand, experts say, is in the $5-million to $15-million market. But despite the demand, price increases have also slowed in this market. "What I am reading in Kingston is that there has been a tapering off of the rate of growth in the prices of real estate compared to two years ago," says Tracey. "Prices are relatively stable. Nothing is pushing the market, so growth is incremental."

And for those who hope for the type of levelling off of prices similar to North America, real estate experts don't believe that it will happen here.

"The Jamaica situation is not like in the States where there was a huge oversupply of building," says one industry analyst. "In Jamaica, developers haven't addressed the demand for affordable units in the $8-million range. Right now, if you put 100 units on the market, 500 people will be on the waiting list."

There is the belief that the direction of interest rates will determine the future rate of growth in the real estate market. "If interest rates go to 10 per cent, the real estate market will explode," Issa says. "When interest dropped from 17 to 14 per cent that helped the real estate sector to grow in 2004."

Tracey looks at it this way, "A reduction in interest rates would make real estate more affordable, it would therefore mean an increase in the construction industry. In my mind, it would augur well for the real estate sector. Lower interest rates would have a multiplier effect. But I am not seeing clear signals that would indicate that interest rates will be heading down to 10 per cent in the short term."

For persons interested in buying but who are on a budget, Issa suggests, "Look at residential lots in the hills (although access to water may be a problem) and properties with access to Highway 2000."

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