KEY stakeholders in the property industry are calling on the private sector to help ease the housing issue in the country by investing in and providing affordable housing solutions amid the rise in the local construction sector.

The housing issue in Jamaica takes the form of declining access to homeownership and stagnant supplies of public housing, despite numerous pop-ups of high-end apartment complexes in and around the Corporate Area.

While private developers are in the business of making money, senior manager for community development at the Housing Agency of Jamaica (HAJ), Nakia McMorris said affordable housing offers investors the opportunity to make a positive social impact while still generating a strong return.

“I’m not calling out to all investors and all developers, it’s the special people. I need you to remember that you are not going to make the most money but you can make it if you do it in bulk, and because the market is not being met right now there’s a huge vacuum to be filled,” McMorris said during the Jamaica Observer’s business webinar ‘The Real Estate Boom: Where Does Affordable Housing Fit In?’ held recently.

“If we have savvy developers, it can be done. And if we have organisations that come in…because foundations and non-profits play a big role in this too, how do we package that to make it interesting to them?” she questioned, noting that the Government also plays a critical role in attracting investors in public housing development.

McMorris, however, pointed out that despite the potential of realising Vision 2030 Jamaica, the affordable housing market is a harder market to serve.

Assistant general manager of corporate and business strategy at the National Housing Trust (NHT), Vencot Wright indicated that housing at the lower end of the market is not very attractive to the private sector.

“The Government has to incentivise the private developer to enter the space, and that’s one of the things that we’re working on,” Wright said, noting that the NHT created its Guaranteed Purchase Programme to address that.

“We invite developers to come to us with planned projects and we say to them, ‘We will guarantee purchasing these units at [a] price if you can produce it,’ and so far the take-up has been good,” Wright said.

“We have also recently launched the Developers Programme where NHT lands are offered to developers. We say, ‘These are the parcels that are available. Tell us what you can do with it and we can strike a deal.’ However, we’re going to tell the developers that the maximum that we’re going to pay is $10 million and the average must be $8 million, and that 80 per cent of the units in those developments must fall within that range. The other 20 per cent, they can deal with it,” he explained.

He added, “Make no mistake, they will be earning on the 80 per cent that they will be selling to the NHT.”

But according to president of Incorporated Masterbuilders Association of Jamaica, Lenworth Kelly there are various factors that affect private developers’ decisions.

“One of the things to consider is the terrain you’re going to build on — that’s critical because anywhere you’re going to build a house, wherever in this country, it’s the same cost once the same materials are used. However, your terrain will vary so there are some terrains you will go on and because of the varying capacity of the soil, you probably need to put a marl area, or areas where you have to remove a lot of rocks, or just to get the house sited you have to build retaining walls,” the construction expert argued, noting that at the higher end there is less risk for developers and hefty profits.

“We know of the attempts of the NHT to try and get prices of houses lower but what developers look at is the risk; and so wherever you see more activity is wherever there is less risk. The other part is the scope of the particular developer. There are developers that develop on hundreds of acres, there are others on the other end of the spectrum that can probably only develop on a half-acre or a quarter acre,” he continued.

Kelly said too, “I don’t think that in our urban spaces that we should be developing on lots that are less than an acre because there are other social things that are akin to that. When everything is just build together in this hodgepodge manner and everything is just packed together, we’re going to have problems later on”.

In 2020 the Government promised to provide 70,000 affordable houses for Jamaicans during the course of the new term, with 30 per cent reserved for the nation’s policemen and policewomen, nurses, teachers and civil servants.

Prime Minister Andrew Holness also indicated that each year, the NHT will invest a minimum of $1 billion in social housing, to include construction and repairs for those who are not able to purchase a home.

Additionally 10,000 homes will be allocated for young people between the ages of 18 and 35, with 100 per cent financing.

Wright further indicated that going forward, housing provided by NHT, in conjunction with private sector partners, will be in the $5-10 million range, in hopes of averaging houses on the lower end of the market at $8 million.

“Where the NHT is concerned we realised that anecdotally, people just want a start. In instances where we are building units more expensive, it will be under a cross-subsidisation strategy where we will be hoping to get profits from those solutions to put towards subsidies at the lower end,” he said.