CHANGES in the real estate industry in Jamaica for the year ended were sometimes as obvious as the changing skyline as new buildings climbed upwards across the island and more units were placed on the market. In 2021 these included the National Housing Trust’s seven-floor Ruthven Towers in St Andrew, which caused a query-quake in Twitterdom and elsewhere.

To get a closer look on the year’s outturn, however, the Jamaica Observer received an informed perspective from local industry members:

Edwin Wint: Chairman and CEO, Better Homes and Gardens Jamaica

“Both the residential and commercial property market remained relatively strong in 2021. The residential rental market has been experiencing some downward correction (10 per cent to 20 per cent) in some market segments of the middle- to upper-income end of the market in the Kingston Metropolitan Area, with newer units out-competing older units at prevailing market rental rates. Residential sales are still buoyant in most parishes, with the target rate for return on investment on new builds trending downwards slightly for investment-type properties. With the sharp increases in the cost of construction materials over the past year and the supply chain challenges, the market has continued to show resilience and absorb these shocks, with demand unabated in some market sectors despite marked increases in the price points. This is evident in the continued high demand for development lands for both residential and commercial developments, sometimes creating a bidding war and the payment of a premium to acquire the development sites.

Commercial real estate

The commercial and light industrial real estate market is showing somewhat of an increase in demand, especially for investment-grade properties in major urban centres, for greenfield and brownfield sites. The demand for locations outside of the city centres is increasing as investors seek to develop outside of the congested business districts in the city centres for improved accessibility. This trend can be seen in the Drax Hall area of St Ann as Ocho Rios continues to get more congested — which was a similar pattern in Fairview in Montego Bay that offered an alternative location to the downtown business district.

Despite the vagaries caused by the novel coronavirus pandemic — enough to contribute to a shift to more online virtual shopping and remote working — the demand for commercial brick-and-mortar properties is still strong, driven in part by the continued growth in the BPO sector and more corporate players entering the property market. Real estate continues to prove itself to be a fairly safe investment in Jamaica, with the safety of capital and income demonstrated to be high and resilient despite the onslaught of the pandemic on the economies of the region and globally. This augurs well for optimism for continued growth and appreciation in property values for Jamaican real estate into 2022, other things being equal.

Realtor B (identity undisclosed on request)

I think there are more people getting into development than before. We have not received the data but, based on what I am seeing, there are a number of new entrants — including institutions such as banks — that have more interest in this. The truth is, when you compare real estate with other investments such as stocks, it seems to be better in terms of return on investment. Under the pandemic, stocks and shares were impacted whereas real estate values increased.

Price rise

I believe in 2022 prices will rise again because demand exceeds supply. We have still not been able to increase supply as we should. Also with the supply chain challenges, costs will be passed on to the consumer. That’s another factor that will increase housing prices. Demand is high, especially in the under-$20 million category — there are just not enough properties. Recently we advertised a property in Pembroke Hall for $18 million and we sold it for $26 million because we received 25 offers over $25 million. There is a great demand for single-family dwellings but with the high price of land it is difficult for developers to do single-family dwellings. There was one house in Havendale which sold for $35 million. In such cases, a development might enter joint venture agreements with owners where they receive not only cash but two of the units. Some of the developments are joint ventures with owners offering them units out of it. In that way they benefit more than outright sale.

Sellers’ Market

It remains a sellers’ market. As regards rentals, it is sad. There are some people who would rather close their property rather than rent; they do have high mortgages but will not rent. However, by next year more properties should come on the market for rent because a lot of people invested in real estate, and it’s better to get something coming in than nothing at all. Also, Airbnb is still a lucrative business, though not as before. When travel is resurgent it will improve.

Andrew Issa: Realtor broker and principal with Coldwell Banker Realty Limited

[The year] 2021 was another exciting year of diverse offerings throughout Kingston but also throughout many of the parishes across the island, which helped spur demand. I think the most frequently asked question over the last year was “Who is buying all these apartments?” and “Are they selling?”

One has to understand that real estate is by far the most stable investment in times of uncertainty, and with very low yields being offered on other financial instruments, Coldwell Banker Jamaica had another excellent year. But this [scenario] is across the world as housing shortages reach crisis proportions where governments are placing restrictions on only allowing purchasers the opportunity to buy if they will be residing in the unit.

Unfortunately, with increased demand and shortages of raw materials, the cost of construction will force prices to continue to trend upward throughout 2022. Many were expecting a correction in 2021 but that did not materialise as demand continued to outpace supply. The softening of the upper-end rental market has not cooled demand, but is concerning as to how soon the island will be fully open for business.

BOJ and mortgage rates

If the pandemic begins to taper off by the end of the first quarter and mortgage rates are maintained below nine per cent, I expect the market to continue to be buoyant throughout 2022. The Government would also need to announce major new projects within certain sectors that will bring additional foreign investment to the country. One just has to look at the traffic across the island to see that the economy is picking back up and everyone wants to get back to work.

Donovan Reid: Realtor broker and Immediate past president of the Realtors Association of Jamaica

What was notable in 2021 were the development of more strata complexes in the Corporate Area and other parts of the island. Also, given the existence of the pandemic and the need for remote working, the development of new commercial real estate has continued, albeit a little slower. We have noted with concern that some new units are in breach of the approved building plans and are receiving special attention in response to complaints filed by neighbours. The overdevelopment of strata units in contravention of building approvals continues to be of some concern.

Apartment sales climb 30 per cent

The demand continues to be strong for apartments in gated communities and the expansion in this sector continues in a bid to meet the high demand. The sales recorded [2021] have been higher than last year and the days on the market period for properties have been reduced. The most remarkable segment is the apartments, which increased by 30 per cent over 2020.

The $25-M-and-below segment continues to be a sellers’ market while the $26M- $45M is trending towards a more balanced market, and the over $45M is a buyers’ market.

The mortgage rates continue to be low in single digits and this has stimulated the real estate market. While the BOJ has increased its interest rate, the banks/mortgage companies have not reacted to this as yet and continue to hold the existing lending rates.

The rental market continues to show resilience, as with the slowing of th e Airbnb sector additional units were made available for long-term rentals. The demand for gated communities is still strong as security continues to be of concern.