Real Estate Market Update 1st Quarter 2024

Background Economic Conditions

A review of the Monetary Policy Discussion and Decision (MPD) of February and March 2024 revealed that the inflation rate experienced by the Jamaican economy had a high of 7.4 percent in January 2024 and a marginal decrease of 6.2 percent in February 2024. However, both rates are above the Bank of Jamaica (BOJ) target of 4-6 percent. It is anticipated that the inflation rate will remain above the BOJ target for all quarters up to June 2025.

Its associated risks were elevated as one considered the impact of the upcoming second round Public Passenger Vehicle (PPV) fare increases, the high wage adjustments, the continued deterioration in the supply chain conditions, stemming from disruptions, higher shipping freight rates and the amid on-going geopolitical tensions.

For the quarter, BOJ maintained its 7 per cent policy interest rate for deposit-taking institutions (DTIs) and sought to stabilize the foreign exchange market while tightening the Jamaica dollar liquidity conditions.

According to the Planning Institute of Jamaica (February 2024), the Jamaican economy is expected to continue to register growth in the short term based on the following factors:

1. Increased economic activities particularly in the Hotel & Restaurant (H&R) industry and the Manufacturing industries. The H&R industry is expected to continue on its upward
   trajectory. Preliminary date on airport arrival for January 2024 showed an increase of 2.3% relative to January 2023.
2. Higher demand stemming from increased employment levels. This was highlighted by the BOJ Governor, Mr Richard Byles (Mar 2023) – “the country is virtually at full employment with those looking for work at 4.2 percent of the labour force in October 2023.” Notwithstanding, Byles is concerned that while there is strong employment growth, it has outpaced the economic growth that suggests a decline in labour productivity.
3. Continued growth in the economics of Jamaica’s main trading partners boosting external demand such as tourism services. Salmon of the Jamaica Information Service (2024) highlighted that Jamaica welcomed approximately one million visitors between January and February 2024, generating earnings of US$1 billion: an increase up to 8.8 percent over the said period last year.

The Real Estate Sector

The Jamaican real estate sector continues for the quarter to experience a mix of the buyer’s and seller’s market. There is a demand for residential properties with selling prices ranging from JA$15M to JA$35M but the available stock is limited. On the other hand, there is an oversupply of units above the JA$40M price which is affordable to a marginal number of buyers. Despite the roller-coaster environment and with the mortgage rates averaging approximately 9 percent; today’s decision to purchase a home remains a great investment option.

In the commercial space, there is a notable increase of construction both in Kingston and on the Western side of Jamaica. The Jamaica Observer, Charmaine Clarke highlighted the development being carried out in Westgate Hills, Montego Bay by the renowned developer Frederik Moe who is known for the work done at the Fairview Shopping Centre. He is currently involved in the development of U-Sure Warehousing of 3.8- acre which is expected to alleviate the deficit of warehousing within Montego Bay and the 100-acre North Bank Logistics and Distribution Hub, a multi-phased industrial project on completion to serve as a regional
distribution hub for western Jamaica, warehousing, and education facility.

It is anticipated that once suitable land is identified for commercial, industrial, and warehousing solutions across the Island, there is likely to be continuous growth in the commercial sector.

C. Patterson/WIHCON Properties Limited – April 17, 2024