- ANDREW SMITH/PHOTOGRAPHY EDITOR
Many persons in the Corporate Area can readily convert their 'old' house at a prime location into serious cash returns. Here, workmen work on a house at 1 Marley Road, off Hope Road, in the Liguanea area, which will be the site of a gated community, Chateux Lingfield, by Kravitz Home.
Hopeton Morrison, Contributor
LIFE INSURANCE giant Life of Jamaica (LOJ) placed its much anticipated 'Winchester Estate' development on the market exactly a week ago last Sunday and the word is that all 60 units comprising studios, apartments and penthouses are as good as gone. Situated in the heart of the business district with easy access to New Kingston and Half-Way Tree the development has been gobbled up by professionals seeking a home, speculators and genuine investors.
Much has been said about the spiralling real estate market especially in most urban areas in Jamaica. Houses in urban Kingston and St. Andrew have risen out of the reach of many professionals and the argument from real estate people is that these prices will continue to skyrocket as developers are running out of land in this particular part of the city.
The current real estate frenzy in Kingston is very consistent with what is happening in North America. Some Jam-aicans are already gloating over the 'killing' that they have been making out of the hot United States property market, with some purchases in Florida already netting investors over 100 per cent market appreciation, sometimes in less than 12 months.
The heated real estate market has now created a new type of investor, one engaged in housing arbitrage. This means that you buy into a hot new maybe risky development, wait out the inevitable appreciation in prices, sell and shift to a more stable and cheaper development. For those who invest in prime Kingston there is little risk as virtually any investment in real estate here now guarantees an almost immediate and major value added.
This housing boom in Kingston is a saviour to many retirees who have homes here, even though many apparently are not aware of the enormous possibilities. Retired teachers, public servants, policemen and women, nurses and other professionals can readily convert any 'old' house in a prime location into serious cash returns at this time. In fact if you own a home in a decent neighbourhood in Kingston, your home could be potentially your largest source of wealth.
Indeed, if you are an empty nester (children now grown and have moved out), it could be a dream come true as you can sell big and purchase a far cheaper apartment. You must choose to treat your home as a sentimental asset or use it to ensure lasting financial independence.
Buying into Kingston also makes sound financial sense for the following reasons. Rent for these properties is climbing and where rent and house prices are moving in the same direction that growth is sustainable in contrast to markets where booming real estate prices are matched by depressed rents resulting in an unsustainable bubble.
SPECULATIVE INVESTMENTS
Additionally because demand exceeds supply in these locations, there are fewer units available for speculative investments (which would ultimately lead to falling prices) as persons are purchasing primarily for residences.
Local financial institutions have caught on to the boom in local real estate as increasingly more are offering home equity loans (that is personal and business loans based on the value of your home). It is only a matter of time before local institutions start offering reverse mortgage products also. Here a financial institution lends you money in the form of a lump sum, a line of credit or make monthly payments to you, against the value of your home. You make no payments, as the institution owns your home. You enjoy this benefit until you die at which time your home is sold, the charges apportioned and the benefits remaining after payment on the loan appropriated to your estate. Where there is a shortfall in the sale proceeds insurance will compensate the lending institution.
Hopeton Morrison is general manager of St. Thomas Co-operative Credit Union Ltd. and lecturer in the School of Business Administration at the University of Technology. Please send comments and questions to: hmorrison@stccu.com
