Ashford W. Meikle, Staff Reporter
There was a kind of rush buying where people were buying into developments before they even formulated plans. The demand is still there, but that type of buying is slowing. - Carlington Wilmot/Freelance Photographer
THE REAL estate market will continue to be hot in 2006, but buyers will hold developers to higher standard.
That's the word from noted realtor, Valerie Levy, as she sat down recently with Sunday Business to talk about the outlook for the real estate market in 2006.
Sunday Business: Almost a year ago you predicted that because of the strong demand in housing we would see a 'Sellers Market.' What are your views on 2006?
Valerie Levy: The demand for housing is still very strong and I expect more of the same. It's still going to be a sellers' market because there is still more of a demand than supply. In Kingston and St. Andrew, for example, land is becoming increasingly expensive, and when you think of it, each year we run out of land that we are able to build on. So, yes, we are still in a sellers market.
SB: So, where is the greatest demand?
VL: The biggest demand is between $8 to $15 million. That hasn't changed it has got worse. So anybody who has a townhouse in that range you can be sure you are getting multiple offers and it will sell within a week.
It's very frustrating for buyers, because these are very difficult to find. Usually we have to find buyers existing developments that are ten to fifteen years old. Anything newer than that is over $18 million.
SB: But what about the $8 -- $12 million range?
VL: Well, if you lower the bar, there is literally very little out there. Every body likes Norbrook, Cherry Gardens, Jacks Hill, but those are high-priced areas. You have to go where your pocket can take you.
SB: What other trends have you noticed?
VL: Well, there is a slight change in how people see developments. There was a kind of rush buying where people were buying before they even formulated plans. The demand is still there but that type of buying is slowing.
SB: What is the reason for this change in people's attitude?
VL: Because of what has been reported in the press recently with certain developments. People are now going to be looking at quality rather than quantity, which I think is really great. Prospective home owners are now going to be looking at the quality of the finishing, how crowded is the development, the number of units, are there any green areas, delivery time and so on.
I think we are going to see more and more people requesting an inspection before they close the sale. In other countries and it happens here as well at the end of the construction period before you pay your final deposit there is a walkthrough, an inspection done with the developer or the developer's representative to make sure things more or less are in working order.
There are also a lot of new players in the market and buyers are now going to be looking at the developer's track record.
SB: You have some concerns about green areas in gated communities. What are these?
VL: I think that ... so many approvals for development have taken place quickly and have sold off quickly that we're almost getting to the stage where we will become a concrete jungle. I think that has to be looked at because people are investing their hard-earned money in these homes ... certainly with town house you need a little green area. There are a number of new developments that are coming on stream that are addressing that.
SB: What is happening in the rest of the island?
VL: Portland is picking up for sure. There are quite a few sales definitely. And there is lot of overseas interest in Portland. Montego Bay has been very, very active [with developments] like the Palmyra which is attracting buyers from overseas so that should take off next year.
In the other parts with Highway 2000 that's opening up areas that are now readily accessible. The problem with that is when you open these areas they become satellite cities [of Kingston]. We need to make sure that the facilities are there to go with the development, proper schools, jobs, health facilities. We need to create communities that people can stay in their communities.
SB: What is the situation with the rental market?
VL: The rental market is very active and the fear that people had [about losing tenants] because the United States embassy bought Crown Plaza really hasn't affected that part of the market. What they (expatriates) have done is that they have given up the older town houses, but they are still renting bigger units. Now, once you get past the US$4,000 per month range there isn't much of a demand.
Also, what owners have to realise is that over the past ten years the rentals have not kept up with the devaluation. It has moved up but not significantly enough to make up for the depreciation in the dollar.
SB: So what are the prospects in 2006 for potential homeowners?
VL: The industry is getting competitive and the mortgage companies are getting very aggressive. And it is said that interest rates are the barometer of the real estate industry.
For the first time we are going to have mortgage brokers in Jamaica. First Mortgage Broker Company has just been formed ... under the Alison Pitter Group. We have been trained and ... we will be able to shop around for the best mortgage for our clients, and that's coming on next year. We are assured that the mortgage process -- from the time you apply to when you get the commitment letter -- will be cut. That's a big plus and should speed up things."
