Jackie Peat-Smith, Contributor
Peat-Smith
Editor's note: part one of this article was carried last week as Real Estate Review and Outlook.
WITH POSITIVE indicators of a buoyant year in real estate, the industry was primed for various types of investments. The reality however was that the gains made never lived up to expectations.
The primary incentive for the real estate players is their ability to achieve reasonable expec-tations from a transaction whether it is wealth or a comfortable lifestyle. Let us take a closer look at the major inhibitors to growth in the real estate market.
Costs associated with real estate transactions have become prohibitive. Combined taxes and fees of up to 23 per cent on the value of a property sale have stifled growth in the market. When a comparison is made between the transfer costs of the title of a $6 million motor vehicle and a property of the same value, the cost for the car will be approximately $4,000 while that of the property would be $600,000.
These costs have to be reduced in order to stimulate growth in the industry, as initial investment costs come mainly out of pocket.
Another concern is the onerous steps involved in completing property transfers. The current system seems unable to cope at the various financial institutions, and government offices, where documents are processed before a transaction is completed. This has resulted in delays of up to 180 days to complete a transaction, inevitably increas-ing the cost as well since time is money.
WORLD STANDARD
The transaction time should be benchmarked with world standard. This would reduce the number of sales which are cancelled by frustrated purchasers or vendors.
There are a large number of untitled parcels of land for which sale or other financing options are difficult to obtain. With the expansion of the island's road network, particularly in central Jamaica, increasingly large tracts of land are primed for development. Many of these are family properties and are passed down from one generation to the next without the attendant change in the name of the owners.
In 2003, a Government of Jamaica/Private Sector Retreat passed a resolution that lands which the highways would open up would be earmarked for new developments such as housing solutions and towns. To date only some of these have materialised.
The Government must quickly open up these areas as promised, and the real estate industry must press for these commitments to be effected.
If the real estate industry is to realise its full economic potential, these unregistered properties must come into the formal land system. In order to do this, support must be given to the government's land titling programme, the Land Administration and Manage-ment Project (LAMP).
Mortgage institutions, through their loan application and approval system, can be facilitators of the process to deal with the regularisation of land ownership and help persons come into the system.
What of the outlook for 2006?
The future remains optimistic for the industry. In spite of the current challenges, there is some resurgence in the real estate market and this is expected to continue. Real estate has the capacity to
be a vehicle for propelling Jamaica's economic growth. In the coming year it is anticipated that there will be a strong demand for housing solutions, and with continued advocacy from groups such as the Realtors Association of Jamaica, interest in the sector, will, undoubtedly, remain high.
* Jackie Peat-Smith is the general manager of JN Real Estate Company Ltd.
