Susan N. Gordon, Business Reporter
Construction work under way at Casa Monte estate, Stony Hill, St. Andrew, on Wednesday, November 14. - Photo by Barbara Ellington
Coming out of a vibrant 2006, the real estate market remained buoyant over the past year, but with demand for both residential and commercial property outstripping supply, it was the sellers who continued to exert the greater influence over price.
Industry experts said this trend could continue well into 2008.
"We can say that Jamaica's real estate market has just experienced another great year of record prices and a strong demand that is years away from being satisfied by developers," said Andrew Issa, real estate broker with Coldwell Banker Jamaica Limited.
During 2007, homes were pricier, with two-bedroom apartments fetching between $12.5 million and $14.5 million, older-type townhouses resold for up to $30 million, while new construction entering the market fetched up to $40 million in the Kingston 6 and 8 areas, Issa said.
Sold out before construction begun
Mid-range developments also included offerings from Kravitz Homes, whose one- and two-bedroom units priced at $8.7 million to $17 million, were sold off even before construction on the $400 million development on Hopefield Avenue had begun; and the $10 million homes in Brittany Manor, formerly known as Watervale, are in the final stage of completion.
Numbered among the up-market offerings were Casa Monte being developed by Geon.
But there were also offerings like Rhyne Park and Rosevale in St. James, and New Harbour Village and Morris Meadows in St. Catherine, whose units were priced below $6 million.
Deborah Cummings, broker and managing director of Century 21 Properties, said demand was high in all areas of the market, but especially so for single-family homes - "more so than usual in a long time."
The gap in supply has left the market hungry for pro-perty, and that hunger spells business opportunity.
"The unsatisfied and increasing demand for middle- and high-income housing provides the potential for developers wishing to upgrade," said Brian Campbell, general manager of Victoria Property Limited, the real estate arm of Victoria Mutual Building Society.
But, Campbell says, lending rates could increase due to the depreciation of the local dollar, and if that happens, the market could experience some level of deceleration as mortgages get more expensive.
Private-mortgage rates are now at a low of 12.99 per cent, a price offered by the two largest lenders in the market - Jamaica National Building Society and Victoria Mutual Building Society.
During the year, with limited space available for sale, rentals kept the commercial market booming, though buyers had to settle for what was available.
Winchester Business Centre, comprising 48 shop units, was the only addition to the commercial market segment this year, with units priced to sell from $5 million to $275 million.
On the rental side, business operators wanted mostly 1,000 sq. ft. or less of office space, and there was also demand for larger modern warehouse space with high ceilings.
But the space they got was generally available in 2,000 to 7,000 square footage at a rental price of US$15 per sq. ft.
Unavailability
Andrew Issa, realtor, Coldwell Banker Jamaica, says housing demand is years away from being satisfied by developers. - File
"There is a huge demand," said Cummings. "The problem is the unavailability, so persons may now have to look to the downtown Kingston area."
Real estate in that area of the capital is cheap, but few businesses want it. Crime and extortionists have driven several companies from the core of the city, leaving rows of buildings - many sporting beautiful and seemingly timeless Georgian architecture - vacant and unkempt.
Several government offices have also abandoned downtown, with the National Export-Import Bank being the latest to leave to take up office space on Oxford Road in New Kingston.
So, even in those areas of downtown that remain heavily populated by businesses, properties are valued much less than those found midtown and uptown.
Winchester's shops, which sit in the heart of uptown Kingston, were priced from $10,000 up. COK recently acquired two of the Winchester shops for $40 million.
A commercial building of 4,000 sq. ft. on Knutsford Boule- vard in the business district of New Kingston, for example, sells for $9,000-$10,000 per square foot, or $36 million to $40 million.
A similar size building on Duke Street - a top-end zone downtown - is more likely to sell for $4,000 to $6,000 per square foot - $16 million to $24 million.
"The time for the redevelopment of downtown has come and has now been given priority by Government," said Issa. "The will is now needed to put it into force."
The real estate agent was referring to plans by the new Bruce Golding administration to develop downtown as an international financial centre, building on a proposal from the business sector for a low tax-offshore business and financial processing sector.
New government gains points
The new government has already won points with realtors after Finance Minister Audley Shaw announced he would eliminate transfer taxes and cut stamp duties on real estate transactions.
During the year, there was also the commitment by the State to provide titles for unregistered land holdings, which, for realtors, represents the unlocking of equity to facilitate housing developments.
In 2008, the market will be further accelerated by the various development projects that are slated to come on stream, said industry experts, with primary focus expected on the development of gated communities and hotels/resorts.
On the books is Life of Jamaica's one- and two-bedroom apartments and townhouses in the Golden Triangle, as well as a 30-unit project at the corner of Shortwood Road and Allerdyce Drive.
But, the insurance company's property arm also plans to develop a 500-unit multistorey parking garage in New Kingston, the units of which will be sold.
Jamaica's first luxury beachfront community, the Palmyra condominiums, is to be finalised at a projected cost of US$176 million (J$12.6 billion).
At the other end of the spectrum, National Housing Trust (NHT) would have delivered just over 1,000 housing solutions by year end March 31, 2008, and has more than 3,000 housing starts and serviced lots on its list for 2008.
In fact, the trust says its medium-term plan includes delivery of 8,600 solutions across the island, and that more than 2,900 of them would be in tourism areas. This is likely in recognition of the hotel developments coming on stream, especially on greenfield sites. New jobs are being created and such workers will need places to live.
During the year, NHT, which is known for low- and middle-income housing, went up-market as a partner in townhouse developments on Salisbury Avenue and Paddington Terrace in St. Andrew.
Those units go on the market in January.
In the year ahead, given expectations that Shaw will begin implementing the promised cut in real estate taxes, and, as real estate broker Valerie Levy puts it, the opening up of new areas for housing by Highway 2000, brokers predict another period of market growth, but with slightly different takes on how prices will perform.
"The real estate sector is expected to continue its growth, moving forward aggressively with a tremendous demand, and price levelling off," said Cummings.
Bright outlook
But Canute McFarlane, first vice-president of the Realtors' Association of Jamaica, sees prices rising further.
"The outlook for the real estate market is very bright and encouraging," he said.
"Prices are expected to see upward movements with strong demand for residential and commercial properties, with commercial leading the way."
McFarlane said the market in 2007 was constrained by the shortage of steel, most of which is consumed by China, while the local construction sector was hit by a cement shortage, which was especially acute following Hurricane Dean.
Issa, too, says 2008 promises to be a great year, noting that the real demand for houses far outweighs current and short-term supply, while international demand continues to grow for resort properties.
It is also estimated that the high returns being paid to investors in alternative investment schemes could start affecting the market by summer, as homeowners expand, and others look to buy property.
sabrina.gordon@gleanerjm.com
