Is Caribbean Property in Jamaica a Good Investment?

According to opinions expressed in the CIA World Factbook relating to the economy of Jamaica, economic growth in the nation is being restricted significantly by serious crime because while the government seeks to battle crime levels it is also attempting to achieve ‘fiscal discipline’ and this is creating an almost untenable situation for progress. 

Against this rather negative backdrop the local property market is actually extremely liquid with property prices rising fast, flat land in short supply and rental demand remaining very strong indeed.  So is Caribbean property in Jamaica a good investment or is Jamaica’s a market worth avoiding until crime levels become more manageable for example?  In this article we examine the facts.

Yes Jamaica has high crime levels, it also has high unemployment and it is well known as being a transhipment point for drugs – however - Jamaica is most certainly a nation with two very distinct halves and if you focus purely on the negative aspects of the country you will actually miss such a wealth of potential.  Having said that, it is not for the risk averse investor – but if you want affordable Caribbean property with a potential for rental yields of up to 10%, then you need look no further than Jamaica.

In terms of Caribbean property, real estate in Jamaica is incredibly attractively priced – in fact property in Jamaica is cheaper per square meter than real estate in the Turks & Caicos, in Antigua, Barbados or even Trinidad & Tobago if you want to compare it.  What’s more, many parts of the country are safe, stunningly beautiful and highly desirable with everyone from retiring baby boomers to those seeking an affordable yet exotic holiday retreat. 

Additionally there is strong local demand for property particularly in Kingston and St. Andrew and new commuter belts are opening currently to accommodate increasing numbers of professional workers who are benefiting from some investment being committed to labour market improvements in Jamaica.

According to senior local realtors, Jamaica is currently a seller’s market because demand is just so intense for property that prices being asked are actually being met - thus forcing higher and higher asking prices being put on property that is coming to the market.  But investors needn’t worry that they have missed the boat because demand and affordability are still rising and are being fuelled by an active and maturing mortgage market that recently saw an interest rate reduction as well as a variety of new products coming to the market such as the popular tiered mortgage product from Scotia Jamaica Building Society.

In terms of where to invest in Caribbean property in Jamaica and what to buy – that actually depends on many factors from affordability to a target rental market - but if in doubt bank land and then worry about what you’re going to do with it later.  Flat land around Kingston, St. Andrew and popular tourism hotspots is in relatively short supply and is favoured over the abundance of elevated plots available simply because of the ease of development of such flat parcels of land. 

Alternatively, for those hoping to target the strongest pockets of local rental demand buying apartments and townhouses in the main cities and towns within secure communities makes the most sense.  Kingston districts 6 and 8 are in demand as are Havendale, Smoky Vale and Constant Spring Gardens according to local realtor Valerie Levy, she cites Seymour and Billy Dunn in St. Andrew although both are expensive and suggests that Portmore and Mandeville are up and coming and that Spanish Town could be a good bet if crime is reduced in the immediate vicinity.

Finally, aside from crime restricting the market appeal for overseas investors there is one final point to mention as it is something worth serious consideration before any commitment is made to buy property in Jamaica and that is the transaction costs associated with the property buying process in Jamaica.  Transaction costs are pushed up largely by high transfer taxes and can top 20% in total on top of the buying price.  Hopefully transfer taxes and the overall fees and charges associated with buying in this market will come down soon as the government realizes it could have an incredibly active and affluent property market with strong foreign direct investment if it gets to the point where it can get a handle on crime and then focus on making Jamaica fiscally more attractive than all other Caribbean destinations for those seeking property abroad.

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