Last Updated:
Jun 09, 2009
Jamaica’s housing market has been weak for the last two years due to weak economic growth and high inflation, not helped by a high crime rate. In early-2009, property prices and sales volumes dropped further, as foreign demand weakened.
The luxury property market, i.e., houses valued from JM$30 million (US$340,000) and above, has seen little activity from 2008 to early-2009. Houses that used to sell in just two months have been sitting on the market for almost a year now, local real estate agents complain.
Real estate developers, especially those in the high-end market, have been forced to stall projects because of weak demand, expensive raw materials and high domestic interest rates.
In prime areas like Negril and Montego Bay, villas and houses sell for at least JM$89 million (US$1 million). On the other hand, in the less developed areas like Treasure Beach, oceanview houses are priced at around JM$62.3 million (US$700,000).
During the 20-year period from 1998 to 2008, property prices in Jamaica rose by a modest 43%, according to figures from Jamaica-real-estate.net. In the north coast, where all the major developments are located, prices have risen by more than 100% over the same period. However, with an average inflation rate of 10.3% from 1998 to 2008, nominal property price increases have not been enough to keep pace with inflation.
Security concerns are at the heart of the problem. Jamaica has one of the highest murder rates in the world, according to UN reports. Gang violence and shootings occur regularly in Kingston, the capital, and nearby St. Andrew and certain areas of Montego Bay.
The luxury property market, i.e., houses valued from JM$30 million (US$340,000) and above, has seen little activity from 2008 to early-2009. Houses that used to sell in just two months have been sitting on the market for almost a year now, local real estate agents complain.
Real estate developers, especially those in the high-end market, have been forced to stall projects because of weak demand, expensive raw materials and high domestic interest rates.
In prime areas like Negril and Montego Bay, villas and houses sell for at least JM$89 million (US$1 million). On the other hand, in the less developed areas like Treasure Beach, oceanview houses are priced at around JM$62.3 million (US$700,000).
During the 20-year period from 1998 to 2008, property prices in Jamaica rose by a modest 43%, according to figures from Jamaica-real-estate.net. In the north coast, where all the major developments are located, prices have risen by more than 100% over the same period. However, with an average inflation rate of 10.3% from 1998 to 2008, nominal property price increases have not been enough to keep pace with inflation.
Security concerns are at the heart of the problem. Jamaica has one of the highest murder rates in the world, according to UN reports. Gang violence and shootings occur regularly in Kingston, the capital, and nearby St. Andrew and certain areas of Montego Bay.
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RENTAL YIELDS
Last Updated: Dec 17, 2009
A two-three bedroom apartment in Kingston or St. Andrew costs around US$255,417. At a relatively low rent figure, gross rental return can reach around 10.14%.
Houses in Kingston and St. Andrew have lower average yields of 8.15%, reaching up to 8.49% for a four-bedroom property. Prices range from US$319,189 - US$806,380.
Houses in Kingston and St. Andrew have lower average yields of 8.15%, reaching up to 8.49% for a four-bedroom property. Prices range from US$319,189 - US$806,380.
TAXES AND COSTS
Last Updated: Nov 29, 2007
Rental Income: Non-residents' rental income is taxed at a flat rate of 25%. Property taxes, maintenance costs, interest payments, and depreciation are deductible from taxable income.Capital Gains: There are no capital gains taxes in Jamaica.
Inheritance: Inheritance taxes are imposed at a flat rate of 15% on the estate’s assessed value.
Residents: A tax rate of 25% is levied on the income of a resident.
BUYING GUIDE
Last Updated: Nov 29, 2007
Round-trip transaction costs are between 25.72% and 28.26%. The buyer and the seller are separately liable for their own legal fees. But both are jointly liable for the Stamp Duty of 5.5%.
The seller pays the real estate agent’s commission of 5%, which is subject to 15% General Consumption Tax. The transfer tax of 7.5% the property value is usually paid by the seller.
The seller pays the real estate agent’s commission of 5%, which is subject to 15% General Consumption Tax. The transfer tax of 7.5% the property value is usually paid by the seller.
LANDLORD AND TENANT
Last Updated: Nov 29, 2007
Jamaican law is pro-tenant, but in practice high-end rental agreements often ignore the law and practice is pro-landlord.
Rents: Rents and rent increases for all commercial and residential premises are set and regulated by the Rent Assessment Board. The standard rent is prescribed by the Minister and is currently set at 7.5% of the property’s assessed value.
Tenant Security: Lease agreements can either be short-term or long-term. A landlord cannot evict a tenant without a court order. It takes a minimum of 105 days to evict a tenant.
Rents: Rents and rent increases for all commercial and residential premises are set and regulated by the Rent Assessment Board. The standard rent is prescribed by the Minister and is currently set at 7.5% of the property’s assessed value.
Tenant Security: Lease agreements can either be short-term or long-term. A landlord cannot evict a tenant without a court order. It takes a minimum of 105 days to evict a tenant.
ECONOMIC GROWTH
Last Updated: Jun 09, 2009
Unstable economy, weak growth
Jamaica (pop 2.6 million, GDP/Capita US$4,000) is the third largest Caribbean island and the largest English-speaking Caribbean nation. Jamaica is a mix of tourist luxury and resort development on magnificent beaches, superimposed on a lackluster economy with high levels of poverty and deprivation.
Since independence from Britain in 1962, power has alternated between the People’s National Party (PNP) and the more free-market Jamaica Labour Party (which ruled 1962-1972 and 1980-1989).
In March 2006 Portia Simpson Millar (popularly known as “Sista P”) took over the leadership of the PNP and became Jamaica’s first woman Prime Minister. The PNP is not generally credited as doing much for the island’s development – which has happened despite the PNP, rather than because of it. General elections are due by October 2007.
GDP growth of 3.7% is forecast for 2006, following GDP growth of 1.5% per year from 2000 to 2005 – not enough to reduce poverty and crime.
Historically, Jamaica depended on agriculture, producing a few staple crops for export. Now Jamaica is heavily dependent on the tourism industry, which accounts for 60% of the country’s GDP. The number of visitors to Jamaica increased an average of 5.6% per year from 2001 to 2005.
Since independence from Britain in 1962, power has alternated between the People’s National Party (PNP) and the more free-market Jamaica Labour Party (which ruled 1962-1972 and 1980-1989).In March 2006 Portia Simpson Millar (popularly known as “Sista P”) took over the leadership of the PNP and became Jamaica’s first woman Prime Minister. The PNP is not generally credited as doing much for the island’s development – which has happened despite the PNP, rather than because of it. General elections are due by October 2007.
GDP growth of 3.7% is forecast for 2006, following GDP growth of 1.5% per year from 2000 to 2005 – not enough to reduce poverty and crime.
Historically, Jamaica depended on agriculture, producing a few staple crops for export. Now Jamaica is heavily dependent on the tourism industry, which accounts for 60% of the country’s GDP. The number of visitors to Jamaica increased an average of 5.6% per year from 2001 to 2005.
