The Realtors Association of Jamaica (RAJ) notes that Multiple Listing Service (MLS) transactions increased from 44 in 2010, to 104 in 2011. Around 75% of RAJ’s 365 members subscribe to the MLS.
But Jamaica Redevelopment Foundation’s (JRF) Jason Rudd believes that in this price category, the market may be overburdened by inventory. Mid-income homes are the most popular, agrees Coldwell Banker Jamaica head Andrew Issa, followed by town homes and apartments.
Red Hills and Stony Hill are in demand, with sales up and inventory low, in popular areas such as Mona, Havendale and Hope Pastures. National Housing Trust chairman Easton Douglas adds that there is a supply shortage for low- and/or middle-income buyers, agreeing with Issa agree that there is strong demand for lower priced homes.
Jamaica’s real estate market has struggled for the last few years, thanks to weak economic growth, high inflation, and high crime rates. In Q2 2012, the country’s GDP declined for a second quarter in a row by 0.2% y-o-y, according to the Statistical Institute of Jamaica (Statin). There are fears of another recession, and in April 2012 unemployment hit 14.3%.
Yet Jamaica’s efforts in reducing violent crimes, as well as the Tourism sector’s intense promotion, brought increased tourist arrivals in Jamaica from 2011 to 2012. Tourist arrivals in 2011 rose by 8.7% in 2011, while stopovers were up 6.5% during the year to September 2012.
Analysis of Jamaica Residential Property Market »
A 3-bedroom apartment in Kingston and St Andrews would cost around US$240,000.
A 3-bedroom house in Kingston and St Andrews would cost around US$330,000.
Gross rental yields remain very strong, especially on apartments, with 2 bedroom apartments reaching yields of around 10%. This would seem to suggest that Jamaica’s residential property market is firmly-based.
Capital Gains: There are no capital gains taxes in Jamaica.
Inheritance: Transfers of property as inheritance taxes is taxed at 7.5%.
Residents: Resident are taxed on their worldwide income at a flat rate of 25%.
The seller pays the real estate agent’s commission of 3% to 5%, which is subject to 16.50% General Consumption Tax (GCT). The transfer tax of 4% the property value is usually paid by the seller.
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.
After escaping a recession in 1998, GDP rose by an average of only 1.6% from 1999 to 2007. Jamaica’s meager growth was followed by a contraction by 0.8% in 2008, and it was the only Caribbean country, along with the Bahamas, to experience recession. GDP fell by 3.1% in 2009, followed by a 1.4% decline in 2010.
The 1.5% GDP growth in 2011 was weaker than other countries’ recovery from the recent global recession. The trend is expected to continue in 2012 with growth of around 1%. Unemployment reaching 14.3% in April 2012.
The Jamaican government hopes to rekindle its borrowing relationship with IMF and reach a new agreement with them before the year ends. Until now, no agreement has been made between the two, although an IMF delegation just departed the country in early-October after a two-week visit. Finance and Planning Minister Dr. Peter Phillips stated recently that the two parties are already making progress on the agreement.
The previous 2010 agreement allowed Jamaica to receive financial support from IMF as long as it met its conditions. But the US$1.27 billion standby agreement stalled in early 2011 due to the country’s inability to meet IMF’s deficit reduction targets.
Newly-elected Prime Minister Portia Simpson Miller, who assumed office in January 5, 2012, has pledged job creation and growth, while implementing IMF austerity measures. We shall see.