Foreign investors dominate the high-end market, while young Jamaican professionals who are first-time homebuyers fuel demand for mid-income bracket properties.
Demand is strongest for apartments, especially for apartments priced up to J$15 million (US$122,000), according to Marcia Reid Grant of Retail Banking at NCB.
Foreign investors typically seek residential units priced over J$40.3 million (US$350,000) while returning residents look for properties priced up to J$24.6 million (US$200,000), according to Howard Johnson Jr. of RAJ’s MLS Committee.
Foreign homebuyers are often attracted to the Montego Bay area, Ocho Rios, and Negril. Recently, there has been growing interest in Port Antonio because of the airport expansion in the area, according to Nicola Delapenha of Coldwell Banker Jamaica.
Young professionals tend to buy one-bedroom apartments in the Corporate Area for J$11 million (US$89,479) to J$22 million (US$178,957) and two- to three-bedroom houses outside the Corporate Area for a price range of J$13 million (US$105,747) to J$24 million (US$195,226), according to Carlton Earl Samuels of Jamaica National Building Society.
Low mortgage rates combined with competition among leading mortgage providers have spurred real estate sector performance, according to Carlene Sinclair, President of the Realtors Association of Jamaica and a Property Solutions Limited broker. Sinclair also noted a trend of “downsizing” among buyers from larger homes to town houses, which allow communal living among consumers, for shared maintenance costs.
Jamaica’s housing market is expected to continue performing strongly this year, triggered by the hotel construction boom and the surging number of tourist arrivals in the country.
In 2015, the economy grew by 1.1% from a year earlier, an improvement from the meagre growth rates of 0.5% in 2014 and 0.2% in 2013 and a contraction of 0.5% in 2012, according to the International Monetary Fund (IMF).
There are no restrictions on foreign ownership of property in Jamaica. However, foreign currency remittance for the purpose of purchasing real estate is prohibited without the approval of the Bank of Jamaica. Consent from the Exchange Control Department of the Bank of Jamaica is required prior to engaging in purchase agreements.
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 5% 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.
This is highly welcome, as Jamaica's economy has performed poorly in recent years. In 2014 growth was a meagre 0.5%, and in 2013 it was 0.2%. GDP rose by an average of only 1.5% from 1999 to 2007, followed by a GDP contraction by 0.8% in 2008, when it was the only Caribbean country aside from the Bahamas to experience recession. GDP fell further by 3.4% in 2009, followed by a 1.4% decline in 2010. After weak growth of 1.4% in 2011, the economy slipped again into recession in 2012, contracting by around 0.5%.
Outgoing Prime Minister Portia Simpson Miller, who assumed office in January 5, 2012, has helped the country create jobs and spur economic growth, while implementing austerity measures and tighter partnerships with its international partners, such as the IMF. Andrew Michael Holness, who won the recent national elections held in March 2016, has pledged to continue strengthen private and international partnerships to help the country to become the “center of the Caribbean.”
Jamaica’s structural and economic reforms have gained national and international support, including IMF’s four-year Extended Fund Facility (EFF) providing a support package amounting to US$932 million; World Bank and Inter-American Development Bank providing US$510 million each; and International Finance Corporation (IFC) and Multilateral Investment Guarantee Agency (MIGA) providing support for the country’s private sector development.
Investor confidence has improved remarkably. Jamaica’s ranking in the 2015 Doing Business report jumped 27 notches to 58th among 189 countries worldwide. The country’s credit rating has also improved. In May 2015, Moody’s upgraded Jamaica’s government bond rating to Caa2 from Caa3 and maintains a positive outlook. A week after, Standard & Poor’s also raised the country’s sovereign credit ratings to B from B-.
“We raised the long-term rating on Jamaica to reflect the country's ability to meet its fiscal targets over the past two years, which has led to strengthened fiscal credibility and stabilised its debt trajectory,” said S&P.
In February 2016, Fitch Ratings again upgraded Jamaica’s credit rating to B with positive outlook, up from B-, citing the country’s continued adherence to the fiscal primary surplus targets agreed with the IMF.
Unemployment stood at 13.5% in 2015, the lowest level since 2011. The unemployment rate for youth is dramatically higher, at 30.3%, and the average jobless rate for women (18.5%) is about double that for men (9.3%), according to the Statistical Institute of Jamaica.
In 2015, inflation slowed sharply to 3.7%, from 6.4% in 2014, 9.7% in 2013, 8% in 2012, and 6% in 2011, according to the Bank of Jamaica. The country’s inflation rate averaged 12.5% from 2004 to 2010.
Jamaica’s debt-to-GDP ratio remains high around 126% in 2015, but this is a sharp improvement from 139% in 2013 from 147% in 2012.